So if banks think "Well, if we don't extend credit at the margin our competitors certainly will", whereas previously they might be OK losing the opportunity for your business to protect their risk profile, these days they want you to *know* you have headroom on your card.
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Really interesting assumptions though! Is this knowledge a by product of being with Stripe?
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I had weird hobbies prior to joining Stripe, too, and I could have done that math in 2006, but suffice it to say my appreciation for interchange has not gone down as a function of my current job.
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Meanwhile I'm just searching your feed for an explanation of interchange.
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When you pay for something via a credit card, the business you’re buying from pays for that transaction. For historical reasons, this is called “interchange.” It’s split between the payment processor(s), the bank which issued the credit card, and the card network.
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And as you often point out, banks can and do think in decades not months, and the potential LTV of the high income person in your scenario is significant, in interchange fees alone, but even more so across the full portfolio of offerings
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The common thinking in the credit card industry when I worked there was that a bank like, say, Chase is happy losing money on a premium credit card as long as it gives them a greater shot at getting the cardholder's mortgage or brokerage business years down the line.
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Interchange being valuable (in the US) was generally my understanding too, but I recently came across these charts and have been struggling to figure out what’s going on between 660 and 740 https://www.samefacts.com/because-you-can-never-have-too-many-charts-on-the-economics-of-credit-card-debt/ …pic.twitter.com/cMRti6f7Q6
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Why isn't that juicy interchange income being competed away? Monopoly?
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This reminds me of when I first learned about high risk merchant accounts when I was in the affiliate space and talking to the guys pushing nutraceutical re-bill offers.
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@threadreaderapp unroll pls -
Hi!, there is your unroll: Thread by
@patio11: Matt Levine's column interesting as always. I'd like to point to one bit in particular, which is… https://threadreaderapp.com/thread/1220549821905326080.html …. Share this if you think it's interesting.
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