Who makes money on CCs, and how do they do it?

[Batman]

If I wanted to understand the margins/commissions behind how money moves through CC, where do I start?

At different touch points -
•⁠ ⁠MDR for a CC: Who all take the cuts here - CC bank, VISA (payment platform) , Razorpay (transaction platform) ?
•⁠ ⁠50 day pay back period - Who pays for this short term loan.
•⁠ ⁠CC bill payment - Is there a transaction charge, who takes a cut.
•⁠ ⁠CC bill payment rewards - like HDFC platinum DC. Who's paying for the rewards.
•⁠ ⁠late payment fee / interest charged fee - who earns here.

Some of this is fairly obvious. I'm looking for a comprehensive understanding of who pays where and who earns (or has the potential to earn) where.

I’m looking for concrete fact based data points. If someone here works at a bank / fintech startup, and you have some insights to share here, please help.

 

[tachniki]

I earlier worked in a fintech company. Answering first part of your question. There are three parties- Acquiring bank (acquired merchant), Network (visa or mastercard or someone else) and Issuing Bank (Issued credit card). Issuing bank takes all the risk and gives interest free money for upto 50 days. And thus they take major part of MDR. If merchant pays about 1.8% MDR, about 0.1 goes to acquiring bank, 0.05 to network and rest issuing bank. If there is fintech involved, they will be usually backed by a acquiring bank (or multiple acquiring banks). Based on business models, they could have cut from acquiring bank or per device revenue or some sort of VAS or combination of all.

 

[tachniki]

Before I read this article - https://www.moneycontrol.com/news/b...-how-do-credit-cards-make-money-10875661.html, I thought credit-card-issuing-banks earn most out of MDR. But looks like their major income could be from interest. This kind of left me guilty (for sometime) because I (indirectly) getting credit card benefits out of what others are paying as interest. 🙂

Below image is from moneycontrol but data analysis by @TechnoFino.