Originally Posted by
cbn42
I don't think it was competition that drove this change. It was AMEX's desire to increase profits by going more mainstream and increasing the size of their customer base.
AMEX charged merchants more so I don't see how profiting from interchange fees due to reduce merchant acceptance was an issue, especially when the cards were primarily used by the wealthy so the amount spent by cardholders was higher.. Visa and MasterCard started breathing down AMEX's neck with cards that were just as good, resulting in AMEX changing their business model. Now it's all about shareholders instead of customers, so AMEX won't offer better cards to their customers... Let's take a look at the Cash Magnet for instance - it's a weak 1.5% back card when banks like Citi offer what's basically the 2% Double Cash, or the Citi Prestige which is cheaper than the Platinum and offers many benefits as well. In another direction, Chase has the Sapphire Reserve and Ultimate
Rewards which is a better program than Membership Rewards. AMEX has simply been mismanaged for the last 10+ years.
There are at most 4. Even in the US, one of them (Discover) is a bit on the weaker side, so there are really 3 that compete fiercely. In some other countries, there are fewer.
Not really sure what you mean here. "Weaker" how? Discover has one of the best banking platforms out there, and their credit cards are decent. Discover is also accepted in more places than AMEX is. Are they as popular as Visa and MasterCard? No, but I'm sure they'll get there eventually as they continue to make improvements.
Sprint is considered on "the weaker side" yet phone service prices have decreased in this country - at least for those who know how to shop for phone service.
Yes, price wars can break out in oligopolies, but they are rare and usually short-lived. I suppose one of the networks could start one if they wanted to, but I don't foresee it happening.
Maybe.
So you believe that banks would pass on the savings to customers, but merchants won't?
Probably not anymore because corporate greed is higher than ever - but banks increased fees and took away rewarding checking accounts after Durbin was passed by Congress. Chances are there'd be twice as many free checking accounts and more rewarding debit cards if this amendment wasn't passed and added to Dodd-Frank.
https://www.forbes.com/sites/norbert.../#6c290fa5740f
I'd much rather earn 1% back on my debit card purchases than save the merchant some money so they can pass the savings to shareholders.
I also bet checking accounts like Chase Total Checking would still be free without a minimum balance requirement if Durbin wasn't passed.
Since the retail industry is far more competitive than the banking industry, the opposite is most likely true.
Banking in this country is very competitive. We're not talking about Canada where mostly everyone just uses the "big five." We have plenty of online only banks, credit unions, and a large number of "large" banks in the USA. The retail sector is less competitive than the banking industry... Amazon, Target, and Walmart swallow most retail business.
Durbin benefits all customers who buy goods and services, at the expense of the wealthier ones who are heavy credit card users.
Based on what information....