
Visa, Mastercard mull increasing fees for processing transactions: WSJ - protomyth
https://www.reuters.com/article/us-paymentprocessors-fees/visa-mastercard-mull-increasing-fees-for-processing-transactions-wsj-idUSKCN1Q41ME
======
habosa
The credit-card model is spinning out of control. I have a good income and
decent credit. So I have a credit card that gives me 2-3% cash back on
everything, low or zero fees, and tons of other bonus perks (various kinds of
insurance, airport lounges, whatever).

So I should be excited right? Well, not really. The 2% cash back barely makes
up for the 2% that MC/Visa take out of the middle in the first place! So the
goods I buy cost more than they should and I get a "kickback" on the backend.

And if you're someone without access to great cards, then you still pay the
same price in stores but you get no cash back, high APR, low credit limits,
and crazy late fees.

It's regressive taxation.

~~~
kazinator
I would ditch credit cards the moment all the merchants I use would give me a
2% discount for paying cash. Using credit cards is perfectly rational until
then. What's more, it's rational even for credit cards that don't earn any
rewards or cash back, let alone ones that do.

~~~
chrischen
Pro tip: if you go to a Chinese restaurant that offers credit card payments,
counteroffer with cash and you can get a discount as high as 10%.

~~~
nebolo
Credit card fees are about 2-3%. So if they are doing this, it must come from
not charging tax.

~~~
chrischen
They are doing this. Also, there are fees from credit card fraud as well to
factor in.

~~~
Wowfunhappy
I was under the impression that was factored into the 2–3%. Not true?

~~~
chrischen
Merchants are usually liable for fraud losses (both the loss in good or
services + a fee imposed by the bank for the privilege...). This is on top of
the transaction costs. Those transaction costs do not cover fraud liability or
losses.

------
tome
Is it a cosmic coincidence that these two large competitors are going to
increase fees at exactly the same time?

~~~
dontbenebby
Your comment reminds me of a recent article I read (on HN iirc but can't find
the comment thread):

[https://www.technologyreview.com/the-
download/612947/pricing...](https://www.technologyreview.com/the-
download/612947/pricing-algorithms-can-learn-to-collude-with-each-other-to-
raise-prices/)

> _Researchers at the University of Bologna in Italy created two simple
> reinforcement-learning-based pricing algorithms and set them loose in a
> controlled environment. They discovered that the two completely autonomous
> algorithms learned to respond to one another’s behavior and quickly pulled
> the price of goods above where it would have been had either operated
> alone._

> _“What is most worrying is that the algorithms leave no trace of concerted
> action,” the researchers wrote. “They learn to collude purely by trial and
> error, with no prior knowledge of the environment in which they operate,
> without communicating with one another, and without being specifically
> designed or instructed to collude.” This risks driving up the price of goods
> and ultimately harming consumers._

I don't think it's out of the realm of possibility that two companies could
arrive at such a move without _conscious_ collusion. I also don't think it
should be treated differently.

Long term, I think Visa an MC could shoot themselves in the foot. Merchants
are now allowed to charge fees for using CCs IIRC in at least some areas.

You could easily end up with a situation like Europe where people mostly use
debit cards for in person purchases since the processing fees are lower.

Consumers lose the protection of a buffer from their bank account, issuers
lose out on revenue. Not a good outcome IMHO.

~~~
etrautmann
Is this essentially a variant of the "tit for tat" strategy in an iterated
prisoner's dilemma? It seems analogous

~~~
will_brown
The prisoners dilemma is ultimately just a demonstration of game theory.

That is there is more than you win/I lose or I win/you lose but there is
win/win.

It’s definately conceivable two algorithms or two ai would be capable of
concluding the same. In fact it may be even easier because what’s the actual
dilemma/self interest of such a system without the selfishness of human
nature?

~~~
roywiggins
Why would you intentionally operate an AI that wasn't as selfish as possible?

~~~
8note
if you ruin your only competitor, the antitrust folks will come after you

~~~
pas
Nah, they still can come after you if you prevent new firms to enter the
market. (But if you just do the usual regulatory capture the gov. will be just
happy for you, as you gave them a lot of busywork for nothing.)

------
blhack
Visa and mastercard should be careful they don't compete their way out of a
market. Stripe, square, apple, google, samsung, etc; there is no reason these
companies couldn't band together to create their own clearing system. Visa and
MC started as credit cards, but almost nobody I know uses them that way
anymore. They're all bank cards, and visa/MC/Amex are just proxies. I see no
reason why they can't be replaced, and I'm honestly hopeful that they will be.

Okay and seriously: I actually just want US Mint backed card. I think it's
absolute lunacy that these private companies are essentially levying their own
tax on consumer transactions. Cash is outdated, and the government should
react appropriately. (And only in my most feverish of fever dreams: it's a
cryptocurrency, and only at >104F temperatures, it's on the ethereum network.
Oh boy a man can dream!)

In this world: Amex, Visa, and MC can go back to being _credit_ cards.

~~~
venantius
I mean the actual reason these companies are able to levy these taxes is
because they provide contractual consumer protection. If we had strong
consumer protection laws in the US in the first place, there wouldn't be much
value left in Visa/MC etc.

~~~
blhack
I don't think I follow you here. What consumer protections does visa offer me
if I am using it as a bank card?

~~~
standardUser
I haven't used a bank card in many years. Is it common for people to use bank
cards for general purchases? I believe more people use credit cards now
because of the many benefits, including consumer protections.

~~~
blhack
Yes this is very common. Most people I know use a bank card, which is powered
by Visa's payment network, and ran as credit.

------
avolcano
Worth noting that here in NYC, the courts have gone back and forth on whether
passing transaction fees onto consumer is legal:
[https://www.law.com/newyorklawjournal/2018/10/23/ny-court-
of...](https://www.law.com/newyorklawjournal/2018/10/23/ny-court-of-appeals-
says-info-requirement-on-credit-card-surcharge-doesnt-infringe-merchants-
speech-right/?slreturn=20190115114916)

I remember being shocked when my local pizza place put a sign on the register
saying there was now a 3% fee on card usage (which became legal to do as of
~September 2017). Absolutely wild that Visa/Mastercard would raise prices
further. It's already hard enough to find a place that accepts my Discover
card, let alone an independent joint that will accept Amex (accept for all the
places in and around Chinatown who only accept Amex, never will understand how
_that_ happened).

~~~
lstodd
Absolutely support passing crap like this on to customers.

Otherwise there is no incentive to lower them.

~~~
toomuchtodo
Conversely, we could regulate and treat card networks as utilities (allowing
them to recoup reasonable operations costs) instead of for-profit concerns
siphoning unnecessarily off of the flows of capitalism. It works for Europe.

Customers regulating through voting with their wallet isn't going to work with
how much power large financial firms wield. I contacted Elizabeth Warren's
office (she's on the Senate Banking Committee); if this matters to you, I
suggest you do too!

~~~
dragonwriter
> I contacted Elizabeth Warren's office (she's on the Senate Banking
> Committee); if this matters to you, I suggest you do too!

Unless you've also got a plan to get a Democratic majority in the Senate, your
plan probably needs to extend beyond Warren if you are relying on her role in
the Banking Committee (if you are expecting her to win the Presidency in 2020,
that's perhaps another story.)

~~~
toomuchtodo
> your plan probably needs to extend beyond Warren if you are relying on her
> role in the Banking Committee (if you are expecting her to win the
> Presidency in 2020, that's perhaps another story.)

It does. No need to pollute this thread, email me if you want to chat about
it.

------
abalone
Visa/MC are probably going to try to target the margin that fintech startups
have able to eek out at the lower end of the card processing market.

From their perspective, the fact that companies like Stripe and Square have
been able to obtain unicorn valuations for card processing services means that
there's money left on the table. Card processing was a basic commodity
business before these guys. Somehow, Stripe et al have been able to convince a
large swath of customers to accept 2.9% + $0.30.

Did you know that interchange on most debit cards is just 0.05% + $0.22?[1]
That's massive margin.

Visa/MC is like, sorry Stripe, don't try to play our game on our platform. We
invented it. (Somewhat cynically you could argue this is why Stripe spends a
lot of time/resources on "big thinking" and kind of puffing themselves up into
more than a "card processor". It's part of the sell.)

[1] [https://www.burlingtonbankcard.com/interchange-plus-
pricing/...](https://www.burlingtonbankcard.com/interchange-plus-
pricing/interchange-plus-credit-card-processing-faqs/what-are-the-interchange-
fees-on-a-10-visa-debit-card-sale/)

~~~
adrr
Stripe and Square will just raise their fees. Visa/MC are the network, you
still need a processor. For low volume transactions, its normal for a
processor to offer a merchant blended rate. For higher volume, you pay
interchange + processing fee. Stripe offers interchange plus pricing if you
have enough volume.

Visa even owns a low volume processor called authorized.net that charges same
fees as stripe. They also own cybersource which specializes in high volume
processing which operates on an interchange plus model.

~~~
abalone
_> Stripe offers interchange plus pricing if you have enough volume._

Are there published details on this? What is their markup?

~~~
adrr
Most interchange plus pricing is negotiated and covered by NDAs.

Generally, Interchange plus fees(not stripes) range fixed of 0.05 with 10bips
settlement fee all the way down to fractions of a penny if you're doing
millions of transactions per month. Authorized.net used to do 0.10 and 25bips
settlement but I think they only do blended rates now.

------
KorematsuFred
India launched UPI (Unified Payment Infrastructure) which is more like a
public utility which does 10x more transactions that Visa and Mastercard in
mere 28 months of its launch and is 100% free. More interestingly you can
built very interesting apps on top of it and make money.

~~~
actuator
I don't know if the stats you quoted are true but UPI is a fantastic product.
The only problem being you can't use credit so you pretty much pay through
your bank account.

Also, they have a more direct rival to Visa and MasterCard as well. RuPay,
which has lower fees apparently.

~~~
KorematsuFred
The stats are for India only BTW. UPI does close to 700M transactions a month
and growing around 20% month on month.

Compared to that Visa, MasterCard and Rupay combined do around 150M
transactions a month. Of course if we add ATM withdrawals (which is actually a
cash transaction to think of) than that number is around 800M per month for
all of them combined.

All numbers are for India only. in USA Mastercard alone does around 12B
transactions a year and globally around 75B transactions a year. Large but
India's UPI had a fair chance to even overtake than in next 5 years.

------
rb808
Presumably this is to pay for all the points people get by using cards, not to
mention the sign up promotions.

I like how in Europe and Australia interchange fees are capped. Even if it
means they live without such bountiful premium cards.

[https://en.wikipedia.org/wiki/Interchange_fee](https://en.wikipedia.org/wiki/Interchange_fee)
>> In the United States, the fee averages approximately 2% of transaction
value.[2] In the EU, interchange fees are capped to 0.3% of the transaction
for credit cards and to 0.2% for debit cards.[3]

~~~
altmind
I think the points are fully paid by avg 21% APR, $37 late fees, interchange
fees, foreign transaction fees(2%) and ATM fees on credit cards. Its just
greed.

~~~
liquidwax
Saw a video by vox today where they argue that the points are also paid by
increased retail prices. Even if you decide to use cash, you are basically
paying for someone's business class upgrades

[https://www.youtube.com/watch?v=ySH5SudRwak](https://www.youtube.com/watch?v=ySH5SudRwak)

~~~
KorematsuFred
The Chinese store I buy from offers me discounts if I pay in cash. He offers
me 5% discount on furniture and also gives me a proper invoice (so he is not
really defrauding the tax authorities either).

------
RickS
While this is a hostile development that will be painful for some, there's a
part of me that's grateful for every shitty thing they do because it increases
the likelihood of a challenger.

Would Stripe exist if PayPal hadn't been so hostile to their customers? Giant
markets of money movers all explicitly saying "We hate having to use these
guys, isn't there anything better?" tells David that it might be worth
fighting Goliath.

IMO blockchain is like a green-party candidate that undermines more promising
candidates by sapping votes in a system that doesn't allow runoff voting –
it's a shiny, utopian distraction that prevents people from starting the
companies I think are more appropriate and promising – card & payments
startups that support or resemble existing infrastructure.

Privacy.com, Final (RIP), the venmo card – the first company to unseat the
incumbents in the card space is going to be a big deal. Stripe is making
excellent headway in eating the elephant, using their web payments platform to
get big enough to compete in the more difficult card issuance space. Here's
hoping they have ambitions of re-investing the clout they get from cards to
attack the underlying processing layers, and disrupt global financial
infrastructure from the outside in.

The Point Of Sale industry is making great headway here too. Revel, etc. The
blockchain equivalents have flopped, but the card-based ones are now standard
issue at even the tiny mom and pop stores. There's real hunger for modern tech
in the payments space, it just needs to roll out in more accessible stages.

~~~
martin_bech
We have a solution in Denmark, thats cheaper called Dankort, litteraly
everyone over 18 has one (Works just like any credit card). Jointly created by
all Danish Banks. Works pretty much flawless, but the banks jointly sold the
company behind it, and now looks like some banks wants to let it die... So
they can instead get kickbacks from Visa/MasterCard.

~~~
RickS
> the banks jointly sold the company behind it, and now looks like some banks
> wants to let it die

There could be a dark brilliance to such a move. Want to raise your margins?
Get paid to sell your low margin product, let it die, and get paid again when
you raise your margins in the new market.

------
throwaway-1283
The best way to beat the system is to take advantage of the massive credit
card reward bonuses that US banks offer. I've churned credit cards since 2012
and have nearly all my personal travel paid for by points every year,
including international business/first class flights, luxury hotels, and cash
for travel...

Best thing is credit card rewards are not taxed because they are considered a
rebate, which is quite amazing especially in a high tax state like CA!

~~~
jacquesc
Good job beating the system. If you tracked all the hours and mental energy
you spent on these tasks vs the amount of money returned, what do you think
the hourly rate would come to?

~~~
garmaine
Something embarrassingly small. It’s not worth it.

~~~
alexhutcheson
Eh, even if you don't value airline/hotel points, you can pretty easily get
~$500/card in value in sign up bonus just for opening the card and using it
for expenses you were going to incur anyway. You need to be discerning about
what you apply for and only apply for the good deals, but it really doesn't
take much time.

~~~
garmaine
For someone on HN, if you spend more than a couple of hours mental energy per
card in total, it's not worth it.

------
occamrazor
As a point of comparison, interchange fees in the EU are capped at 0.3% and
total average cost for merchants is less than 1%.

------
avanderveen
All this talk of regulating Google, Facebook, Twitter. What about Visa and
Mastercard? How is acceptable for so much power to rest in the hands of such a
small number of companies?

~~~
rc_kas
Would Stripe or Paypal ever create their own credit cards?

~~~
thehoopyfrood
Stripe already does: [https://stripe.com/issuing](https://stripe.com/issuing)

Granted, it seems geared towards businesses who want programatic control of
the credit cards they own, but still.

~~~
rc_kas
That looks like its a Visa card still.

------
amaccuish
I think there's a place for a nationalised network or some sort of not-for-
profit org.

Seems silly to rest such an important part of society in the hands of a few
private orgs. Or maybe even empowering banks to better compete (as long as we
don't end up with 50 different networks).

~~~
howard941
The post office would be a good host for such a network, among other banky
things.

~~~
DesiLurker
It does so in India for rural communities. I've always wondered why it cannot
do low cost banking in US. they already have the infrastructure and the
manpower.

------
rellui
I forgot where I read it but an article explained the way credit card
companies hide how the fees have been transferred to the customers. The
merchant takes the burden but they jack up the prices of the goods which hits
the consumers.

The reward point systems of the credit cards work the same way. Merchants jack
up the price of the goods to be part of the reward point system which in the
end hits the customers. In fact, the people that don't get a credit card with
reward points actually end up losing by not joining.

I thought it's interesting that everything in the end gets put on the
customers. It's the price we pay for convenience. I just don't like the way
it's hidden to make it look like we're not actually the ones paying for it.

~~~
maxxxxx
It reminds me a little of medical pricing. The real costs are hidden from the
customer and things are intentionally convoluted. There are a lot of areas
where we need more transparency.

~~~
ArtDev
When costs and prices are hidden, competition cannot happen and the market
stops working.

~~~
maxxxxx
Businesses don't want working markets once their position has been
established.

------
Aiphie3E
Meanwhile europe phases in instant inter-bank transfers, had direct debit for
years (now standardized via SEPA) and paying via wire transfer (to any bank,
via IBAN) has always been an option.

------
cronix
Maybe if they did a better job at securing their systems and card security
requirements there wouldn't be as much fraud that they are liable to cover?
Their systems are broken. CC fraud is at a high. They're having to pay out
more, decreasing profits. Answer? Raise fees and keep the broken system in
place so they don't have to spend millions/billions to fix _their_ problem
they created. Being able to use a RFID/NFC reader in close proximity to
someones wallet (like in their back pocket, standing ahead of you in line) and
being able to charge their card without even touching it is not a very good
thing lol. Chip cards are pretty cool.
[https://www.youtube.com/watch?v=PmoE1mDz_cM](https://www.youtube.com/watch?v=PmoE1mDz_cM)

I can't find the other demo/video where they were just walking up to people
and making charges in realtime by rfid scans.

One of the first thing I do on chip cards is cut the antennae trace on the
chip. I don't need or want that convenience. Swiping the mag strip on the card
isn't that hard for me, and never was.

They recently (last year?) raised limits (at least Visa) for the amount you
(or someone) can spend without requiring a signature. It doesn't make me feel
good that if my card is stolen someone can charge up to $1k on it without a
signature. I don't know when the last time a merchant asked me to see my
identification to see if it matched the name on my card.

This will just raise the price of all goods since merchants figure the cc fees
into the prices of all products, whether you're paying with cash or card.

Meh, it's easier to just raise fees than fix the real problems directly
affecting their bottom line: Fraud.

~~~
nickjj
Unfortunately business owners are the ones responsible for paying for fraud.

For example I've sold many thousands of copies of my digital courses online.
Never had any type of problem.

Today I got a taste of my first Stripe dispute.

The customer signed up, bought the course, watched some of the course, never
contacted me, disputed the charge for unknown reasons, Stripe notified me for
evidence, I sent evidence of everything they asked for, weeks later I lost the
dispute with no feedback from anyone, on top of everything I was charged an
extra $15.00 by Stripe as a "dispute fee".

In other words, I got completely screwed with no chance to do anything and the
banks and Stripe made a profit off an arbitrary dispute charge.

To make matters even worse, after talking to support, I asked Stripe to send
me a screenshot of the images I provided them as evidence and it seems Stripe
manipulated the images I uploaded as proof by shrinking them to be completely
unreadable. So basically I'm penalized because Stripe tampered with my
evidence.

The system is completely broken.

~~~
cwkoss
Cryptocurrency is great for merchants doing online transactions. Once you have
funds in your wallet, customer can't claw them back except with the explicit
action of the merchant.

Is it much easier for merchants to scam? Definitely! But it also allows
merchants to trust that funds will never disappear with no recourse.

------
TheChaplain
I believe Visa and Mastercard are feeling threatened perhaps?

For both UnionPay and Alipay are huge in Asia, various banks replacing Visa/MC
as primary choice for credit/debit cards and mobile payments in a majority of
shops.

Europe seems to be next from what I've noticed, their brands showing up here
and there in shops.

But I think this might be a good thing, we need more competition in that area.

~~~
the_duke
The situation in Europe is generally better because EU legislation
(Interchange Fee Regulation) has limited the fees that payment processors can
charge. That regulation also requires more transparency and is supposed to
promote alternative payment systems by limiting lock in.

As always, Europe is too fragmented, and slower to adopt new tech, for one of
these app based solutions to gain wide spread adoption quickly, though.

~~~
jwr
> As always, Europe is too fragmented, and slower to adopt new tech, for one
> of these solutions to gain wide spread adoption quickly

Not sure what you're talking about. In Poland, I can use my phone to pay for
anything anywhere. Seriously. I can buy a single apple at a grocery stand and
tap my phone on the reader that will surely be there and will surely work with
all NFC payment systems.

Coming to the US is a shock, because suddenly nothing works, and even in
places where it's supposed to work nobody tries to pay with a phone, because
it's flaky.

So I'd say it's exactly the other way around. With customer-facing banking
tech, Europe is _way_ ahead of the US.

~~~
the_duke
And what is the name of the app?

Because I guarantee most of Europe has never heard of it.

That was my point. Solutions might gain adoption in a single country quickly,
and there are some that are becoming very popular in various countries.

But it's hard for any one of them to get adoption across the EU.

~~~
dan1234
Usually ‘the app’ is just contactless payment via Apple Pay or Google Pay.

------
iabacu
People forget that cash transactions also have a cost.

It’s mostly on the risk of keeping and transporting cash, and the cost
associated to mitigate those risks.

Small shops are usually more willing to take the risk to avoid fees.

~~~
Entalpi
In Sweden the cost of handling cash is forcing small shops to go card only.
Even banks thesedays have cash-free offices.

~~~
dontbenebby
Are there a lot of violent robberies in Sweden? I'd think in a society with
less guns people would be more wary of robbing. The clerk is separated by a
counter and may have a bat or simply hit the panic button before you can get
on them, leaving little time to escape...

~~~
AnssiH
Assuming Sweden is similar to Finland, I think the main point is not avoiding
robberies, but just to save money.

Here, visits to bank branches have been in decline for decades now, especially
for cash services, so it makes sense for the banks to reduce the amount of
locations that offer those services to save money.

In 2018 there were 854 bank branches in Finland, compared to 1627 in 2007 and
3600 in 1985. Population is 5.5M.

This also has the effect of increasing cash handling costs to businesses if
they have to get cash services from a bank branch that is far away.

Sources (Finnish):
[https://www.finanssivalvonta.fi/kuluttajansuoja/kysymyksia-j...](https://www.finanssivalvonta.fi/kuluttajansuoja/kysymyksia-
ja-vastauksia/pankkipalvelut/peruspankkipalvelut/selvitys-
peruspankkipalveluiden-saatavuudesta-ja-hinnoittelusta-2018/)
[https://www.savonsanomat.fi/kotimaa/Suomessa-pian-alle-
tuhat...](https://www.savonsanomat.fi/kotimaa/Suomessa-pian-alle-tuhat-
pankkikonttoria-Fiva-Alaraja-alkaa-tulla-vastaan/1039549)
[https://www.kauppalehti.fi/uutiset/pankkien-konttorit-
katoav...](https://www.kauppalehti.fi/uutiset/pankkien-konttorit-
katoavat/6b102a9e-f5b8-34eb-a164-a7a1bcb8f565)

~~~
dontbenebby
Thanks for this. I did not think about distance as a cost factor.

------
fitzroy
> They also say that expenses for ramping up anti-fraud/theft security
> measures, to make payment processing safer, need to be covered.

Or they could implement Chip & Pin like the rest of the planet – with the side
benefit that we might be able to reliably purchase a train ticket from an
automated kiosk overseas on occasion.

------
nafey
Before we break up Google and Facebook how about we take a look at collusion
and behind the back deals happening in these companies. This duopoly has been
levying tax on huge chunk of transactions happening all across the world. How
have they avoided scrutiny for so long?

------
ArtDev
Something should be done about this. These companies have a criminal monopoly
by forcing out their competitors.

If you have ever ran a small business and seen the obscene amounts these
companies make; you would be outraged too.

------
dustinmoorenet
They have survived the internet revolution where other businesses have been
disrupted. No startup is even close to chipping away their collective control.
So they are empowered to do as they please.

~~~
geofft
I suspect a big reason for this is that merchant agreements prevent you from
directly passing on the cost of cards to customers. So if you accept Visa,
MasterCard, and payment form X (where X could be cash, bitcoin, Venmo,
whatever), the price you charge customers is the actual price you want to set
plus the Visa/MasterCard fees, even if they pay with form X.

One way a disruptor could tackle this is by providing all (or even almost all)
of those fees as cash back - giving everyone 2.5% cash back regardless of
their creditworthiness / ability to get a sweet rewards card would be very
popular. But then you'd probably want to _not_ do that at merchants that _aren
't_ accepting traditional credit cards, and I'm not sure how customers would
feel about this.

~~~
cma
Obama changed that to let states decide it. I don't know about websites though
that are interstate.

------
chillydawg
Part of their rationale is that the cost of anti fraud and AML and so on is
going up. At the same time, the volume of transactions going via cards is
increasingly massively year on year and will continue to do so for quite some
time. Surely a lot of these anti fraud and other systems benefit hugely from
economies of scale. Once you've got your anti fraud tooling set up, you mostly
just need to throw a few new VMs and staff at it as tx rates grow. This seems
to me like a good cover for them to cartel up and raise prices.

~~~
matthewdgreen
This chart shows overall card fraud rates (in absolute $) as being essentially
flat, albeit noisy, over the past several years:
[https://www.zdnet.com/article/identity-theft-credit-card-
fra...](https://www.zdnet.com/article/identity-theft-credit-card-fraud-cost-
us-consumers-16-billion-in-2016/)

If transaction rate is increasing, that means that fraud costs should actually
be going down as a percentage of transaction income.

And of course, Visa and MC control the technology. Their continued avoidance
of major technical advances in the core card technology (things like one-time
credit card numbers for online shopping) tends to undermine the "fraud is why
we charge so much" theory. Also wouldn't hurt to look at the profit margin of
Visa while you're at it, it's remarkable.

------
joshe
Raising rates from 2.5% is a pretty great indicator of monopoly power, and a
good target for startup disruption.

~~~
CardFellow
Visa / MC rates aren't 2.5%.

There are multiple components to the final rate that a business pays, with the
bulk of it being interchange, which goes to the banks that issue cards.
Visa/MC only get assessments and dues, which are significantly smaller.
(Visa's volume assessment is 0.13%, for example.)

We need to know which fees they're raising, and by how much, to know what sort
of impact this will have.

------
techsin101
There is no need for private Banks. Banks and lending should be separated.
Banks have only one purpose to store the money and give it back when I need
it. No interest no fees or anything else. It doesn't require some great feats
to increment or decrement numbers. Similarly paying, transferring, etc should
be instantaneous and cost free. Highest cost should be electricity cost of
computer running the transaction. It boggles my mind why let there be cluster
fuck of crappy private solutions when the problem is faced by whole society.
Why not build 1 efficient cheaper public owned system. We don't have private
highways, private dams, so why can't we have public owned banking system

------
newscracker
_> However, it is up to merchant banks if they want to pass on the fee hike to
sellers, or absorb it themselves. Similarly, it is sellers’ discretion to pass
on the hike to consumers or not._

Of course, we know what will happen! This whole scheme is like indentured
servitude. They not only get more of your money, but also sell your habits to
others and make even more money creating or helping others create profiles of
you. And you have no control over this as long as you take it with
resignation.

What consumers need is a disruption on electronic payments by moving to non-
conventional non-electronic/non-digital payments (cash is a good option, but
it needs to be encouraged more and made to look sexier).

------
kyrra
Source article: [https://www.wsj.com/articles/purchases-with-plastic-get-
cost...](https://www.wsj.com/articles/purchases-with-plastic-get-costlier-for-
merchantsand-consumers-11550226601)

------
bsbechtel
‘Your margin is my opportunity’ -someone who has a lot of money

------
tsuru
I don't know how justified this feeling is by fact, but I feel like this is
being done to further compete with cash back rewards. The more card holders
want in cash back percentage perks, the more the credit card companies will
want to collect in transaction fees.

------
exabrial
Good. Let's break the oligopoly.

------
munk-a
In Canada we've got the Interact network which was built by a coalition to
banks and offers an entirely separate plastic based method... it's sort of
like a US debt card. You Americans should really give the free market a try
one of these days...

~~~
rfinney
We did. We had American Express, Diner's Club, Discover (the old Sears)
,department store cards, gas station cards, Bankamericard (Visa) and Interbank
(Mastercard). In the 1960s there were hundreds of credit cards. Visa and
Mastercard won the free market battle.

~~~
munk-a
Forming a cartel is not "winning a free market battle" it is kicking the free
market out of your business domain.

------
ramshanker
Yes please. So that our local alternative RuPay gets even broader adoption. :)

------
kevin_b_er
This means a price increase for _everyone_. The stores will just increase
their prices across the board, even for cash, because most of their
transactions are credit cards now.

This is the cost of wanting a cashless society, mastercard and visa get a tax
on everything. A tax not subject to voting, but one controlled by
unconstrained capitalism.

------
devoply
Considering how much of a rip off they already are on the financial system.
Simple rent seeking at 23% interest, 20% + 3% processing. There should be
legislation to combat this shit.

~~~
WrtCdEvrydy
If you struck down the rules about providing different prices based on payment
type and did a 10% discount by paying in cash, you'd be surprised how quickly
things would change.

------
chrischen
A few thoughts 1) Why doesn’t PayPal lower fees 2) Use our transit/metro cards
as a digital cash equivalent like in many other highly developed
cities/countries.

------
SN76477
Cash is king.

Actions like this by visa and mc is gross. They are just bloated asshole
companies.

------
segmondy
I hope they do, I hope they make it very large, 10x, 20x! Increase it so much
that folks run back to cash, checks and alternate digital payments. Let greed
do them in!

------
xwvvvvwx
This is why we need crypto :)

------
uasm
Cash free societies?

~~~
bob_theslob646
Will never happen. What happens if the power goes out or the systems fail?
There will always need to be a backup.

~~~
fosco
this just happened for me shopping at a grocery store I do not usually
frequent, I overheard them saying it was happening company-wide. people left
full carts of food because the ATM was also not working. (non-urban area)

------
pexaizix
How is it legal for them both to do it at the same time?

