Latest news with #transactionfees
Yahoo
28-06-2025
- Business
- Yahoo
How credit card companies make money
Credit card companies generate most of their income through interest charges, cardholder fees and transaction fees paid by businesses that accept credit cards. Even if you don't pay fees or interest, using your credit card generates income for your issuer thanks to interchange (or swipe) fees. You can minimize fees and interest payments with responsible card use, including timely payments, avoiding cash advances and understanding your card's terms and conditions. You're probably familiar with cardholder fees related to credit cards, but that's just one main source of revenue for credit card companies. They also generate income from two other main sources: credit card interest and transaction processing fees. Credit card companies use various strategies to generate revenue. Whether you carry a balance or not, your credit card activity contributes to the issuer's income. Understanding how credit card companies make money can empower you to minimize fees and interest payments through responsible card use. Credit card issuers — like Chase and Citibank — are lenders. When you buy something with a credit card, you're borrowing money from a lender with the expectation that you'll repay it, sometimes with interest. At the point of sale, the card issuer pays the merchant, and then you're obligated to pay the issuer back. If you don't pay back your charges, the merchant still gets paid, and the card issuer is responsible. The other major players are credit card networks. They manage the process between merchants and card issuers. The four major credit card networks are Visa, Mastercard, American Express and Discover, with American Express and Discover serving as both networks and issuers. There are multiple details that unfold when you swipe your card, but put simply: money must transfer from the issuer to the merchant's bank, a process the network manages. The network checks with the issuer to ensure the funds are available and the card is active before approving the transaction. All of this happens in a matter of seconds at the point of sale and, yes, fees are involved in the process. Credit card companies make the bulk of their money from interest, cardholder fees and transaction fees paid by businesses that accept credit cards. Credit card interest Interest charges are the fees that you, the cardholder, pay for the privilege of borrowing money via your credit card. In most cases, you won't owe interest on your purchases as long as you pay off the balance in full each billing cycle. Interest charges are determined by your card's annual percentage rate (APR), and your APR depends on several factors, including your credit score and the type of credit card you're using. Your card likely also charges different interest rates depending on the type of transaction you're making. For instance, a purchase APR range is likely lower than the APR for cash advances. Balance transfer APRs may also vary. Regardless of the type of APR, the fees represent a major source of revenue for card issuers. More than 50 percent of cardholders report carrying card debt from month to month, according to a June 2024 Bankrate survey, and the Federal Reserve Bank of New York reports that credit card balances hit $1.18 trillion in the first quarter of 2025. With average credit card interest rates now around 20 percent, it's easy to see how this can be a significant source of revenue for issuers. Interchange fees Even if you pay off your credit card balances every month and never pay interest charges, issuers are still making money off of you. That's because every time you use your card, the merchant pays a fee to cover the cost of processing the transaction. This is referred to as an interchange or swipe fee. Interchange fees cover the cost to communicate with the issuer, check for fraud and card validity and ultimately process the payment. They're unavoidable for merchants who want to accept credit or debit cards as forms of payment. These fees are largely invisible to consumers, yet they are an important expense to consider for businesses. Annual and other fees Many credit cards charge an annual fee to hold the card, representing an additional revenue stream for issuers. There are plenty of excellent no-annual-fee credit cards out there, but cards with annual fees are often worth it for the right cardholder who can fully use the perks, features, rewards and benefits that come with that annual fee. In this case, cardholders do get something in return for the fee, even as issuers generate revenue. However, there are numerous other fees that credit card companies may charge, which help them make money, many of which can be avoided by cardholders. Avoidable fees include late payment, cash advance, balance transfer and foreign transaction fees. While these fees can generate significant revenue for credit card companies, cardholders can avoid paying them altogether by understanding their card's terms and conditions and using their cards responsibly. As a cardholder, there are several steps you can take to minimize the fees and interest you pay. It all starts with understanding how your credit card works and then making smart decisions. What are some steps you can take to avoid paying fees? First, be aware of the common credit card fees you may encounter so you can minimize charges or avoid them altogether. Beyond that: Sign up for monthly bill reminders via text or email from your card issuer. This will help you avoid late payment fees. Consider setting up autopay for at least the minimum amount due each month. This automatic payment can prevent you from missing a payment and incurring a late fee. If your credit card charges an annual fee, consider whether the benefits you receive from the card outweigh this cost. If they don't, it might be worth shopping around for a card that doesn't charge an annual fee. Avoid using your credit card for cash advances. Most credit card companies charge a flat rate or a percentage of the transaction. If you travel abroad or shop in foreign currency, make sure you use a card that doesn't charge foreign transaction fees. The key lies in understanding the fees that your card charges. By knowing the fees, you can take steps to avoid some of them. If some charges are unavoidable — such as annual fees — you can make an informed decision about whether the benefits of the card justify that fee. If you're charged an avoidable fee, such as a late payment charge, don't hesitate to contact your credit card issuer. They may be willing to waive the fee, especially if you're a good customer who normally pays your bills on time. Mistakes happen and it never hurts to ask. Otherwise, take steps to ensure you don't incur that fee again. That could mean setting up due date reminders or auto-payments or rethinking your budget and spending less to avoid interest charges. As a cardholder, you help credit card issuers earn money even if you're responsible with your cards and never pay interest or avoidable fees. The annual fee you may pay, along with the interchange fees generated each time you use your card, contributes to the credit card issuer's revenue. Using a credit card comes with costs for the privilege and convenience. Understanding these expenses and using your card responsibly is the key to earning valuable rewards while avoiding unnecessary fees.
Daily Telegraph
27-06-2025
- Business
- Daily Telegraph
How to avoid the $138m mistake Aussie travellers keep making
Don't miss out on the headlines from National. Followed categories will be added to My News. Aussie travellers have forked out $138 million in avoidable international transaction fees over the last year, new research has revealed. A report by ING found holiday-makers dedicated a hefty 20 per cent of their travel budgets to food and dining purchases – an average of $1,477 per traveller. Of that, $82.28 in transaction could have been saved. 'Our new research shows Aussies are increasingly prioritising food and dining experiences when they travel,' ING's head of daily banking Dina Kotsopoulos said. A collective $12bn has been spent by Aussies on overseas dining. Picture: iStock 'We encourage Aussies to confirm with their banks what fees they might be subject to while on holiday, ahead of time, so they can fully enjoy their global foodadventures without unexpected costs.' Ms Kotsopoulos encouraged those looking to travel internationally to plan ahead, check their bank's fees on overseas purchasing and consider their options to avoid incurring avoidable charges before they leave. THE TOP FIVE CUISINES AUSSIES WANT TO MASTER AT HOME The research also found that more travellers are prioritising memorable culinary experiences when holidaying, with 88 per cent of respondents willing to cut back on other aspects of travel, such as shopping and activities, to make room for a good meal. Dina Kotsopoulos, Head of Daily Banking at ING, encouraged Aussies to check with their banks what fees they might be subject to when travelling. Picture: Supplied In March this year, Australia's number one cooking resource surveyed more than 2350 Australians from all cultural backgrounds on their food habits for their Taste the World report. It found Millennials were the most domestically adventurous demographic, with 13 per cent of those aged between 29 and 44 expressing a willingness to travel to a different state or region within Australia to try a particular cuisine. In the last year, a collective $12bn has been spent on overseas culinary experiences alone. Japan remains the biggest hotspot for Aussie travellers, with a 60 per cent uptick in visitors compared to pre-Covid levels. The Asian destination is closely followed by New Zealand, with Queenstown seeing a 14 per cent increase, and Bali with a 27 per cent hike since 2019. India, China and South Korea are also rising in popularity, according to MasterCard's 2025 Travel Trends Report. Consumers are increasingly investing more in experiences, naming travel and tourism, outdoor activities and dining as their top three priorities this year. The top foodie destination was Turkey, with its median restaurant in Istanbul hosting tourists from 67 different countries. This was closely followed by France and Switzerland, each hosting a median of 64 tourist countries each. Originally published as How to avoid the $138m mistake Aussie travellers keep making
Yahoo
25-06-2025
- Business
- Yahoo
UK merchants seek alternatives to costly payments: Yapily report
Businesses in the UK are increasingly seeking cost-effective and secure payment methods, according to a recent report by open banking infrastructure provider Yapily. The study highlights merchants' dissatisfaction with high transaction fees and the current chargeback model, which many consider unfair. Yapily's report sheds light on the growing demand for alternatives to traditional card payments. The survey, conducted by YouGov for Yapily, involved over 2,000 UK consumers and 250 merchants. It found that 98% of businesses value lower transaction fees, and 41% want chargebacks removed entirely. Additionally, 77% of merchants express concerns over transaction fees, while 68% worry about fraud risks and 54% about data breaches. Two-fifths of businesses believe the chargeback process favours consumers too much, with 49% wishing for a more efficient process. Meanwhile, consumers prioritise security and convenience, especially for low-value purchases, with 49% favouring ease of use for purchases under £20 and 44% prioritising security for purchases around £100. The report highlights that 58% of consumers would try new payment methods if they offered lower fraud risk. Although open banking is seen as a solution with lower fees and higher security, cards remain the preferred method due to familiarity. Yapily's recommendations aim to drive open banking adoption and create a fairer financial system. Yapily's recommendations include aligning the ecosystem on open banking's value propositions, developing a consumer protection model without chargebacks, and introducing an open banking trustmark. Yapily founder and CEO Stefano Vaccino said, "Open banking has the potential to enrich people's payment experiences beyond other payment methods." Yapily VP for product strategy, innovation and policy Nicole Green added, "Businesses are telling us they need lower costs and better security - which is what open banking offers. 'Now the challenge is finding the tipping point that drives behavioural change among consumers, encouraging them to make the switch at the checkout. 'Rolling out new features like cVRP faster and creating a clear, trusted brand complete with an industry trustmark for open banking payments will encourage adoption.' Yapily is an open banking infrastructure platform in Europe, connecting customers to thousands of banks. The company has raised $69.4m in funding and continues to expand across Europe. "UK merchants seek alternatives to costly payments: Yapily report" was originally created and published by Electronic Payments International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
FF News
18-06-2025
- Business
- FF News
The Stablecoin Sandwich: A Better Way to Move Money Across Borders
Cross-border payments remain one of the most expensive and opaque aspects of international business. Fintech Finance reports that global corporations move $23.5 trillion across borders and pay an estimated $120bn in transaction fees annually. With slow settlement times, high FX fees, and complex compliance requirements, many companies are seeking faster and more transparent alternatives. What traditional cross-border payments get wrong Despite living in an era of instant communication and cloud-based everything, cross-border payments are still burdened by outdated infrastructure. Much of the friction stems from reliance on legacy systems like SWIFT and correspondent banking networks, which introduce delays, fees, and opacity into every transaction. These systems were never designed for the speed and scale of today's global digital economy. The list of issues that businesses face when making payments in 2025 is a long one: delays, hidden fees, poor FX rates, limited transparency, access issues, failed payments… These inefficiencies aren't just a nuisance. They create real business risk and operational drag. Consider the following scenarios: A tech firm in London needs to pay its developer team in Argentina weekly. FX volatility and delays mean developers are paid late, and the firm must overfund to account for slippage. An online education platform in Singapore pays tutors across Africa. Bank coverage is patchy, and students complain when class schedules are affected by delayed payouts. A French import/export company struggles to make timely supplier payments in Turkey due to capital controls and high intermediary costs. In each of these cases, the core problem is the lack of a direct, efficient, and programmable value-transfer mechanism. Enter, a modern-day solution, the 'stablecoin sandwich.' What is a stablecoin sandwich? A stablecoin sandwich is a cross-border payment strategy that wraps a blockchain-based stablecoin transfer between two fiat currency conversions. The process begins by converting the sender's fiat currency (e.g., GBP) into a stablecoin (e.g., USDC). That stablecoin is transmitted over a fast, low-cost blockchain network, like Solana, before being converted back into the recipient's local fiat currency (e.g., INR). Think of it as putting a stablecoin in the middle of two fiat 'slices', a transaction sandwich, crafted to avoid the sogginess of traditional banking rails. No one likes a soggy sandwich. This structure isn't just more appetising, it's more efficient. It delivers: Faster settlement: Cross-border payments that typically take 2–5 days via SWIFT can now be completed in minutes or hours, depending on network choice. Lower fees: While traditional correspondent banking can incur fees of 3–6% per transaction , stablecoin transfers often cost a fraction of that, especially on efficient Layer 2 networks. Greater transparency: Transactions are recorded immutably on-chain, allowing for real-time tracking and automated reconciliation. More importantly, it enables businesses to bypass congested correspondent banking networks, which still underpin most traditional international payments. According to the BIS , nearly 40% of cross-border transactions rely on just a handful of major correspondent banks, creating concentration risk and liquidity bottlenecks, especially in emerging markets. In contrast, blockchain-based rails use decentralised infrastructure that routes payments through faster, borderless channels. However, the fiat off-ramp still depends on access to local currency. That's where Bitpace plays a key role: we partner with licensed financial entities and local payout nodes to ensure liquidity is available, where it's needed for clients. This decentralised but regulated approach shifts the burden away from slow, centralised institutions and toward programmatic, API-driven liquidity networks optimised for scale, speed, and compliance. The stablecoin sandwich is especially powerful in regions where traditional banking infrastructure is patchy, restricted, or expensive. In Sub-Saharan Africa, for instance, the average cost of sending $200 is 8.5% . Stablecoin pathways offer a modern workaround, enabling access to liquidity without the inefficiencies of legacy financial networks. How it works: The technical filler The stablecoin sandwich is built on three core steps: on-ramp, transfer, and off-ramp. Each step is designed to reduce cost, increase speed, and maximise transparency. Here's how the process works in practice: Fiat on-ramp: The sender begins by converting their local fiat currency (e.g., GBP) into a stablecoin (e.g., USDC) using a trusted payment service provider (PSP), crypto exchange, or an integrated payment gateway such as Bitpace. Blockchain transfer: Once the stablecoin is issued, it is transferred via a blockchain network. The choice of network, Layer 1 or Layer 2, depends on speed, cost, and regional infrastructure. Each has trade-offs in terms of latency and transaction fees. For example, the Ethereum network can be used for high security and liquidity. Fiat off-ramp: Once the stablecoin arrives, it is converted into the recipient's local currency (e.g., INR) through a licensed partner or PSP connected to local banking rails. Bitpace coordinates this process end-to-end through a network of verified payout nodes in key markets. Because stablecoins are largely 1:1 backed when issued by regulated entities and held in transparent reserves, and are not subject to the volatility of other crypto assets. They serve as a safe, fast medium of value transfer, especially for B2B use cases. In B2B use cases, such as payroll, treasury transfers, supplier payments, and digital export settlements, this balance of speed, stability, and programmability makes stablecoins a compelling instrument for moving value at a global scale. Crypto sandwich use cases Many suppliers in Africa, Asia, and LATAM face delays in receiving payments through traditional banks, often waiting 3 days or more for funds to be settled, which are further diminished by FX spread losses. A stablecoin sandwich enables same-day delivery of funds with better FX rates, improved visibility, and full auditability. Example: A UK-based e-commerce firm pays a textile manufacturer in the UAE. GBP is converted to USDC, sent via the Solana network, and instantly settled in AED through a local partner. Remote talent marketplaces struggle with payout delays and high intermediary fees. With the stablecoin sandwich model, talent in over 100 countries can receive funds in minutes, in their preferred local currency or even as stablecoins. Example: A London-based design agency pays contractors in the UAE. Payments are routed through Bitpace, converting GBP to USDC, sent over the Ethereum network, and withdrawn in AED. Stablecoins offer programmable liquidity. Businesses can hold them during global settlement cycles to manage timing mismatches and use Bitpace to hedge or convert when rates are most favourable. Example: A UK-based SaaS firm with clients in the UAE receives revenue in AED. They convert to USDC to hold until rates are favourable, then settle GBP expenses in the UK, all without touching legacy FX platforms. Exporters of digital goods (think SaaS, gaming, digital art) often don't need the friction of banking systems. A stablecoin sandwich allows these businesses to sell to global buyers and receive clean, fast payments they can either hold or cash out. Example: An indie game studio in England receives royalties from the UAE. Bitpace enables them to accept AED via USDC rails, convert to GBP, and settle in their UK business account. Why the sandwich works The stablecoin sandwich is not just a workaround, it's an upgrade. It removes the weakest parts of traditional cross-border payments (slow banks, expensive FX, opaque routing) and replaces them with the strengths of crypto (speed, transparency, and programmability). At Bitpace, we've seen this model deliver real-world efficiency gains for our clients, without the regulatory or volatility concerns often associated with crypto. Under frameworks like the EU's MiCA regulation, UK's FCA DP23/4, or Brazil's PL 4401/2021 and CVM/BCB division of roles, stablecoins will be issued by regulated e-money institutions, backed by 1:1 fiat reserves, and subject to rigorous audit requirements. This clarity is already attracting institutional players who want the benefits of crypto rails, without the volatility of speculative assets. As the market matures and stablecoin regulation (like MiCA) brings further clarity, I believe this sandwich will become the default meal for modern global payments. Final thoughts With global B2B payment volumes expected to surpass $150 trillion by 2025 , the pressure is on to modernise infrastructure. The stablecoin sandwich offers a path forward: one that combines the trust of fiat, the efficiency of crypto, and the compliance of licensed platforms like Bitpace. Let's make moving money as simple and fast as sending an email (or making a sandwich). We're building the rails for compliant, real-time global value transfer. If you're a business, PSP, or financial institution looking to stay ahead of the curve, join us.
Globe and Mail
09-06-2025
- Business
- Globe and Mail
Coinbase's Transaction Fees Improve: Will it Accelerate Growth?
Coinbase Global Inc. COIN generates the bulk of its revenues from transaction fees, its biggest but most volatile income source. Transaction revenues, which contribute over 50% of COIN's top line, are closely tied to trading volumes and are primarily earned from spot trades executed by both retail and institutional customers on its platform. International revenues comprised mainly transaction revenues. Transaction revenues increased 18.2% year over year to $1.3 billion in the first quarter of 2025, driven by a 26% increase in trading volume, which reflected both broader market momentum and Coinbase's rising market share in the United States. For the second quarter of 2025, COIN expects institutional transaction revenues to be impacted by $30 million to $40 million on a quarter-over-quarter basis. The surge in crypto trading activity, spurred by increasing adoption of Bitcoin ETFs and tokenized assets, continues to drive COIN's transaction-based income. To support long-term growth and improve crypto utility, Coinbase is investing in foundational infrastructure like Base, its Layer 2 Ethereum scaling solution. In 2024, Coinbase partnered with Stripe to integrate USDC on Base, advancing global crypto adoption. Additionally, the platform has broadened its asset offerings by launching tokenized equities such as cbXRP and cbDOGE on Base. Transaction revenues offer strong operating leverage, with profitability improving as volumes rise faster than costs as well as scale globally. While inherently sensitive to market conditions, this revenue stream continues to be a key growth engine. At the same time, Coinbase is steadily expanding its subscriptions and services segment to diversify income and enhance business resilience. What About COIN's Competitors? COIN competes with Robinhood Markets HOOD and Interactive Brokers Group, Inc. IBKR, two crypto-oriented companies. Transaction revenues, a key contributor to Robinhood Markets' growth, are driven by active retail trading in cryptocurrencies, options, and equities. Making up over 60% of its total revenues, these earnings reflect Robinhood's strong sensitivity to market fluctuations and the behavior of retail investors. Interactive Brokers Group's commission-based transaction revenues are a key driver of growth, reflecting its success in capitalizing on rising client trading activity. This high-margin revenue stream demonstrates strong operating leverage, as increased trading volumes translate into outsized revenue gains and improved profit margins. COIN's Price Performance Shares of COIN have gained 1.2% year to date, outperforming the industry. COIN's Expensive Valuation COIN trades at a price-to-earnings value ratio of 45.5, above the industry average of 18.72. But it carries a Value Score of F. Estimates Movement for COIN The Zacks Consensus Estimate for COIN's second-quarter and third-quarter 2025 EPS has moved down 47.1% and 37%, respectively, over the past 30 days. The same for full-year 2025 and 2026 has increased 52.3% and 16.7%, respectively. The consensus estimates for COIN's 2025 and 2026 revenues indicate year-over-year increases. While the consensus estimate for COIN's 2025 EPS indicates a decline, the same for 2026 EPS suggests an increase. COIN stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028. See This Stock Now for Free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Interactive Brokers Group, Inc. (IBKR): Free Stock Analysis Report Coinbase Global, Inc. (COIN): Free Stock Analysis Report Robinhood Markets, Inc. (HOOD): Free Stock Analysis Report
