Creditors/Merchant Services

[Neckername]

With this DLC you guys are doing great so far. I do see something missing though that would introduce more interesting play. Credit cards and merchant services! For example you could have 3 different types of cards: Credit, Debit, Private Label (ie:gift cards for individual companies). The credit cards could be manufactured and R&D can improve design and security like in real life. With that the Digital Age DLC also comes in and commerce sites can use different merchant services or invest in their own. The merchant services would also need to invest in card reading products for physical businesses as well as security. With that being said I would love to see security become more of a company investment, and have maybe a random "disaster" that is getting hacked. That's a whole different post though Really the credit and merchant services would be nice. It would allow anyone providing those services to charge a fee. If you really really want to get technical about it, there could even be payment network operating costs and investments needed to increase transaction capacity. I really do hope something like this gets implemented or modded in!

[David]

This is a good suggestion! I would recommend that you create a poll for your suggestion. You could see some examples in the Suggestions forum.

One quick question: Will this be operated by a separate type of firm other than banks? If so, what should be the name of this new firm type?

[Neckername]

The firms could be separate merchants that handle just credit for consumers and businesses. Or it could be a bank with their own debit card. Or the business themselves can take on the credit and risk making their own gift/credit cards. They will have to have a merchant building ideally. This building should have capacity that can be upgraded and tech that can be upgraded for features, speed, security of transactions, etc.

[David]

I will forward your suggestions to the dev team.

[Neckername]

Thank you I really appreciate that. If I knew how to code better I would love to someday try to be a part of that dev team!

[Spac3y]

I like this suggestion +1

[buells]

In the credit card ecosystem, you have a few players:

- Issuers: Banks that issue you your credit card like BofA, Citi, TD, Amex, etc. These are the companies that are taking the credit risk that the consumer fails to pay their cc bill. They earn interest on credit card balances and earn interchange revenue. They fund the credit card rewards programs, screen borrowers for fraud and credit risk to approve or reject accounts and transactions, set credit card rates, and handle collections.

- Merchant acquirers: These are banks like Worldpay and First Data. They outfit the merchants with card reading machines and the infrastructure to accept cards. They collect customer's charges from the issuing bank and hold the deposits before the transaction clears. More precisely, they lend to merchants based on the balance of credit charges that have been made with them. They are bearing the risk that the merchant goes bankrupt and cannot fund refunds, reversals, and chargebacks on credit card transactions.

- Networks: These are the guys like Visa and Mastercard (and Amex, as it is vertically integrated through the value chain). They set the interchange fees for the networks and connect issuers with merchant acquirers. They charge an assessment fee to the merchants in addition to the interchange passed on to the issuer. The assessment fee is a small part of the total merchant discount.

- Digital Payment Companies: Companies like PayPal that let customers make digital payments, often using a variety of means (not just credit cards). For credit card transactions on these networks, the other parties are all still involved unless the customer is using the payment site's credit products.

Typical merchant discount is in the realm of ~2% of gross transaction proceeds. Most of this goes to fund the interchange fee. Assessment fees are about 0.14%. Typical interchange fees are 1.81%. For online transactions, the fees are higher, closer to 2.5%. This is probably due to higher fraud risk on online purchases. Typical credit card balance interest rates are 15-25% p.a. based on customer credit

[Neckername]

That is some awesome input. I actually just learned this not long ago at the job I am at right now. We do Consumer and business sales and now have offered our own Visa card so we had to do training on this.

[Neckername]

This is a good suggestion! I would recommend that you create a poll for your suggestion. You could see some examples in the Suggestions forum.

One quick question: Will this be operated by a separate type of firm other than banks? If so, what should be the name of this new firm type?

Sorry for the late reply! I have followed your suggestion and created a poll with a few options. I welcome any suggestions about credit cards in Capitalism Lab to be posted here!