
EU asks why credit cards are so expensive - FluidDjango
http://www.theregister.co.uk/2012/01/19/ec_payments_consultation/
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bunderbunder
Don't know about Europe, but I can sure rant about the situation in the USA.

The entire credit card industry is one giant market failure. The people who
pay the price for a credit card are, by and large, not the people who choose
which card to use. And those costs are deliberately hidden from the people who
do make such decisions.

It creates a perverse situation where credit card issuers aren't really
competing on price at all. They're competing on service. So they issue rewards
packages. Those rewards cards do cost more. But the higher price comes in the
form of a higher processing fee, which retailers are contractually bound to
hide from consumers. So consumers are completely unable to decide whether a
particular rewards package is worth the price.

Worse yet, since everyone pays the same price at the till regardless of what
the transaction fee for their particular credit card is, even if I did know I
would have no reason to worry about a more expensive card. We all pay the same
price, so if my card's more expensive than average that just means that the
extra cost is being paid by someone with a card that bears a lower transaction
fee.

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tzs
> But the higher price comes in the form of a higher processing fee, which
> retailers are contractually bound to hide from consumers

That's no longer correct. As part of an antitrust settlement with the Justice
Department in late 2010, the card associations agreed to drop that. Retailers
can now charge different depending on whether or not the card is a rewards
card or not.

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AndrewDucker
The problem here is lack of transparency.

If shopkeepers always passed on the cost of debit cards (or, at least,
separated out whatever amount they were passing on) then consumers could make
a choice about which cards to use and providers would have to compete on price
as well as service.

