Emerald Business Systems Blog

Visa’s point of sale practices : Core Economics

Posted in General Business,POS by ebs4pos on January 6, 2010

The NYT has an article about Visa’s practices in the US or charging merchants much more for signed transactions than debit card transactions. When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code. … Seizing on this odd twist, Visa enticed banks to embrace signature debit — the higher-priced method of handling debit cards — and turned over the fees to banks as an incentive to issue more Visa cards. At least initially, MasterCard and other rivals promoted PIN debit instead.The issue is that, at the point of sale, it matters to the merchant what payment instrument consumers choose while the consumers may not care or, alternatively, as Tyler Cowen points out, may be induced by other means to choose signature debit. The policy issue to find a way of making them care.

via Visa’s point of sale practices : Core Economics.


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