tmiw

Retailers could probably do BIN number checking to determine at least the issuer and card type, much like what was done pre-EMV to detect that a debit card was swiped. It's a simple matter from there to block all cards from Chase because most of their Chase using customers are using the CSR (for example). It wouldn't be 100% reliable but would likely still have enough of an impact to force the networks to renegotiate fees for the higher end cards.

Also, many smaller businesses still don't have customer-facing terminals. For those, their employees can just check the logo on the card before inserting to make sure it's not Visa Infinite or similar.

mikesyr18

So in other words, discriminate against Chase cardholders, but not Bank of America cardholders. -or- Discriminate against someone who has a Visa Signature rather than a Visa. I guess the person who owns a NFCU Visa Signature Cash Rewards can't use their card since it has a $5,000 or higher limit, but the person with weaker creditworthiness and just a regular Visa Cash Rewards can use their card. Not gonna ever happen.

tmiw

It's not like the retailer will get the money clawed back just because a customer defaulted on the card they used for the transaction. In fact, this may be a more "friendly" option compared to simply surcharging all of their card using customers; people who have higher end cards tend to also have debit cards at minimum if not a lower-end credit card or two.

That said, will many merchants actually do this? Personally, I'm not sure the larger ones would, but definitely at least some smaller ones.

akr1970akr

Maybe we'll just see more Kroger like situations where a whole network like Visa is banned from some regions, until terms are agreed upon.

This sounds like the cable companies and programmers types of battles....they fight and the consumers are the ones who end up bearing the brunt of their commercial dispute.

tmiw

That's more akin to stores not accepting AmEx. Discriminating based on whether a card is Visa Infinite/Signature vs Debit or Platinum is something that hasn't been tried before.

sdsearch

The funny thing is that Amazon promotes using Amex Membership Rewards points or Citi ThankYou Points to pay for stuff, but to do that you have to make the purchase officially with an Amex Membership Rewards series card (including Platinum) or Citi ThankYou Points series card (including Prestige). So they're fine with higher fees from partners Amex and Citi, but doesn't want to accept higher fees from non-partners?

rasheed

Yeah, I agree that the BIN (first six digits) is the best way to do things to automate declining Visa Infinite/Signature (or MasterCard WE/W). It isn't perfect (many cards I have that were upgraded did not change the account number). This also seems to favor online (card not present) merchants who can flag not accepted cards much easier than someone trying to pay for a purchase at a physical checkout.

I think the technology is actually the simple part now, the bigger issue is how to deal with the in-person card rejection from a customer service perspective.

So, my thinking is that this will re-start the direct network conversations (like Chase Pay). so that those BINs can be routed directly to the bank, bypass the Visa/MC network and at a negotiated rate. The routing aspect has been allowed for some time now, but there just wasn't enough incentive previously. Maybe this is one reason Chase has kept Chase Pay around.

I actually think the biggest loser in this plan are cards like City National Visa Infinite along with some other banks like Barclays that don't have much merchant services presence. I think Chase and cards like CSP are not good examples because Chase will make arrangements to ensure continued acceptance. It is possible that rewards might be reduced for certain situations, but I think most customers will accept that versus outright card rejection (not that there would be many alternatives).

Even if I dislike this card discrimination idea, I support merchants having this choice. This means customers also having the choice. I wouldn't necessarily give up on the credit card usage and rewards train. We continue to see card acceptance as an alternative to taking only cash (or checks) as a favorable decision. For example, Aldi started taking all credit cards as they expanded to the West Coast. Also, it does seem merchants will take more expensive payment cards if only in moderation. Costco takes non-Visa cards online. Why would they do that otherwise? Now if many customers did this maybe they would not take the cards.

Is it time to see a new network start out again (like Sears Discover/Novus history)? I think instead store or co-branded cards (Kohls, Target RedCard) are going to be bigger players since they can be virtual and customers don't have to carry physical cards. It definitely feels backwards to see individual store/chain payment cards being a bigger factor again.

tmiw

I'm not sure how Chase would be able to have any control over merchants not using their payment processing. They would likely need to downgrade their cards from Visa Infinite/Signature to a lower tier in order to get around any blocks, which would likely reduce rewards for all transactions except for maybe Chase Paymentech ones. I'm not sure how customers would be able to tell what payment processor a merchant uses.

On the other hand, I can see Chase offering very good incentives to merchants to start supporting Chase Pay. Combined with increased rewards when using it vs. a physical card, perhaps it'll finally get significant use.

percysmith

Agreed, provided customers/cardholders have a real choice over merchant as well, and this isn't more abuse of market power.

fliesdelta

All of my cards are points/miles/whatever earning examples (CSR, Citi AA MC, Delta Plat Amex, etc), so if they start rejecting these types of cards, I guess I'll start walking away from stores that do that and stick with ones that don't (though, it seems that more and more my in-person use of cards is just restaurants, grocery stores, and the occasional gas station fill-up while traveling... most of my shopping is on-line).

rasheed

Actually, I believe Wal-Mart physical store receipts have been doing a flavor of this for over a year (transaction routing). I have only ever had an "E" for my Visa credit transactions, but I think it would be possible for other routings to happen. I think we agree that Wal-Mart would be one of the most aggressive and have an unlimited number of routings built into their systems if they can negotiate those individual bank network agreements. For me it is when not if for the merchants to get out of the "must accept" situations for those agreements to get done.

The Kroger example is a good point. While they are only doing a smaller no-Visa credit test (which seems to have had minimal pushback - my guess is because debit is available if not another card type for a customer), they were supposed to have implemented Chase Pay (which hasn't happen). If they actually get that done now, then it would indicate they are not having success with renegotiating with Visa directly (since Chase is almost 100% Visa except for some co-branded card).

Yeah, I think the US market can go the EU route (not so good rewards cards with widespread lower discount rates for merchants) or merchants picking and choosing which cards to allow. I sometimes wonder how do banks that have big Visa rebate cards deal with Costco charges. My impression is that it is just a law of averaging where other merchants who pay bigger discount rates cover the shortage of Costco's payment (or lack of payment). Same might be true for Capital One. If people are only using the higher rebate cards overseas, it might cause some revenue stress, but I have not heard of Capital One closing a customer due to that type of spending.

For me, I feel I face this issue everyday due to gas stations with two price charts. I know this is not true in every state, but it would be awful to see every merchant doing what gas stations have been doing for years. And even then, there are loopholes for gas stations (most accept prepaid branded gift cards at the cash price which you can easily buy with credit). I just learned that Winco has a similar loophole (and you only have to pay the extra $1 the first time and recharge with credit online as you like). So, yeah, am I going to have to carry lots of gift cards for merchants that go this non-rewards card route? Very possible. The reason why the gift card/prepaid card loophole won't go away is because the redemption breakage is amazing (do you really know if gift cards you give to others actually get used?). Now, these merchants are supposed to keep that money segregated, but there is nothing stopping them from scooping the investment income off that pile as easy revenue. I am sure some companies like Disney and Amazon have billions in their gift card fund.

tmiw

While Walmart has been doing debit routing for a while (hence the occasional complaint about "credit" transactions being treated otherwise by particular banks), I believe the "E" just means that the payment was processed electronically.

Also, it's probably a good idea to remind people that the "honor all cards" rule is still in effect. It's very possible some other alternative may end up happening instead, such as Visa/MC agreeing to reduce interchange for higher tier cards or imposing stricter rules on issuers as to when certain cards can be assigned to those higher tiers.

Kroger still has a few months to roll out Chase Pay based on at least one article I've seen. On the other hand, retail tends to not bother with updates after around October or so due to the holiday shopping season.

While I think interchange will end up being cut eventually, I'm not sure it'll ever be capped at EU levels--at least not without legislation.

rasheed

Perhaps true on the E designation not being specific, but Walmart (and a few other big Chase Paymentech customers) are routing all Chase-branded cards bypassing Visa already for a few years now (not just Chase Pay QR code). I think that has to be BIN based right? I know that on EMV, Chase cards do indicate their bank brand on the name tag, but I don't think that could be reliably used.

https://www.paymentssource.com/list/...u-need-to-know
https://www.pymnts.com/news/payment-...sing-chasenet/
https://www.pymnts.com/exclusive-ser...hant-services/
https://bankstocks.com/lets-close-the-loop-on-chasenet/
Chase Net 2017 ? Noyes Payments Blog

If these articles are to be believed, for example, CSP or CSR holders who use their card at United Airlines or Marriott (for example) are more costly than other bonus category travel merchants. How long is that subsidy sustainable? I don't know.

tmiw

I think using the "Chase Visa" application name on the chip is fairly reliable for credit cards, but probably not so much for debit. Otherwise, I'd imagine Chase would have given Walmart all of the BINs that they use.

As for sustainability, one could argue that it's already not sustainable. Many of the merchants fighting the networks have presences outside of the US, so they're deeply familiar with how much more they're paying for their US operations to handle cards.

rasheed

For any Amazon purchase that you use MR or TY points or related, I would tend to believe that Amazon has negotiated the "swipe" fee as well for the non-points part. I also think that Amazon is bypassing Visa/MC for those transactions if it would have been that card type. I believe Citi also has a broad flat-rate with MC just like Chase has with Visa.

Summarizing, Amazon would absolutely prefer you use those partner cards points or no points...