Wal-Mart, Amex take on banks with Bluebird debit card
Nov 1, 2012, 1:00 pm
#1261
Join Date: May 2006
Posts: 1,433
That was my question as well. OD makes $3.95 on the sale of the card...but then has to pay ~$10 in merchant fees when someone swipes their credit card (on a $500 gift card.) Obviously there's something else going on behind the scenes or they wouldn't be selling any kind of GC in the first place.
Nov 1, 2012, 1:02 pm
#1262
Suspended
Join Date: May 2010
Posts: 2,998
without any inside insight into how the pricing and mechanics of all these pre-paids work we can only speculate on who is winning and who is losing in these games. however what is for sure is that with the huge spike in volume since this deal got publicized we are going to find out pretty soon who is hurting the most as whoever it is will make some kind of change. office depot, vanilla or amex are going to puke pretty quickly
Vanilla shouldn't care unless the fees are passed on to them or if loss via fraud comes back on them, but I suspect that's more OD's issue
Nov 1, 2012, 1:02 pm
#1263
Join Date: May 2006
Posts: 1,433
Quote:
Originally Posted by Preacher7
All purchases from Super Wal-Marts and Neighborhood Wal-Marts are always classed as Grocery by Chase, I know that from previously this year during the Freedom 5X category bonus. Pretty sure Amex will class it as the same. We've done all our grocery shopping at WM for over a decade. Is it unusual for WMs not to sell groceries? I'm serious. I've never seen a WM in the US that doesn't sell groceries. In Canada, yes, but not south of the 49th.
Does SuperTarget get coded as groceries as well? I haven't been in a while, and can't find a transaction on my statement.
----
In some areas they have wal-marts that are "neighbor" grocery stores (AKA: Walmart market).
Originally Posted by Preacher7
All purchases from Super Wal-Marts and Neighborhood Wal-Marts are always classed as Grocery by Chase, I know that from previously this year during the Freedom 5X category bonus. Pretty sure Amex will class it as the same. We've done all our grocery shopping at WM for over a decade. Is it unusual for WMs not to sell groceries? I'm serious. I've never seen a WM in the US that doesn't sell groceries. In Canada, yes, but not south of the 49th.
Does SuperTarget get coded as groceries as well? I haven't been in a while, and can't find a transaction on my statement.
----
In some areas they have wal-marts that are "neighbor" grocery stores (AKA: Walmart market).
Nov 1, 2012, 1:06 pm
#1264
Join Date: Aug 2009
Location: RDU
Programs: A few
Posts: 5,499
I don't see it being Amex. They don't feel it if you buy via CC or cash other than if you use their CC to buy. They can be surgical in killing BB accounts if someone proves to be an issue.
Vanilla shouldn't care unless the fees are passed on to them or if loss via fraud comes back on them, but I suspect that's more OD's issue
Vanilla shouldn't care unless the fees are passed on to them or if loss via fraud comes back on them, but I suspect that's more OD's issue
Nov 1, 2012, 1:10 pm
#1267
Join Date: Aug 2010
Location: ORF
Programs: Amex Plat, AA, BA Silver, Marriott Plat, Choice Gold, HHonors Gold, IHG Diamond
Posts: 3,749
Seems to me that the 2 huge weaknesses here are Chase and OD.
The Chase "problem" is obvious. The 5x points at office supply stores is obviously a "come on" offer for their Ink card. It's a loss leader. They probably figure a "typical" small business would be spending 50 bucks/month at stores like OD. Now, suddenly, many folks are spending thousands of dollars every month at OD. There's no way Chase is making money on those transactions by paying out 5x points.
But there could be a similar problem with OD. Does anybody know what profit a merchant gets on gift cards? I assume there's money to be made or the stores wouldn't carry them. But if you pay for the cards by credit card (like Ink), the store has to pay a credit card fee. So I'm wondering if OD actually makes money on this booming business in Vanilla reload cards.
The Chase "problem" is obvious. The 5x points at office supply stores is obviously a "come on" offer for their Ink card. It's a loss leader. They probably figure a "typical" small business would be spending 50 bucks/month at stores like OD. Now, suddenly, many folks are spending thousands of dollars every month at OD. There's no way Chase is making money on those transactions by paying out 5x points.
But there could be a similar problem with OD. Does anybody know what profit a merchant gets on gift cards? I assume there's money to be made or the stores wouldn't carry them. But if you pay for the cards by credit card (like Ink), the store has to pay a credit card fee. So I'm wondering if OD actually makes money on this booming business in Vanilla reload cards.
Regarding Chase, I doubt seriously that Chase expects any honest-to-goodness business (not FT businesses whose sole apparent business plan is getting business cards in order to double dip on signup bonuses and whose sole employee is the cardholder) to spend only $50 per month at Office Depot. When I was a partner in a law firm with approximately fifty employees, we spent hundreds per month just on stationery products. That doesn't count the potentially bigger items that OD would love to sell you, like office furniture, copiers, and computers. I just don't believe that Chase is afraid of too many UR points being given out, but they're definitely going to examine circular use of the card that doesn't reflect real demand.
The viability of the business model for OD or Vanilla will matter in the long run. In the mid-term, it's still likely that more cards will end up in the stores because the demand is there.
The 5X promotion from Chase could go away because of abuse. The cards themselves or the ability to continue to buy from OD with credit will depend on the viability of the business plan, not on whether 50 people or 5000 people buy these cards.
Nov 1, 2012, 1:15 pm
#1268
Join Date: Jul 2001
Location: DTW
Programs: AA Gold, Marriott Titanium
Posts: 819
I've been intrigued by this thread . . .
Chase? The biggest problem is obviously here. Circular use of Chase's money to fund and pay will definitely raise their ire, but that's a matter that they may choose to handle by individual account action, not a broad slashing of a benefit. And absent circular abuse, what's the difference to Chase? They already have an arrangement that recognizes that items purchased at OD (as well as other office supply stores) will result in 5X UR points--no matter whether you purchase a computer, a printer, candy bars at the register, or gift cards.
Chase? The biggest problem is obviously here. Circular use of Chase's money to fund and pay will definitely raise their ire, but that's a matter that they may choose to handle by individual account action, not a broad slashing of a benefit. And absent circular abuse, what's the difference to Chase? They already have an arrangement that recognizes that items purchased at OD (as well as other office supply stores) will result in 5X UR points--no matter whether you purchase a computer, a printer, candy bars at the register, or gift cards.
That was my question as well. OD makes $3.95 on the sale of the card...but then has to pay ~$10 in merchant fees when someone swipes their credit card (on a $500 gift card.) Obviously there's something else going on behind the scenes or they wouldn't be selling any kind of GC in the first place.
Nov 1, 2012, 1:59 pm
#1270
Used to be garyjr316
Join Date: Feb 2011
Location: LAX or SBA
Programs: AAdvantage, MileagePlus, Gold Passport, Hilton HHonors, Marriott
Posts: 800
Nov 1, 2012, 2:17 pm
#1272
Join Date: Aug 2010
Location: SEA
Programs: HH Gold, SPG Gold, AA Gold
Posts: 354
Maybe its just me, but I don't get the concern about "circular" use with Chase. It's not like they administer BB, so they wouldn't know how your card gets funded. They don't know, though they can certainly guess, that all you're buying at OD are reloads. They only know that you spent $X amount at OD, and you're bill paying $X through a bill pay service. I don't see how this action alone would warrant a closer inspection of one's account.. it's what they'd expect from a normal cardholder, isn't it?
Now, say if you were paying off an AMEX card with BB, I could see where that circle could potentially cause some trouble, but not when you're going between two different banking entities.
Now, say if you were paying off an AMEX card with BB, I could see where that circle could potentially cause some trouble, but not when you're going between two different banking entities.
Nov 1, 2012, 2:21 pm
#1273
Join Date: Dec 2001
Location: NYC
Programs: AA LT PLT, SPG Gold
Posts: 2,564
Pretty sure the merchant agreement that OD or any other vendor has with a credit card company has them paying the same % per swipe, regardless of mark up of the items sold. I mean, if you're the credit card company it's not your job to worry about how much profit the store is making per transaction, right? And how could a credit card company possibly police that? That said, it's possible GC fall under some other type of arrangement. Even so, at only 1% OD would still be losing money on every $500 vanilla card charged, so I do wonder how they make money on these. There's got to be something else going on.
Nov 1, 2012, 2:23 pm
#1274
Join Date: Jul 2011
Location: DFW
Posts: 1,145
Money cannot be "pulled"
Having money pulled from your account to pay your mortgage or car loan does not work. I thought it could be done, went through everything and it seemed to work, but yesterday the funds still had not gone out of my BB account. I called and spoke to them and they said it was for deposit only, you could not give them the direct deposit info and have the funds "pulled" to make a payment. Today, the funds automatically came back out of my loan payment account. I submitted a normal "pay bills" payment to my auto loan and it looks like it will be drafted via ACH today and post tomorrow, so no biggie. Just wanted to let everybody know of my experience.
And...I successfully linked my BB account to Amzn pmts, so...might be useful to some.
And...I successfully linked my BB account to Amzn pmts, so...might be useful to some.
Nov 1, 2012, 2:31 pm
#1275
Join Date: Jul 2011
Location: DFW
Posts: 1,145
Maybe its just me, but I don't get the concern about "circular" use with Chase. It's not like they administer BB, so they wouldn't know how your card gets funded. They don't know, though they can certainly guess, that all you're buying at OD are reloads. They only know that you spent $X amount at OD, and you're bill paying $X through a bill pay service. I don't see how this action alone would warrant a closer inspection of one's account.. it's what they'd expect from a normal cardholder, isn't it?
Now, say if you were paying off an AMEX card with BB, I could see where that circle could potentially cause some trouble, but not when you're going between two different banking entities.
Now, say if you were paying off an AMEX card with BB, I could see where that circle could potentially cause some trouble, but not when you're going between two different banking entities.