How do credit card companies earn with the promos that they have?

[boybi]

Like in HSBC, free Starbucks coffee with 1 add-on for every P/2,000.00 charge slip.

How much does the credit card company earn for every 2K transaction?

A starbucks coffee costs around P160-P180.00 plus the add-on of P25.00.
I know that the card company doesn't pay starbucks the full retail price of their coffee,
but assuming they pay P100.00 per coffee. That will be 5% of 2K.

The card company deducts just around 3.5% from the merchant where you swipe your card.
So it's like they're losing 1.5% of 2,000.00 for every coffee that you redeem.

Yes, not all transactions will be just 2K, some will be a lot more. But a lot of cardholders are taking advantage of this promo and requesting merchant stores to multiple swipe their cards into 2K each.

So how does HSBC benefit from this promo?

[crazy_boy]

3.5% lang ba? Kala ko 6% deduction ng CC sa mga stores.

[tidus1203]

Yeah hindi lang 3.5% I think its anywhere from 5%-7% of credit card sales go to the credit card company...

Add to that hoping the card holder revolves so kita din sa finance charges...

[uls]

with that promo, HSBC encourages people to use their cards more often, shop more often, buy more stuff

more business for HSBC

consume

consume

consume

zombies

consume

buy

shop

consume

[Walter]

They gain market share + bragging rights. Same thing applies to unlimited text and call promos.

[Mguy]

Plus they dont waive annual fees anymore. Besides, they are earning a lot with financing fees and late charges from other clients.