Alex Mayyasi

But I think as time has gone on, the ability to move money from one bank to another, that's become a lot easier thanks to technology.

But credit cards still charge these very high fees.

I don't think customers think about them that often, but every time you use a credit card at a store, there's a good chance that the credit card companies and banks are charging that store maybe 2.5% of the cost of the transaction as a fee for the credit card transaction.

And that might not sound like a lot, but you have to remember that, like,

For a restaurant or a coffee shop, their entire profit margin on the transaction might be 4%, maybe 2.5%.

Maybe they just don't make any profit on some transactions and it all goes to Visa.

And so there is this strange economics going on where to customers, it just feels like you're getting offered free stuff.

But the reason you're getting that free stuff is because the banks, they want you to use their credit cards so they can charge these fees.

But then stores have to pay those fees.

So what do stores do?

They raise their prices.

So now we're paying higher prices because of credit card fees.

And so it's very hidden, but there is this kind of pernicious reverse Robin Hood effect where if you're pretty wealthy, you have a good credit score, you have this great...

a credit card that gives you all sorts of miles and cash back, you're paying a bit higher prices at stores because of credit card fees, but you probably get that back in the form of your points and miles and all those perks from your credit card.

But for someone who doesn't have a great credit score, they don't have that much money, they're probably paying in cash or with the debit cards, they're not getting benefits.

They just have to pay those higher fees that the store is charging because of credit card fees, but they're not getting that back.

So there's this kind of

indirect subsidy by lower income people of those points and cashback benefits that more affluent people get to enjoy.

Because American Express charges a really, really high transaction fee that they then use to pay out these really great benefits to their affluent customers.

But lots of banks that use Visa or MasterCard have also, over the past 10 plus years, put out credit cards that give you really, really great rewards.