Visa and Mastercard agree to lower average credit card interchange fee below 1%
Visa and Mastercard don&#x27;t keep much of interchange at all and never have.<p>The vast majority is paid to issuing banks to pay for loan origination, fraud and, most significantly, to return in the form of cash back or points.<p>These networks charge 0.2% for debit and 0.3% for credit in Europe as per regulation, you just don&#x27;t get rewards there.<p>Kinda sounds like they&#x27;re just going to squeeze issuing banks. Cash back and points cards in Canada (already pretty weak offerings compared to the US) are going to get further watered down. I&#x27;ve no real opinion on this, tbh.<p>Some napkin math that may not be right: Visa processed 11.6T in payment volume last year. Net revenue was $29B. Opex was $9.3B. Net income was $16B. That means their net revenue is about 0.25% and their net income is like 0.137% of transaction volume. This passes the smell test given their EU-mandated numbers. [1]<p>[1] <a href="https:&#x2F;&#x2F;annualreport.visa.com&#x2F;financials&#x2F;default.aspx" rel="nofollow">https:&#x2F;&#x2F;annualreport.visa.com&#x2F;financials&#x2F;default.aspx</a>