MINNEAPOLIS, Minn.—With an ongoing fight in Washington over the Credit Card Competition Act, which merchants are backing as it would lower credit card and debit interchange fees, Target has been doing something on its own to cut its own related costs, according to a new report.
Target’s RedCard debit card, which allows shoppers to save 5% on any purchase in-store or online every day, avoids the interchange process, according to The Motley Fool.
“This offering is unique because it pulls money directly from a customer's checking account; there's no need to use Visa's or Mastercard's rails anytime the card is used,” The Motley Fool stated.
In fiscal 2022 (ended Jan. 28), 20% of Target's $108 billion of overall revenue came from the RedCard program, which includes credit card products as well, The Motley Fool said.
‘Not An Insignificant Sum’
“The company doesn't report how much is from just the debit card, but that's not an insignificant sum. If 2% of these RedCard sales avoid going to interchange fees, Target could've saved $432 million in 2022, a figure that should mainly flow to the bottom line,” The Motley Fool stated.
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