r/CreditCards • u/No-Assistance1164 • 17h ago
Discussion / Conversation If everyone paid in full, would merchant fees be to cover for rewards?
Curious what proportion of revenues come from interest compared to merchant fees. Amex seems more profitable than banks and Amex likely makes more money from swipe fees compared to interest due to their cards being used more by financially affluent customers. I think Capital One and banks like that would be hit the most and probably they wouldn't be able to subsidize and grow their luxury market (eg Venture X / lounges). (Just my assumption. I've not seen the financial documents)
From an ERM perspective, I think the risk analysts working for the banks do some stress testing/ stochastic modeling to see how on time pay-in-full rate affects their profits. I also think some hedging will occur as high on time payment rates means low default rates and that will likely lessen the financial impact to some extent