I don't know how it works in this case but if a commercial for-profit service is gratis, the general rule of thumb is that you are not the customer but the product.
this post was submitted on 03 Aug 2023
53 points (96.5% liked)
Asklemmy
43853 readers
691 users here now
A loosely moderated place to ask open-ended questions
Search asklemmy ๐
If your post meets the following criteria, it's welcome here!
- Open-ended question
- Not offensive: at this point, we do not have the bandwidth to moderate overtly political discussions. Assume best intent and be excellent to each other.
- Not regarding using or support for Lemmy: context, see the list of support communities and tools for finding communities below
- Not ad nauseam inducing: please make sure it is a question that would be new to most members
- An actual topic of discussion
Looking for support?
Looking for a community?
- Lemmyverse: community search
- sub.rehab: maps old subreddits to fediverse options, marks official as such
- [email protected]: a community for finding communities
~Icon~ ~by~ ~@Double_[email protected]~
founded 5 years ago
MODERATORS
I'm not familiar with this so take this with a grain of salt because I'm just guessing. Let's say your CC is with Visa and T-Mobile has this offer going. You sign up for it and the fine print says that Visa gets to send T-Mobile details of your purchases. How much information I don't know. They might just send a total of eligible purchases or they might send a lot more. Then, Visa sends them some amount of $ for each eligible transaction which is more than the cash back they're giving you. Visa is ok with this because the more purchases you make the more interest you're likely to pay them so everyone is making money but you.
Edit: in other words they're counting on you paying more in interest than you're getting in cash back.
Visa does not care about interest. The issues bank does.
Visa makes its money on transaction fees. Every time you use your card, the merchant is charged an additional fee, usually a percentage of the amount this of the sale.
In these agreements, T-Mobile is buying transaction info from visa. The level of detail varies, as you say, but it's just more ways for companies to track consumer habits and later sell you something.
usually a percentage of the amount this of the sale.
It's usually a percentage plus a fixed amount. Rewards cards and AMEX and Discover can be significantly higher than your bog standard bank account card.
Here's Squares rates, which flatten out all the variables to these standard fees. Traditional merchant credit card processing services pass on the exact charges based on the type of card, issuer, and entry method. I think AMEX was 3.5%+.
The Square standard processing fee is 2.6% + 10ยข for contactless payments, swiped or inserted chip cards, and swiped magstripe cards. Payments that are manually keyed-in, processed using Card on File, or manually entered using Virtual Terminal have a 3.5% + 15ยข fee. Invoices cost from 2.9% + 30ยข.
I'll also add that spending habit data is very valuable in terms of advertisement. We are in the age of very targetted advertisement. Just a random example: *user14555* on our T-Mobile app eats at a restaurant for lunch every Thursday. Have the app pop-up with a coupon from one of our participating restaurants on Thursday morning.
Restaurant will pay or give exclusive coupons to T-Mobile in exchange for these benefits. T-Mobile then hopes to entice more users by listing their app and "exclusive coupons" as unique benefit to using them as a cellphone provider. All the major providers have more or less settled at similar prices for cellphone plans so they lean on these extras as marketing tools.
They sell your transaction history to advertisers.
The ToS and privacy policy will give you an actual answer. Generally, you are having all of your purchases and stuff tied to your name, age, gender, address (approximate or specific maybe), and other demographic data. This data is then used for a variety of purposes running from actual research on trends and such to targeted ads, to who-knows-what. Basically you and your data are the product and you get points for being so.
Grocery store cards were one of the early adopters of this sort of thing, IIRC.
The participating outlets will see the transactions they participate in and share when you pay.
It's an incentive to use their services and keep using their services over others.