It's more complicated than that. I can't claim to understand all the details, but of that 2-3% I think at most half goes to the card issuer (in your example Home Trust). Visa and Mastercard, take their cut, and a few other middleman processors (terminal issuers, network providers) take a cut as well. I have read that about 1.5% goes to the card issuer for a non-rewards card. There are more processing fees for a rewards card.chufinora wrote: ↑14 Feb 2018 17:00Sure we don't offer as much as those who carry a high interest balance, but I am pretty sure they make plenty on the 2-3% they charge retailers on every purchase. I was using mine as my primary card so the were probably making $50-100 revenue a month off of my purchases. (Thats more than my internet provider makes from me.)kcowan wrote: ↑14 Feb 2018 16:09 The facts are that the card appealed to snowbirds and they don't typically carry a balance.
Also how many of we card carriers charged a bunch at amazon.ca?
So both sponsors wrote it off as a bad experiment! I am amazed that it lasted as long as it did.
There is clearly a need and I wonder how long Home Trust will honour the zero FX feature when they discover that we make no money for them.
So it might be for a rewards card only about 1% goes to the card issuer. I think issuers really love people who carry a balance as well as forex and cash advance fees, ATM fees and any other way to get milk from the cow they can come up with. I think you see niche providers offering these cards to build a customer base, but it seems if they succeed, they cut the rewards ASAP.
Heck, even Tangerine reduced their cash back incentives as soon as their basic card became popular.