So, when you pay with Curve - is there a dual interchange scenario at play?
Curve from the merchants bank, and then your issuer from Curve?
By virtue of this - is your payment provider still benefiting from the same revenues when purchases are made? Or is it a shared job with Curve?
If not, then are Curve’s interchange revenues essentially cancelled out? Making money from cross selling only? I guess a little like a payment provider allowing you to top up by card.
Hope this all makes sense!
Yes, it’s pretty much that.
Curve collects the interchange fees from the merchant for the transaction you’ve paid with Curve. Curve then acts effectively as a merchant, re-charging your underlying card at “Bank X”. This time, Curve has to pay the fees to the bank that issues the underlying card. Technically, at this stage, you are buying “e-money” from Curve, which is then immediately used to fund the transaction with the retailer.
They make money off their premium accounts, cross-selling cashback promotions (which the featured retailers presumably pay a commission on) and things like their technology as a service, which powers the Samsung Pay card.
Is this relatively similar to how PayPal functions when you use a card through it? How about g or Apple Pay?
Apple/Google Pay directly access your accounts (as cards, although they use different numbers that are stored on your phone’s device) and present unique tokens to the bank that show essentially that it’s your legitimate authorised device.
PayPal functions like Curve, unless you’re paying without an account, in which case it acts like an online payment terminal.
I think PayPal is also able to claim the money via Direct Debit if linked to a current account that way, but other than that being slightly different at the claiming part of the process it works the same way.
I assume that they like you to use Direct Debit, if possible, as it may cost them less?
Do Google and Apple take a split in the interchange then?
It all goes further if you use Curve to pay with a mobile wallet - surely curve then lose out and the underlying bank gets the best deal?
Yeah I should imagine the Direct Debit payment is a good function for PayPal - I used to use it with Revolut and a set pocket for takeaways during lockdown
It’s top-secret, but some details have leaked out.
Apple, at least, do get paid a very small amount of the transaction fees. In the US this was about 0.01% of the transaction value, but there is speculation that it may have been a flat-fee per active card, per year, in the U.K. and EU (due to the interchange cap).
This is paid out of the part of the interchange revenue that goes to banks, directly by the banks themselves, and is supposed to “pay for itself” because of Apple Pay’s lower fraud rates. There is never an extra cut taken out of the money a merchant gets or ever any charge direct to consumers for adding their cards. Apple don’t allow it.
Generally yes, and that is true all the time and not just when you pay with a mobile wallet!
This is because you generally end up having to pay higher interchange for “cardholder not present” transactions (which all Curve transactions on the underlying card are) than transactions in person - which many transactions on the Curve card will be.
Of course, this is why Curve have other sources of revenue and, to an extent, the whole business model is “freemium” - where the free customers don’t make a profit but the premium customers cover costs, and you hope that one day free customers will upgrade + the free product is cross-subsidised with other revenue streams.
This sorta applies to all refunds but…let’s say you GBIT on a payment 20 days back. A refund is initiated from the original underlying card - I assume the original interchange attained won’t be affected?
On the other hand, is the initial card provider pocketing anything on top from facilitating the refund?
This is how I’m envisaging the process -
Shop - Curve - Revolut (interchange from shops bank to curve & curve to Revolut - possibly more due to cardholder not present)
Refund (Interchange charged by Revolut to return the money?)
Shop - Curve - Chase (“” to first)
So if there is interchange on the refund it’s an additional enhancement to the loss making of transactions made through Curve?
I’m not sure how interchange works for refunds, but presumably they get at least some of the money back from the original transaction’s interchange as it has now been reversed (probably minus a processing fee of some kind).
If that is true, then Curve would have to pay more interchange, overall, on transactions where you had Gone Back in Time, yes. This may be why there is a time limit on this, to discourage widespread use of the feature.
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