VR Refunds

Discussion in 'General Discussion | Credit Cards' started by Muerl, Feb 20, 2014.  |  Print Topic

  1. Muerl
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    Muerl Gold Member

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  2. TravelBear

    TravelBear Gold Member

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    While what you might be suggesting sounds a little intriguing I imagine repeat customers would be looking at a shut down.
     
  3. traveler
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    traveler Gold Member

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    Sounds like the next firestorm!!!!!!!!!!!!!!!!!!!!!!!
     
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  4. MX

    MX Gold Member

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    What is there to shut down? VR's are single use.
     
  5. TUMD

    TUMD Silver Member

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    Very intriguing...
     
  6. TravelBear

    TravelBear Gold Member

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    True, I was thinking a step ahead when I wrote that apparently. Ignore the man behind the curtain. :D
     
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  7. downhillcrasher

    downhillcrasher Gold Member

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    Indeed, this is going to be huge and then get shut down...
     
  8. andhoova

    andhoova Silver Member

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    Vanilla Reload cards will end up with a "Cash Only" stamp on them.
     
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  9. MX

    MX Gold Member

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    Notice the fine print:
    " Except where otherwise required by law, all refund requests will be considered on a case-by-case basis and may be granted or refused at our sole discretion."
     
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  10. youpaiyou

    youpaiyou Silver Member

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    I applied for a 1k refund. We will see what happens.
     
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  11. NYBanker
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    NYBanker Gold Member

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    Good luck. My concern is refund requesters will have to sit for a few weeks while they consider.
     
  12. NYBanker
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    NYBanker Gold Member

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    What part of their profitability model is hurt by offering refunds?
     
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  13. TUMD

    TUMD Silver Member

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    Good question. You would just be loading the funds onto another device anyway, with no way to pay VR any more fees. I wonder if there is a % or cut for having the VR loaded onto your device, like BB paying some minuscule rate for every VR that is loaded. Otherwise, I guess the only downside for VR is that it probably costs them more to send you the money back than it would if you just loaded it to BB.
     
  14. youpaiyou

    youpaiyou Silver Member

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    I'm maxed out for Feb anyway.
     
  15. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    What is their profitability model?
     
  16. NYBanker
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    NYBanker Gold Member

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    It's amazing how little is known for sure on the behind the scenes math on these cards.

    There are five potential ways for incomm to make money with VRs:
    1) sharing a cut of the card purchase fee (which I think is unlikely)
    2) a fee when they load non-incomm products (charged to the likes of bluebird, etc) (slim, but probably not nil)
    3) fees they charge on MVD cards when people load them to MVDs (this is the most lucrative)
    4) inactivity fees and forfeitures of VRs. (This is also pretty low...and fees only kicks in twelve months into the future, and I imagine there are laws about forfeiture in most states which preclude them from, or put restrictions on, "keeping" the money)
    5) earnings on the cash while they hold it (I suspect there are regulations that limit what they can do with the cash...but I imagine they can earn some modest float)

    I think they sell the loaded amount at par to cvs and allow cvs to keep the card fee. Assuming cvs pays 1% merchant fees, cvs is losing on every $500 load, but making money on smaller loads. Importantly, they also create traffic...which is valuable. Cvs also increases their average swipe amount, which may help them lower their fees in aggregate.

    Re #2, I suspect they keep a small vig when the load to non incomm products, probably 0.25% to 1%. Why Amex would pay is because a) most business models for these reloadables cards involved a reload card and via incomm, Amex doesn't need to build the infrastructure or distribution itself and b) when bluebirds are unloaded via swipe (not that we do much of that), Amex makes merchant fee. That's really the only way Amex makes money on bb.

    So, to the original question, I suspect if an individual put in more than a few refund requests, they'd be cut off from future refunds pretty quickly. Incomm gets a lot of complaints from consumers. If I had to guess, I suspect incomm put in this refund mechanism as a result of some sort of negotiation with a state regulator.
     
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  17. LarryInNYC

    LarryInNYC Gold Member

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    Everything you say is true, but I can't find a convincing explanation of how this is actually profitable for anyone. In particular, take CVS, which apparently has examined this issue closely enough to formulate an actual corporate policy -- $5K credit card purchases per day. Assuming all they get is the $3.95 fee, that must be a huge money loser for them. And it's not just 1% they're paying, since we're all using premium cards that involve an additional claw back, and I think they even allow AMEX cards (although I haven't tried). It just doesn't make sense. I don't buy the increase-in-traffic theory (they could just have an open bar in the back of the store -- it would be cheaper!) or the lowering-the-swipe-fee theory (which sounds a bit like "we lose money on every transaction, but we'll make it up in volume").

    Where I think they probably could make money is on the kind of person this product is ideally suited for -- large scale money launderers who have cash they need to inject into the banking system.

    As far as the refunds go, after however many it takes for them to cut you off you could just switch over to an in-law, or someone, who just signs the check over to you. Depending on how many trustworthy people you know, I suppose you could go on for a while. No doubt, however, there will be additional intelligence on this matter developing over the next couple of months.
     
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  18. HaveMilesWillTravel
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    I assume there is a reason why Walgreens doesn't want any part of this "profitable" business.
     
  19. LarryInNYC

    LarryInNYC Gold Member

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    Thinking about this a little more, if the float does play some part in their business plan, the refund thing may work out for them.

    I assume the float on the average used-to-reload card is a day or less. If they stretch out the refund period to, say, four weeks that would juice the float rather substantially.
     
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  20. youpaiyou

    youpaiyou Silver Member

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    I received my check today for $1007.90. It took 5 days. Anyone else doing this?
     
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  21. LarryInNYC

    LarryInNYC Gold Member

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    You got the fee back too? Impressive.
     
  22. bigx0

    bigx0 Gold Member

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    I sure hope nobody else is doing this since it doesn't bode well for the VR scheme many of us "enjoy".
     
  23. HaveMilesWillTravel
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    And you think those who are candidates for this scheme would care? ;)
     
  24. bigx0

    bigx0 Gold Member

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    In case it's not in jest, ;)... Yeah, I think some do since it would kill the deal for them too.
     
  25. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    Get while the gettin' is good ...

    They may realize that they help kill "the deal", but they may also believe that it won't stop others, so they might as well claim their "fair share" ;)
     

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