It’s worse on business cards. I negotiated a bank contract for our corporate card program earlier this year and we get 3.5% cash back from purchases. It incentivizes us to pay every vendor invoice by card too as ACH / check actually cost us money.

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guru4consulting 5 days ago | parent [-]

if merchants pay anywhere between 2% to 3%, how is the bank able to pay 3.5% for purchases to your corp card customers? Simple math says the bank would lose money on this which of course won't be true. What am I missing?

	▲	conductr 5 days ago \| parent [-]
		Merchants pay what they’re charged on a transaction by transaction basis. That is unless they have some agreement with Stripe or similar that provides a fixed percentage. If you get a full merchant account as a business, with IC+ billing or similar, your statement will itemize IC charges on every transaction and it’s based on the type of card the customer used. If it’s Amex / Discover it might be 5% or more. This is why a lot of merchants are Visa and Mastercard only. If your customer has a cash back card, it will maybe be 4%. If your customer uses a no frills visa bank card, it might be 1.5%. Across a large population of transactions it usually averages 2-3%. But if you have a B2B where all your transactions are from companies like mine, you’ll likely find it averages above 3%. Businesses like stripe are betting that 2.9% is above the average they see across a very large population of transactions.