For the sake of illustration, let’s hypothesize that there’s a bank in america that supports payments through several different methods. Let’s also assume that the bank’s IT is bad and unpredictable. (That’s crazy, right?) Given that, it’s not to hard to imagine that different payment methods lead to different results; For example, the hypothetical bank refuses release credit lines on one payment method for up to 10 business days, but only sometimes. Using another payment method though, the same hypothetical bank releases its credit line within a day or two. Succinctly:
- The credit line isn’t released for up to 10 business days using payment method A
- The credit line is released 1-2 business days later using payment method B
Let’s add a further rub to this real-life hypothetical scenario: Assume payment method B might earn 50%-75% less than payment method A.
What’s the right thing to do in this situation? Remember the velocity of money. If you’ve got the spend to effectively use freed credit line quickly, earning half as much but being able to do it three to four times more often is still the higher earning play, because 50% * 4x > 100% * 1x.
Even though A pays more than B, B might earn more than A. Now, we just need to figure out C, I guess, or maybe just figure out what MEAB is driveling on about this time?
Have a nice weekend friends!
Let’s not even start with how to play with this beauty.