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EU fines Mastercard more than half a billion euros (dw.com)
267 points by denzil_correa 25 days ago | hide | past | web | favorite | 222 comments

The card payment industry duopoly (in europe at least) is a really weird one that seems to go mostly unnoticed.

I often wonder how much goes into the pockets of these companies who are essentially providing an easily replaceable service if it were not for the entrenched reality. (IE; to compete you'd need an entirely new card system that would be incompatible with the others, and thus your card would be unusable in most places)

That said, I can't complain too much about VISA; which (Apple Pay and Samsung Pay also uses on the backend, there is no escape in Europe) -- they seem to be processing things fairly well, even if I don't understand how much both parties paying for such a service.

> The card payment industry duopoly (in europe at least) is a really weird one that seems to go mostly unnoticed.

It goes unnoticed to the consumer because it didn't go unnoticed to the lawmakers. The EU caped the fees those companies can charge to merchants to 0.3% for credit card and 0.2% for debit card back in 2015 [1]. In the US it's less ignored because those fees to merchants are on average 10x bigger! (2% on average [2])

[1] http://europa.eu/rapid/press-release_IP-15-4585_en.htm

[2] https://www.hostmerchantservices.com/current-us-interchange-...

That's not quite true. The interchange fee is the portion of the fee that goes direct to the banks.

The payment processing market is a bit more complicated:

When you make a transaction:

1) Your bank charges Visa/Mastercard an interchange fee (this is the bit capped at 0.2%/0.3%)

2) Visa/Mastercard charge a payments acquirer a processing fee

3) The payments acquirer charges the merchant a fee - this final fee is likely to be a blend of percentage and fixed fee per transaction. There's no cap imposed here.

Indeed. For example, here in Finland the VISA/MasterCard merchant rates for Nets, which I believe to be the largest provider:

EU-domestic debit cards 0.31% (max 0.75€), EU-domestic consumer credit cards 0.90%, EU-domestic company credit cards 1.10%, foreign consumer debit cards 1.25%, foreign company credit cards 1.45%, foreign credit cards 1.65%.

No per-transaction fees, but card readers have a monthly fee (39-53 EUR/mo).

Finnish source: https://www.yrittajat.fi/uutiset/572780-maksupaatteet-hintav...

Could you explain this a bit for those of us who don't know in depth how this works? For starters, what's a payments acquirer? Also, due to inherent ambiguity in English, I'm not sure whether your point #1 means that my bank imposes an interchange fee on Visa/Mastercard or whether they impose a Visa/Mastercard fee on someone else (and who it would be).

Not the parent, but I think I can explain it decently.

So let's say that you swipe your card at a retailer, perhaps an IKEA.

IKEA has a card payments processor (ie: the vendor that the little terminal you sign on / stick the card into is from). This processor deals with a network (usually Visa or MasterCard, although there are smaller vendors such as Amex, Discover, etc) who ultimately connects the payment processors to the banks.

Now, for each transaction, your bank charges a fee to the network (the interchange fee, limited in the EU to like 0.3% I think) as a percentage of the total transaction. The network then charges some fees to the payment processor, which includes the fee that the bank charged. Finally the payment processor adds in their own fees and charges some unified fee schedule to the merchant (in our case, IKEA).

You are missing two parties here and mixing one.

The payment processor doesn’t belong to any of the credit card companies if they are tied to any institution they will be part of the acquiring bank but these days most of them aren’t, all they do is facilitate the transaction and there could be more than one in the chain.

The issuing bank as in the institution that issued the card charges a fee, as well as the acquiring bank the bank that actually receives the payment also charges a fee.

There are fees that are levied on multiple parties across the chain by multiple parties however at the end these tend to be mostly be then baked into the fees that are levied on the merchant.

Thank you for explaining this. I had no idea banks charged a fee to Visa and MasterCard; for some reason I thought it was the other way around.

Different banks there are two banks involved in the process the issuing bank who issued the card and from which account the money is taken and the acquiring bank the bank that the receives the payment.

Each of them charges a fee, and can be charged a fee. A credit card transaction is a multiparty transaction with a lot of small fees.

The merchant where you use your card will eventually pay all the fees. In the first instance, the merchant signs a contract with a 'payments acquirer' which specifies the fee they will pay on all different types of transactions (e.g. any combination of Visa/Mastercard/Amex credit/debit/prepaid consumer/business foreign/domestic). Sometimes this payments acquirer will be a bank, sometimes it will be a separate company.

The payments acquirer will then send on some of this fee from the merchant to Visa or Mastercard (again the exact rate depends on the transaction type). Visa or Mastercard will then send on an interchange fee to the bank that issued the card the customer paid with - this is the bit capped at 0.2% for consumer debit cards and 0.3% for consumer credit cards.

So essentially, card payments is a 3 sided market. The merchant chooses which payments acquirer they want to use. The issuing banks choose which card company they want to use. Customers choose which banks they want to bank with.

The interesting thing is that the EU has capped the banks' interchange fee, but not capped the fees elsewhere. When the interchange fee was reduced, this was passed on as a cost saving to the payments acquirer. This saving might have been passed onto the merchant (especially if the merchant is big and sophisticated enough to shop around), but it was equally possible that the payments acquirer could just enjoy the higher profit margin, or that Visa and Mastercard could raise their processing fee.

Here in Denmark, the story is a bit different. Many consumers here use a Dankort, which is a national debit card. The fees are low and regulated by the government. It is usually combined with a Visa so that it can be used abroad as well.

Those proprietary cards in most of the European countries have definitely advantages, but are also a big problem: In lots of European countries merchants often only accept the country's own proprietary debit card, but no debit/credit cards from other European countries.

For example in Denmark: "Due to the higher fees charged by banks for the use of non-Danish issued cards (that consist of foreign card network interchange fees plus Danish banks own fees), many Danish merchants only accept Dankort and Danish-issued credit cards, but not foreign cards." (https://en.wikipedia.org/wiki/Dankort)

I really hope that the EU adds some regulation that forces merchants to accept debit/card cards from other EU member states on an equal basis. Especially in combination with the fact that in some cases only electronic payments are accepted, which makes it pretty much impossible for anyone to pay without a national bank account.

The EU already solved (or at least mitigated) the issues with roaming in mobile networks. Doing the same for payments is the next logical step.

And in Germany it's Girocard[1]. You couldn't even buy a metro ticket with a Visa / MasterCard in Berlin a few years ago. And maybe you still can't.

[1] https://en.wikipedia.org/wiki/Girocard

You actually can buy tickets with credit cards since summer 2017! (it positively surprised me when I checked for visiting friends a while back)

Thanks, that's great news. My last visit was in May 2017. And for 10 years between 2007-2017 I pretty much carried only cash in Berlin.

The cardless life was very strange in the beginning, but I learnt to love the absolute sense of freedom and privacy the lack of any digital records of my day-to-day life provided me.

I even stopped carrying my smartphone when I didn't need it. It was like back to 1990s.

German supermarket chain Aldi was, until not too many years ago, one of the last places in Denmark which didn't take Visa or Mastercard, only the above mentioned Dankort (which I personally abhor, like everything else coming out of its controlling company, Nets).

I was astonished when I was in Berlin couple of years ago how many places wouldn't accept credit cards. I was used to the US where I could get around for months without carrying any cash, and there everybody was refusing to deal with CCs. And I arrived on week-end, means I couldn't just go to a bank to change cash (there were probably still places to do it, but I didn't know where they were...). Had to borrow cash from local friends to get by until the workweek started. No idea why Berlin is so reluctant to deal with credit cards.

If I recall there is an ATM in Alexanderplatz station that accepts foreign debit cards (used a Canadian card) and also a currency exchange business. You should always bring some local currency with you if you travel internationally. Your bank will likely get you a better exchange rate than the money changers at your destination.

> No idea why Berlin is so reluctant to deal with credit cards.


A short answer: because of history.

I can answer this :) Because in Germany, everyone uses Girocard. It has a lower fee, so it is preferred over credit cards. We also don't need the consumer protections that credit cards offer because most of them are law here.

But if you already accept Girocard marginal cost of accepting Visa/MC (with which they are co-branded frequently, as I understand) should be extremely low. But what I encountered is a lot of cash-only places, from fast food & restaurants to museums. In US, where I live, I know maybe one or two cash-only restaurant out of a thousand. In Berlin, it felt like the majority is. And the delta in fees can't be that big...

Same in Italy, actually. Every POS accepts Bancomat[1], which is the standard debit circuit over here.

[1] https://en.wikipedia.org/wiki/Bancomat_(debit_card)

Same in Norway (Bank axept)

The individual banks seems to set the fees (card owner is charged) Most banks charge a yearly fee (~25$) (free transactions), though some banks charge as much as 1NOK ($0.12) per transaction on top of that.

It’s similar in Switzerland, almost every shop accepts PostCard

Are there any consumer benefits, ala rewards, for using this card?

Who pays for these "consumer benefits"? Something tells me the consumer.

Actually, it's merchants.

EU drastically capped interchange fees a few years ago. The premise was that it will lower costs for merchants and effectively lower costs for consumers. However, most of the savings were kept by merchants, especially larger ones.

Some EU study confirming that: https://www.europeanpaymentscouncil.eu/news-insights/insight...

Merchants pass-through the fees to consumers. If they charge the same price to consumers using rewards cards and cash (common in the US), consumers using cash or debit cards subsidize credit cards.

I'm pretty sure you're subsidizing the debit card users if using cash, too. They use the same networks as credit cards (visa/mastercard networks).

I remember when debit cards first came out in the US. There was actually a 1-2% surcharge that most merchants were charging (especially smaller mom/pop type stores) to use debits - because it cost them to use the payment system just like credit cards. Eventually the merchants just baked the processing fees into the prices of all goods because most transactions are done with cards. Even checks now are converted to an "ACH debit" at the checkstand and the funds come out of your account immediately. You can't float checks anymore, not that that was ever a good idea anyway.

> I'm pretty sure you're subsidizing the debit card users if using cash, too.


> Even checks now are converted to an "ACH debit" at the checkstand and the funds come out of your account immediately. You can't float checks anymore, not that that was ever a good idea anyway.

I don't know what checkstands are but I've never seen a check immediately pull from my account. (Just for example, I wrote a check Saturday and I'm sure the vendor deposited it immediately and it still hasn't posted to my account three days later.) In fact, that would be great, IMO. Instead anyone who wants immediate payment without the risk of a check not clearing (landlord first month's rent, or mortgage, or like a car) will demand a cashier's check or money order or wire, all of which are associated with an additional fee of $10-25. (Or will pull your credit to cover the float.)

How are the merchants paying benefits to credit card owners? Either way you would be fool to believe the merchants pay anything with their own money. It's just like saying that the lottery owner pays the winners.

Paid through interchange fees. Cards with the most rewards are most likely heavily supported by interchange.

Fees are higher for those cards than cards without rewards.

Sure. The consumers do (at the end of the day), hence the fees. We also pay for the costs borne by them to resolve disputes, handle those that don't pay back, etc. Also hence the fees.

In Europe, most cards are debit cards, not credit cards.

In some countries and places, credit cards are not even accepted because of the possibility of a chargeback and much higher processing fees.

In essence, many people here treat Visa / MasterCard as just "electronic cash", and therefore spend only the money they actually have.

In my own EU country, only about 1% of private bank customers own a credit card. These are usually the wealthiest people in the country, who have no problems paying the balance back on time.

The credit cards themselves provide very few benefits apart from the international health insurance for the entire family, and 0% fee for up to 45 days.

The reward programs are almost non-existent. Just like the general idea of spending the money one doesn't have.

It might sound like a very conservative society, but people here are a way more relaxed about their personal finances than in the US.

Instead of trying to earn reward points, they try to plan their expenses upfront, and focus on staying debt-free as much as they can.

That's because most Europeans have stable jobs with stable salaries which can neither grow, nor decline by a lot. Therefore, almost nobody expects to become very rich or very poor, and lives accordingly.

I exclusively use my credit card (in the US) for all payments that I am allowed to, which is most. I also pay the balance off in full each month. I pay $0 in fees and $0 in interest charges, and the bank pays me about $1,500/year with a cash rewards program, so I end up making $1,500/year by using it. I just wish I could pay my mortgage with it. I did buy a car for my daughter on it (and went home and paid it off a week later). That was a nice chunk of change. The only actual debt I have is my mortgage.

I don't claim to be a typical credit card user, but I do like to game their system and make money off of them (paid for by people NOT paying their balances off monthly and racking up dumb fees). I don't see a downside to it. It's not like they're getting more data on me by using a rewards card. They already know all of the purchases I make with them.

I would probably do the same, if I lived in the US, because that's how the entire country is optimized to operate.

At the same time, I am glad that the EU provides a more conservative alternative and style of living.

I think the US is more about getting rich, and the EU is more about not becoming poor.

And for a money-savvy person the US might provide much more opportunities than the EU can.

Yet, the majority of people are not money-savvy, and the "high risks, high rewards" game inevitably produces more losers than winners.

Hrmm, many people in other areas only spend money on credit cards they actually have too. I was also curious about the dispute resolution feature of the card itself. It is my primary reason for a CC (rewards are just a perk) so I don't have to rely on government institutions with limited incentive to go to bat for me when the card acceptor did me wrong.

I never heard of anyone disputing his Visa / MasterCard payment in my country.

That's probably because people pay online only at a very limited number of places they trust, and it's easier to solve issues with the local merchants directly.

Another reason might be, that many online payments are made via direct bank tranfers / SEPA, which can be both, fee-free and instant, across the entire EU.

Essentially, everything is based on trust. Nobody puts his debit / credit card details into a form of a website he never heard before, and nobody risks his business reputation if he has managed to earn it.

It's pretty short sighted to think you can trust your "debit" card number with any online merchant nowadays. I wouldn't shop online, or even at physical stores for that matter without the safety net a credit card provides. I don't mind paying the extra bit on top for this protection (which is negligible due to rewards).

I definitely wouldn't use a debit card if I lived in the US, just because of the general atmosphere of "suing and disputing" everyone and everything, if something goes wrong. But debit cards work just fine in the EU, where governments take proactive steps to protect consumer rights, and an average consumer is rarely expected to fight for himself. I have personally never had to.

I can dispute a charge on my debit card just as I can dispute it on my credit card. Disputes get harder for payments made using my pin, but any charge from an internet payment is trivial. I can also dispute any SEPA-withdrawal. The best option for a merchant is pre-payment via SEPA transfer initiated from my side. That’s pretty hard to dispute.

You can dispute, but the big difference between credit card and debit card is that on credit card, each transaction is insured through the merchant fee. Mastercard and Visa's rules also specific require the card lender to repay a disputed charge in full, regardless if they can manage to reverse a transaction or not; the same is not the case for debit cards (even if they are branded with the Mastercard/Visa logo).


what makes you think debit cards are less safe than credit cards? as far as I know here in EU all debit cards are smart cards with PIN code protection, what exactly is the unsafe part?

are you confusing debit cards with magstripe cards?

I know that with credit cards money lost is the credit card's company, and there's a fair number of protections to keep consumers from paying that bill in the case of fraud, but with a debit card money lost would be directly from a bank account, and there seems to be less. Is there more fraud protection for bank cards in the EU?

In France, for all banks I know, you can call, say "starting this date, all activity on my card is fraud", and you are refunded, no questions asked in the vast majority of cases. This seems quite enough for me.

Ah, so you do have those sorts of protections.

In my country, it's possible to get the money back if somebody charged your debit card without your knowledge, but not if you approved the payment yourself. In such case, you are expected to solve the issue with the merchant yourself. Just as you would be, if you had paid in cash. Which seems to be reasonable considering that the maximum allowed debit card fee in the EU is 0.2%.

Yeah, that was my interpretation. It sounds like the "low fees" is the consumer benefit. I'd rather everyone have lower rates than a select few being able to "game the system".

Using a debit card for any transaction is free, which is why cash is going the way of the dodo.

I don't use a CC in Europe so I can't comment on how expensive those are here.

As for who is paying for it? Once you have a payment system set up its really not that expensive to maintain it. Driving around armoured vans with money is actually more hassle.

Of course not. On the other hand, the costs are near-zero.

You can either have low fees and near-universal acceptance, or high fees and not-so-universal acceptance plus "consumer benefits". To me it seems fairly clear which one is preferable.

I am familiar w/ (relatively) high fees and near-universal acceptance so I'm not sure your dichotomy holds. Either way, I do appreciate the features my card providers offer me as a buffer between my bank and the merchant. Don't have to completely trust merchants or the government, can leverage the escrow the card provides to be on my side since I pay them and can leave them so easily. I agree, it is fairly clear which one is preferable.

> easily replaceable service

> to compete you'd need an entirely new card system that would be incompatible with the others, and thus your card would be unusable in most places

That's basically the definition of hard to replace.

Technically easy to replace but a hard-to-displace monopoly (duopoly) solely due to network effects. Like Facebook, eBay or WhatsApp in the tech space.

> easily replaceable service

For all my disagreements with major payment processors, I must say that there is a lot more than meets the eye in these networks.

Having visited the fraud detection apparatus of a couple payment networks, I am thoroughly impressed. Most of them were doing machine learning at an industrial scale at least eight years ago.

Only tangentially related, but it’s the same in the US. Sure Discover and Amex exist, but fees for merchants are usually high and adoption is lower.

I’ve travelled quite a lot, but everywhere I’ve been there has been the same - Visa, MC, and a local alternative or two that might be popular within the country but don’t extend elsewhere.

Is there actually any other network elsewhere in the world that is of a similar scale? I assume China must have something?

Sure Discover and Amex exist, but fees for merchants are usually high and adoption is lower.

Doesn't that suggest VISA & MC are not making obscene profits? The upstart being more expensive than the incumbent is often a sign that the incumbent is not just resting on their laurels with fat profit margins.

Neither American Express nor Discover are upstarts.... both are old.

AMEX has been issuing charge cards since 1958 and Discover has been issuing credit cards since 1985.

China mostly uses WeChat's payment system and Alibaba's Alipay on mobile devices.

Not sure why you're getting downvoted. NPR had a story on exactly this - China largely skipped credit cards and went straight for the mobile payments.


Africa did as well for the most part, didn't they? I recall reading how people there are largely "unbanked" but they carry balances with their cell provider somehow and pay each other that way.

In Africa that would be m-pesa, started by a Kenyan telecom and Vodafone.

One fun bit is that it uses SIM applications[0], something that's barely used for anything serious except for m-pesa (and its spin-offs) but exists practically across the entire GSM infrastructure.

[0] https://en.wikipedia.org/wiki/SIM_Application_Toolkit

It's called "protectionism".

China did the same thing by banning Google and supporting Baidu.

or maybe it's just the case of being "late to the game", when you don't have to stick to particular technology just because there was a significant investment in its' infrastructure, but can choose whatever you want from what is available currently.

Sort of.

In Baidu's case, they're a locally grown replacement. Per the article, local credit systems didn't really take off; a researcher in the article states their belief it's due to different attitudes on debt in China.

And for the direct equivalent of Visa/MC there's unionpay.

Most merchants also prefer to take WeChat and AliPay because there are no fees.

Interesting, I've been using a Discover as my primary payment method for a couple years now, and I think I've run into maybe two businesses in that time that accepted Visa/Mastercard but not Discover. Perhaps it's regional?

Within the US they’re widely accepted, just as Amex is. A lot of merchants hate them because their fees are usually insanely higher. Outside of the US you’ll find dozens (dozens!) of merchants that accept them, while Visa and MC are nearly, if not totally, universal.

China has UnionPay, it's accepted at quite a few places in Zurich, so it has some international adoption. No way for Swiss People to get a UnionPay card themselves though.

fees are also much cheaper in Europe. Interchange fees are capped at 0.3%, compared to 2%+ in the US. https://en.wikipedia.org/wiki/Interchange_fee

I worry that Visa/Mastercard will use their duopolistic position in credit/debit/etc payment processing to gather more data and spy on consumers. I suspect Visa/Mastercard collects even more valuable data than google or facebook and they've already indicated they want to me more of a technology/ML/AI company.

With data being ever more valuable and a small group near monopolistic companies in position to siphon most of it, it's going to be difficult to lead a private life.

In germany we have Girocard (formerly EC Card) which has about 4 to 5 providers with 40% marketshare and less, to my knowledge atleast.

That's probably got a lot to do with credit cards being vastly less popular in Europe. Paying with plastic/card usually means using a debit card (many names, largely the same). Additionally in most parts of Europe paying cash is far more common than in the US.

A lot goes into their pockets. VISA is the 20th largest company in the world by market cap and MasterCard is 43rd, and they are still growing quickly.

In a lot of European countries, payment cards use the domestic payment scheme and are co-branded Visa/MasterCard (or V-pay/Maestro).

Are they abusing the market ?

"easily replaceable service"

Yeah. It's called "cash" and "checks".

Yeah, in the same way that a washing machine can be replaced by a river and a piece of wood.

As the parent comment explains, nearly every electronic money system in Europe uses Visa or Mastercard as a backend, creating a unhealthy duopoly. The free market needs some competition so it can thrive.

”nearly every electronic money system in Europe uses Visa or Mastercard as a backend”

I think that’s nearly every credit card system. Many countries have debit card systems that, AFAIK 100% outside of Visa and MasterCard, traditionally work across most banks in the countries, and nowadays work across the Single European Payment Area (28 EU countries plus six others. See https://en.wikipedia.org/wiki/Single_Euro_Payments_Area).

AIUI the two largely act as a fallback and the relevant interbank network (e.g. Girocard) is used directly if possible.

I’ve always found the difference between cash and credit to be a wash in terms of ease of use. For cash you need to always make sure you stop by an ATM. For credit you have to wait for a receipt after nearly every transaction, and sign (this is changing with chipped cards).

But ApplePay is actually more pleasant than both. I can pay with my phone and my watch. It is a faster transaction than both cash and credit, and no need to pull my wallet out.

With one big exception! There are a few places in the city that are starting to only accept credit/applepay/etc., but when their terminals go offline, they’re screwed. I saw this exact thing, for some reason they had no backup system to accept cash. I assume this is a rare issue, but still, I couldn’t believe they couldn’t resort to cash.

> I saw this exact thing, for some reason they had no backup system to accept cash

To accept cash as a back up you have to have all the items in place to accept it all the time basically. You need the register and to have enough cash on hand to cover giving change plus the accounting and tracking at the end of the day to make sure cash hasn't walked. So if a place has the ability to accept cash intermittently they might as well accept it always.

For those that don't handle cash, they could get some sort of insurance to make up for lost business (and any brand damage) if the machines go down.

Yeah, I realized that something along those lines is the issue. It's still surprising when a business can't operate in a situation like this.

At least in Norway most visa debit (and/or credit) cards now come with nfc/"tap" payment up to a certain amount (10-15 usd I think) - with no need for chip&pin for "Small" transactions.

Has some issues wrt theft (portable pay terminal with boosted nfc signal/antenna) - but certainly convenient.

Most of the places here in the US seem to have gone to chip only for small payments, with a signature on amounts over some limit, dependant on merchant. Wish we'd catch up and use pins.

As I understand it, the major card companies all required vendors to upgrade their payment systems to use chip. If they didn't (by some date I think last year) then they moved the liability from themselves in regards to credit-card fraud to the vendor.

Isn’t there an exception for gas stations?

I can't remember how long it's been since I signed for a cc transaction. Aren't PINs used in the US?

Generally not for credit cards. It is used for debit cards. It's a problem buying gas (petrol) at unattended stations in Europe for Americans using credit cards. We don't know our PIN for credit cards.

> For cash you need to always make sure you stop by an ATM.

I used to get cash back at the grocery store. Very easy way to keep the wallet stocked since you're there 1-2x a week

The backup system in north america is a manual impression scan, where a carbon copy impression of the front of the card is made for later offline processing. Is this not available as a backup for when the electronic methods go down?

"checks" being a clearly inferior option. While they are convenient they are fraught with fraud / bank balance issues, and add risk to the merchant and to the customer. They also take longer than any of the other options to create as well.

Just like Tesla would be easily replaceable with "horse" and "buggy".

But Tesla doesnt have a monopoly...

I have to say the best thing about credit cards in the U.S. is the massive point bonuses you get for signing up for cards. I have gamed the credit card bonus system for ~6 years and pay for 90%+ of my personal travel including international business and first class flights and high end hotels with points earned from opening multiple cards each year with almost no impact to my credit score (760+). Combined with the fact that points are not taxable it is probably the single most lucrative “side hustle” I have that requires almost no work.

Money doesn't grow on trees. The "bonus" you get is actually paid by higher prices on the stuff people buy. Card fees are transferred to merchants, and merchants transfer it to customers via higher prices. I wrote about it some time ago: https://svedic.org/economy/indirect-razors-and-blades-busine...

But, you are right, if you careful you can game the model. In your case, if you are paying 90% of your travel expenses with bonuses you are probably getting back more than $400 a year, which is an average credit card cost per US household.

>The "bonus" you get is actually paid by higher prices on the stuff people buy. Card fees are transferred to merchants, and merchants transfer it to customers via higher prices.

Doesn't that mean people who don't engage in this 'hustle' are essentially losing money?

That is correct. Merchants and customers who aren’t gaming their credit cards lose money.

Credit card fees end up as a transaction tax on a huge part of the economy. The folks who have figured out how to insert themselves into the money flow (Visa et al.) are sucking a huge profit out by slightly taxing everyone else.

As a side benefit for the credit card companies, they also collect data about everyone’s purchases, and can earn extra money by selling that data to the highest bidder, compromising customer privacy.

The system is in need of some strict regulatory oversight, but card networks can afford expensive lobbying / campaign donations, so don’t hold your breath.

Calling it a tax belies the enormous benefit that the payment networks have for customers and merchants. The fact you can make a purchase from most of the merchants in the world, with a card issued from your local bank is an extraordinary convenience. I think a lot of the commentors here don’t know (or have forgotten) how tedious and slow international/online shopping or travel used to be when it came to money/payments. You don’t know slow and unreliable payments until you’ve had to mail somebody a cashiers check.

Everybody's paying for this, it doesn't matter if you hustle or if you don't, if you have a card or not. Contracts prohibit merchants to charge more than cash so they need to cover the processing fee by increasing the prices paid by all. It's not like they can refuse to accept cards.

It's one of the larger rackets in the economy today, whole percentage points of consumer spending is syphoned by the financial industry as pure rent.

Pure rent? I don't love them, but providing a worldwide payments network is not free or trivial.

I was talking about the rent part on top of the costs of those systems, nonetheless they are trivial compared to the revenues. If there was an international agreement on a single payment system with mandated interoperability, we could find out what those costs actually are in a competitive market, probably fractions of a cent per transaction.

"Contracts prohibit merchants to charge more than cash" - Interestingly, this is changing in New Zealand. More stores are passing on the fees (2.5%?) if you pay using a credit card.

Yes and no.

Essentially, card processing fees (paid by merchants), interest charges (paid by cardholders who carry a balance), and annual card fees (for some cards) are income to card issuers.

Points, cash back, and paying interest on purchases from cardholders who do not carry a balance are expenses to card issuers.

I expect income is rather static at scale. Which is why card issuers are always tweaking the expenses side. The numbers have to add up somehow, and if you go from all cardholders redeeming points for a real value of $100 to their doing so for a real value of $300... they won't.

Sign up bonuses (the easiest part of the hustle) are the hardest to gauge from the card issuer's side, as a hustler looks like a regular customer. There have been attempts by some issuers to track this in a more detailed way (e.g. Chase's 5/24), and I'd expect to see more issuers moving towards doing so. It's essentially the same problem Vegas has.

Yes. Exactly.

But remember, this is how credit cards work anyway. These companies rely on people not paying their bill in full each month, paying high rates of interest. That pays for all this "bonus" crap and more.

It’s much more than $400. If you optimize redemptions it is more like $25k+ back a year e.g. a single first class redemption (took Japan Airlines first class last month to Tokyo) was ~$12k one way.

Keep in mind the profit margin on first class seats is insane - their cost to provide a "$12k" trip was probably more like $1-2k. There's a reason you can get crazy amounts of miles via sign up bonuses, but you never see a cash back award much above $500 (and those are usually for business cards with high minimum spends).

Yes, I mean I don't personally value a first class trip at $12k (e.g. would never pay for it out of pocket), but it's fun to be able to experience the very best in air travel at almost no cost every one in awhile.

I do value business class, though, and happy that I can redeem points over paying for it out of pocket. There is a joy in actually being able to lie flat and sleep on a 11-14 hour flight to Asia or Europe and feel rested when you arrive vs feeling sore/cramped/and jet lagged for the first 2 days of your trip!

You've got no real evidence to support the idea that higher prices specifically are how credit card companies pay for their perks...

All you can say for sure is that credit card companies have revenue, and some of that revenue is spent on marketing, such as signup bonuses, and that's pretty obvious.

"Company sets prices to account for marketing budget" is hardly a revelation.

> The "bonus" you get is actually paid by higher prices on the stuff people buy.

In the EU, we pay VAT on practically everything, so, US prices are still cheaper with credit cards etc.

Actually, it's not entirely true. A few years back EU cut the interchange fees dramatically (to 0.3% on credit cards, 0.2% debit) but all the savings were pocketed by merchants

Are you sure you're not spending more than you otherwise would be? That's the real kicker with bonuses.

I pay my rent with my credit card when I need to meet a certain level of spend to get a sign up bonus e.g. I’m not actually buying things I otherwise wouldn’t buy just because I opened a new card

Are you using cash advances to pay for rent? How can you use a credit card to pay rent without getting hit hard with fees and special interest.

Some places just accept credit card payments. Even with a ~3% surcharge for paying with a credit card, it can easily be worth it, depending on the particular sign up bonus.

I pay a 2.5% fee but it’s not considered a cash advance just a regular purchase.

The math works for me since it’s the fastest and most convenient way to meet spend (usually around $3k)

For a $3k rent payment (mine is less than this but as ex to meet spend), you’d pay a $75 fee, but earn the signup bonus + 3075 points. Depending on the credit card, 3075 points is likely at least worth $30.75 if not more, so your net fee is $44.25 or 1.475%, which is not bad IMO.

Gotcha it was to meet the sign on bonus. I was thinking you were getting a net benefit for just the points alone not to meet the sign on bonus.

"Bonus" means the initial thing. The rewards are called rewards or points or cash back etc.

Your example sounds like you’re losing money. What am I missing?

The signup bonus is >>> the fee you pay.

There's a service called plastiq that charges a flat 2.5% fee that won't look like a cash advance on your statement.

Otherwise, some landlords might let you pay via credit card.

Unless the value of the points you're getting are worth at least 2.5% cash back (which I doubt is the case), this is a pretty bad deal.

It is the case with sign-on bonuses through, which is which spawned this threads, and which was the use case mentioned (meeting minimum spend).

I see offers for stuff like $150 cash back after spending $500. Even if your rent is like $2000 that's a $50 fee which earns you $100.

Also, if you use something like plastiq.com, you can use them to pay your rent and other places that typically do not accept credit cards. They do have a charge for their services, but frequently runs 0% charge sales.

Disclaimer: I have been a satisfied customer for them. I do not work for them or get any kickbacks.

There are services specifically for this. They charge a fee, from 2-4% (sometimes there are promos for lower fees).

If you are spending to earn a bonus, e.g. 50,000 points for spending $3,000 you are earning 16+ points per dollar (1 point is generally around 1%, sometimes better).

Making donations through services that waive processing fees for the merchant is another good way to do this. For example, PayPal's Giving Fund or Facebook Payments.

(But only for donations you're making anyway, and only when fees really are waived.)

All those bonuses are coming from somewhere, though. In this case, it mostly comes from higher fees on merchants, which leads to higher prices.

You're getting some points, sure, but everything you buy is a percent or two higher to pay for it.

That's all true, but as a consumer I think a percent or two is worth the conveniences that cards offer. I pay for virtually everything with cards. I rarely even carry cash. Cash is bulky, dirty, inconvenient to get, and has absolutely no loss protection.

I pay my balance in full every month, so I don't pay finance charges. If you can't do that, then don't use cards. They will eat you alive. Understand that most of the benefits/points that are offered are paid for by people who carry a balance.

If you can manage them and keep the balances paid, the points are just icing on the cake. I rarely pay for hotels anymore, for example.

> If you can't do that, then don't use cards. They will eat you alive.

I like to think as credit cards as tax on the poor to feed the rich.

I would call it a tax on those with poor financial planning skills.

Also, yes. But not only.

I recommend this wonderful essay into the trials of being poor, which isn't necessarily because you're bad at financial planning:


Also this recent HN posting and discussion, about the "Vimes [from Discworld] Boot Theory":


Read the "being poor" article.

Conclusion: I'm poor.

That would be great if it weren't a prisoner's dilemma at that point.

There is no getting away from the fees, so I must get a credit card, but that means that all of my purchases are tracked.

If you don't think this is important, you haven't been paying much attention.

> but as a consumer I think a percent or two is worth the conveniences that cards offer

Yes, but we're also paying for that guy's international flights. I don't care how little it is: I don't want to pay for that. Buy your own vacation.

For the record: good on him for taking the points. 100% his prerogative. My problem is purely with the eventual cost being amortised across other customers, even non-CC customers.

I think the bonuses are primarily paid for by the interest charged to people who carry a balance, since the entire point of the rewards programs is to create customers who carry a balance.

At least some of the cost is borne by merchants - rewards cards have a higher interchange rate.


Yes, if there were a law requiring the consumer pay all fees for their specific card, this form of freeloading wouldn't exist.

This is true. The fees pay to run the program including all the front-end companies that sell card products to the market; the banks financing it want those big, juicy 20% APRs

Sure, but very rarely can you pay less by not using credit cards. There are some exemptions like "cash discounts" but in my experience they're rare.

>Sure, but very rarely can you pay less by not using credit cards

Only if you pay the full dose immediately at the end of the billing period. Anytime you've haven't paid your cc bill in time, you're charged way more in interest. People have crushed under cc debt.

I think it is a given that ironically you should never use credt cards for credit but like a debit card.

The point about paying less is that the merchants who often complain of the processing fees and delays seldom give a discount for paying in cash to offset the lack of fee surcharges bundled into sale prices.

That's tangential at best to a discussion of credit cards as a payment processor.

The encouragement of the use of credit cards goes hand in hand with "spontaneous purchases" without the money, added interest, and cc debt.

So, it's only tangential in the NRA sense of "guns don't kill people, people do".

Hooking people to using credit cards for payments plays into this whole system.

In Germany and France, for example, the equivalent payment systems are still online, through cards, etc., but they involves debit cards almost exclusively.

Everything everyone buys is a percent or two higher. This behavior should really be considered antisocial. GP is taking advantage of the system for their own personal (moderate) gain to the (very small) detriment of everyone else.

That assumes the cost of cash handling is zero (or close to it), which isn't true. When I worked retail around the turn of the century, here's an estimate of the time added by cash handling:

- 5-10 minutes at beginning and end of shift to count cash drawers in and out, and make deposit bags, per employee

- 10-15 seconds per cash transaction to count payment and make change

- 60 minutes to prepare daily cash bank deposit and restock change (once, done by a supervisor)

- Employee theft from cash drawers, while not a common issue, did happen probably at least once a year

Now, I couldn't say if that all adds up to an extra 1-2% overhead, but I think its disingenuous for people to suggest that merchant fees charged by credit cards have little to no benefit to retailers. I think we'll see way more businesses go to electronic payments only within 10 years or so.

Three of the four problems in your list of cash-handling downsides are solved in some places through self-service checkouts where the machine automatically counts the cash and dispenses change, so a human doesn’t have to. Sometimes there is an actual human at the checkout, but when you wish to pay with cash, you are directed to put the money into a machine placed there, so that the cashier does not have to actually handle cash.

In recent months I have seen the latter system (human cashier + cash-handling machine) in a Madrid airport restaurant and a Romanian hypermarket.

If the company servicing these cash machines charges 0%, sure. I'd bet they end up charging fees close to what credit cards charge, though.

The problem isn't the consumer who takes advantage of the system. the problem is the regulations that prevent consumers from choosing whether they want to pay that extra 2-3% that credit card companies charge the merchant. Right now, if i want to pay with cash, I still end up paying that extra 2-3%, even if the merchant wants to give me a 2-3% discount, they're not allowed, due to those regulations.

It's payment network agreements, not regulations in the government sense. E.G. If you accept Visa, you cannot mark up credit transactions & discount for cash per your agreement with them. It's nuanced (gas stations do it compliantly by advertising both prices next to each other).

More info: https://www.pymnts.com/visa/2018/non-compliant-cash-discount...

But that is a sign of a lack of regulation, as that is obviously anticompetetive behavior (demanding that a competing product cannot be sold cheaper).

It's the same product being sold, not a competing product. And as a merchant, you aren't required by any law to accept Visa, or credit cards of any kind. Many merchants don't accept Amex, for example, because their fees are a few points higher than competing networks.

Cash and Mastercard are competing products, and Mastercard requiring the merchant to sell payment with cash at the same price as payment with Mastercard is obviously anti-competetive. Whether the merchant has the choice to not offer a particular product is irrelevant.

Seems like a good example of "concentrated benefits versus diffuse costs."


You can look at it as interest that's not disclosed or as a service fee for handling transactions. It's not obvious that an explicit fee for either would be lower.

I think people have claimed that when the experiment was done by capping fees, things don't get cheaper, so your viewpoint may not be accurate.

Sadly, that pretty much describes most successful businesses on the internet today.

Tragedy of the commons.

A tax paid by those without the same strategy, presumably. For instance, I hate the idea of CC points and do not participate. I still use my card and pay the same prices.

Isn't this only true if you assume profits are constant (hence competition effectively not happening)? They could we be paying for some of it by sacrificing profits, and judging from the fact that some of the best deals get discontinued, I don't assume they all end up making money.

The money still came from somewhere.

Yes, I don't think anyone claimed money comes from nowhere.

Well, you kinda did when you implied that profits aren't paid by the customer. Just because a company "sacrifices profits", doesn't mean those profits would be the same at the same price in a market where there is no credit card quasi-monopoly.

But everyone pays the higher prices while very few hustle CC rewards programs. Just like that superman movie plot or Office Space, the GP is gathering up all those fractional pennies and using them to buy first class air travel.

r/churning for those who are interested.

I wonder why this isn’t the case in Europe? Some cards offer small bonuses but peanuts compared to US ones.

That’s amazing. Do you have any tips? I was trying to do this and got completely overwhelmed with all the numbers.

Plus for the life of me I can figure out if a travel card is better than cash back.

The best thing about credit cards in the U.S. is the amount of transactional data credit card companies are able to sell to anyone with a dollar.

Your credit reward system comes at the cost of half of the world's businesses and the government knowing every single thing on your shopping list last week.

That is not how credit card processing works. Some companies store additional data on a store by store basis, but visa/MasterCard does not transmit that info. They deal with a lot of data, but it's transactional. To make the transaction happen.

So no they can't sell your shopping list, the system simply doesn't work that way. Terminals don't send that info.

In-store reward systems aggregate purchases under a common identifier, and chain stores will also attempt to cross-reference purchases and create identifiers for non-members through credit and debit cards. Even when individual items cannot be attained, these systems still can reveal a lot just through the purchase summaries. Store location, type of purchase, etc. All of this data ends up in the hands of tons of financial companies. Stores don't have to directly give up this data to competitors. The information market is simply too big and unregulated.

Cash is the only way to circumvent this process until we have anonymous credit systems.

Yes in store reward systems are completely different than credit card and debit card companies. I work in that industry and look at the raw data. You are definitely incorrect about how the various levels of a transaction works and how the various companies collect pieces of relevant information. Information is definitely collected but please don't spread misinformation. Your above sumnary is completely misguided to how it actually works.

Specifically, what am I wrong about? Always interested to improve my understanding of how this complex network of data trading works.

There certainly is a mechanism to send significantly more data, though I don't know how common it is:


Hopefully crypto payments/stablecoins will get more traction so we can get ride of these mono/dupolies.

This was my thought too. It amazes me that people don't see crypto currencies as the answer here, and one that solves a number of other problems at the same time.

I believe the main reason is the association of bitcoin and its flaws(i.e volatility) with crypto payments.

The payment processors don't seem very eager to support stable coins either as it's harder for them to inflate the fees/conversion to fiat.

For that to happen, they'd need to match the current system on cost, performance, safety, and availability. There are a ton of people — e.g. almost every small business — who would like alternatives but for a legal business there are too many cases where their costs (either direct or support) would go up enough not to be worth it.

How would they help here?

still lots of progress needs to be made from a usability standpoint.

> The fine would have been higher, but Brussels reduced the amount by 10 percent to thank Mastercard for cooperating.

I am unable to find a link to the ruling in the article, does anyone have it? Curious how this number was arrived at.

Press release: http://europa.eu/rapid/press-release_IP-19-582_en.htm. It says:

”Mastercard cooperated with the Commission by acknowledging the facts and the infringements of EU competition rules.

The Commission granted Mastercard a 10% fine reduction in return for this cooperation. Further information on this type of cooperation can be found on the Commission's Competition website”

with a link to https://europa.eu/!XC69Qb.

Basically, you get a fine reduction if you promise not to appeal to the fine.

That seems problematic. It appears to be equivalent to financial punishment for appealing a ruling. And in the EU competition law is enforced via the rule of essentially one woman and her department - competition laws are so vague that she effectively has the power to levy huge fines at will, unchecked by anything except the right to appeal, because she doesn't have to prove anything in court to begin with.

If the Commission is now able to levy such massive fines and lower them if you promise not to appeal, in a binding way, then they can simply make whatever sum they pull out of thin air 10% higher, give a 10% "reduction" for cooperation, and that's effectively a second fine for appealing the first.

It's sad that this duopoly is controlling so much of the market, especially that merchants can't make customers pay the fees (in which case mastercard and visa would quickly lose their market share).

Especially considering that many european countries such as Germany had (and have) independent systems with often orders of magnitudes lower fees, faster transaction times and more safety and security.

I'd rather see girocard become a monopoly on the european market than to see this mastercard/visa monopoly continue.

Nowadays credit and debit card fees are limited by the EU. Around 0.3% per transaction. A 10x reduction to before. Since then adoption of credit card payment has spread widely in German supermarkets.

That limit is on the interchange fee, not what the merchant pays their payment processor, which is still significantly higher.

Good to know. Then i am still wondering why there seems to be wider adoption of CC in Germany. Or maybe we are only reaching the CC adoption that other EU countries have already seen a long time ago...

Germany is still nowhere close to what's common in other EU countries. Pretty much all Germany's neighbors have much higher adoption of terminals accepting MC/Visa.

> ... especially that merchants can't make customers pay the fees ...

Why not? Is that due to contract terms that prevent you from charging more for card transactions vs other payment methods?

I vaguely remember clauses like that were recently thrown out in the USA. I’d imagine the EU would be even more consumer friendly.

Anecdotally, I see lots of small businesses in the US which explicitly charge slightly more for credit card transactions.

This is extremely common at gas stations and coffee shops, for example.

Sometimes that is actually the business charging slightly less for cash transactions rather than charging slightly more for credit card transactions.

What's the difference? If the business advertises both a cash price and a credit card price, then there is effectively no difference I believe whether you characterize it is a discount for cash or a surcharge for credit cards.

However, if you only advertise one price, then its a surcharge if that is the cash price and you add extra for credit cards at the register. If the one price is the credit card price, and you take off some for cash at the register, then it is a cash discount.

Doing a cash discount was a common trick at gas stations to work around terms in their contracts that said they would not have credit card surcharges. There was a lawsuit against such contract terms by merchants who wanted to do a surcharge, and in a settlement in 2013 Visa and Mastercard agreed to allow them (with some restrictions, like no more than 4%, must be a sign disclosing them at the point of sale, had to be included on the receipt, and had to apply to all cards), reducing the need for such tricks in many areas.

There are some states that have laws prohibiting credit card surcharges, so the cash discount trick may still be in use there. California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. These have been challenged on Free Speech grounds. The Supreme Court has said that they are (well, New York's version, but others are similar) is a regulation of speech, but did not rule whether it was an unconstitutional regulation (the lower courts had not reached that issue) [1]. I don't happen to know what happened to that case after that.

[1] https://www.supremecourt.gov/opinions/16pdf/15-1391_g31i.pdf

Yes. The EU's consumer protection priority is "no hidden fees". They want the advertised price to match reality.

For some transactions the reality is that almost every single purchase will be on a card and the vendor knows it, so advertising a "cash" price was just always going to be misleading. Rather than try to figure out some complicated rule (maybe you can advertise the cash price if most customers pay in person at a store?) the authorities just said it's simpler to ban all fees.

The British news media actually did stuff about this in the last few days. A bunch of famously shady lines of business like letting agencies were still charging extra for credit cards even though that's illegal.

Merchants can offer cash discounts, but cannot add credit card fees. This is due to price transparency rules.

I seem to remember that the store did transfer the costs to the customer in Denmark at least, Maybe 12 years ago. It led to an oproar by consumers faces with paying ~4cent per transaction, and some stores not allowing card payment on purchases less than ~3$.

There was quite a reaction against it, but in the end I assume they dropped this because they say usage numbers drop, though that is just speculation.

I don't know the entry barrier details, but are governments working on standards to put your own payment system based on a defined API and following standard regulations?

> On this basis, the Commission concluded that Mastercard's rules prevented retailers from benefiting from lower fees and restricted competition between banks cross border, in breach of EU anti-trust rules

The following will be extremely unpopular here, however, it's a bit interesting that the EU is, in the case of private businesses, interested in preventing "restricted competition," however, when it comes to taxes, the EU continually criticizes Ireland for low corporate taxes. Essentially the EU is opposed to tax competition.

The EU parliament has accused Ireland of being a tax haven and damaging the economies of its neighbors. While now, Mastercard is being accused of harming the EU economy by preventing competition. Mastercard gets fined for preventing competition (a correct decision in my opinion,) while strangely, Ireland also gets condemned for attempting to have lower taxes. Ireland, Hungary, and Bulgaria are promoting competition and they're in "trouble" while Mastercard is restricting competition and they're in "trouble" with the EU as well.

So the EU Parliament is effectively acting like Mastercard by attempting to prevent tax competition which would lower prices for consumers far more than anything Mastercard could come up with. If the EU actually cared about competition and lower prices for consumers, then they'd let members set tax rates to whatever they want, but instead they want to "harmonize" tax rates -- essentially destroying the competitive advantage of lower tax locales. The countries that are harmed the most by tax competition are the ones that have highest taxes and public obligations -- yet Ireland, Hungary, and Bulgaria are supposed to raise their taxes to compensate for the fiscal decisions of France, Spain, or Italy?

"The EU’s tax commissioner Pierre Moscovici said in November that the Commission was considering using extraordinary powers to strip EU states of their veto power on tax matters to break resistance over blocked legislation."[1]

So the EU tax commissioner wants to essentially force EU member states to comply with a "harmonization" of tax rates, despite some members opposing such a move and now the EU is fining Mastercard for attempting to "harmonize" interchange fees? That's hypocrisy, assuming the reason for the EU fine is to protect competition and/or lower prices for consumers. The difference is that businesses can more easily stop accepting Mastercard than they can change governments. It's worth noting that Pierre Moscovici is French and France has some signifiant headwinds in terms of regulatory and taxation attractiveness for companies. Punishing Ireland, Hungary, Bulgaria and other countries with significantly lower taxes serves to benefit high tax countries such as France.

So good for the EU for punishing Mastercard -- let's hope that they now turn to punish themselves for attempting to prevent competition with taxes. To be clear, I'm not anti-tax, I'm anti-tax harmonization and the reason is that tax harmonization essentially subsidizes bad fiscal policy. So countries like Ireland lose a competitive advantage simply because Spain can't balance its checkbook.

[1] https://www.reuters.com/article/us-hungary-ireland-taxation/...

> The following will be extremely unpopular here, however, it's a bit interesting that the EU is, in the case of private businesses, interested in preventing "restricted competition," however, when it comes to taxes, the EU continually criticizes Ireland for low corporate taxes. Essentially the EU is opposed to tax competition.

How is that "interesting"? That should be obvious. Taxes pay public goods, private companies just extract money to investors. They are diametrical opposed.

This is why we need crypto.

We already have crypto. Now we await utopia, apparently.

How would crypto-currencies change the situation?

because a commonly owned and permissionless value transfer layer has no control over the actions of the businesses and individuals who use it.


The market has shown that cryptocurrency infrastructure tends to centralize in the same way.

Europe seems to be on a roll lately but is brexit going to change that? Is GDPR and all these other consumer focused regulations lessened by losing that market?

Why would Brexit affect the EU's GDPR legislation that already exists? Perhaps it could change in Britain, but it would still exist in the EU, where the legislation was approved and is currently being enforced.

The ICO won't be a member of the EDPB post-Brexit which will definitely have an impact, but not a catastrophic one.

The bigger problem is that the UK won't be able to be certified as having adequate protection due to the Snooper's Charter (or, rather, any adequacy decision will be almost instantly sent for judicial review).


I think our politicians have forgotten how much we got away with by doing it after we joined.

I live in a smaller country (canada) that doesn't have the same market strength and resources as the bigger markets. I was just wondering about the consequences of losing 70 million people and the worlds fifth largest economy would have on all these efforts.

I thought my question was fair so i don't understand the downvoting.

I think it's because politics aren't supposed to be discussed here and Brexit is such a radioactive topic like Trump that any mention of it will make everyone uneasy.

ok, well i asked a question specifically of particular interest to the tech sector. It's not like we can ignore the rules of the world we live in.

This is not exactly a consumer focusing regulation, one of the bing things of the EU is destroying barriers to the single market like foreign bank fee for withdrawals, roaming charges on phones, SEPA, etc.

> The Commission, which monitors competition, said that Mastercard's rules prior to 2015 forced retailers to pay certain bank fees in the country they are located rather than let them shop around.

Meanwhile I can’t get a debit card from my bank that defaults to a language I speak at POS terminals because that’s not the official language of the country I opened it in.

The logic and connection being that is the country in which I signed the terms of service and agreed to x, y, and z (one of those being the language and another being fees).

So I, as a consumer, am stuck with the terms of the country I reside in, but the bank, as a merchant, shouldn’t be?

That's a false analogy. No one forces you to stay with your bank. If you are an EU citizen, you can open an account in any other EU country. Mastercard was forcing merchants to only use banks within their respective countries.

In point of fact my bank is German, but because I’m in Estonia I’m regulated (in their mind) by the Estonian TOS I signed.

Which is necessary because each EU country still has its own local laws, which the local T&C must abide. If you travelled to Germany and opened a bank account at a local branch, you’d get German T&C.

If you live in EU/EFTA you can open an account with any EU/EFTA bank which wants you as a customer. Revolut and N26 are two popular examples of banks that offer accounts in many countries.

I wouldn’t say that the bank I was referencing was one of those, but it might have begun with a letter in the range of M-O and ended with a numeric sequence that is less than 30.

Edit: also, good luck with the “wants you as a customer” part. If you’re not a resident of their country it seems highly likely it’s not in their business interest to open you an account.

As a consumer you are free to open another account with any bank anywhere in Europe. The merchants should have the same freedom.

*Any bank that will accept you as a client.

In Estonia, at least, they will demand some sort of “tie to Estonia”. That could be residence or a business, but you’re not getting an account otherwise.

The EU laying down the law!

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