I'd argue that credit cards are conceptually not very different. Users pay the fees both directly (annual costs, interest) and indirectly (increased prices due to vendor fees), and the shareholders reap the benefits.
Just like credit cards, and the various digital currencies like Bitcoin (where exchanges have plenty of regulation and reporting requirements to deal with!), this will be subject to regulation and governmental oversight.
Note that I'm not a fan of this at all, due to the company behind it.
But it's not a groundbreaking new concept, or very scary if seen in isolation.
>Users pay the fees both directly (annual costs, interest)
Both avoidable. Many zero fee cards, interest only on monthly balances. Some zero fee cards even offer rewards (read: net positive over cash).
>indirectly (increased prices due to vendor fees)
I'd need to see some data that the convenience of credit cards to both consumer and retailer has increased prices. I do know that explicitly raising prices to cover fees for card using customers is against most merchant account terms of service and you can report retailers that do so.
It’s a total tax on the entire ecosystem. Every merchant that chooses to accept credit cards has to build 2-3% into their margins to cover the interchange fees. It’s often against their agreement with visa/mc to charge the fees for credit transactions only and so they build them into the base cost.
As a side note, the situation is a bit better in Europe, where considerable regulation was introduced recently. With mixed but positive results. Interchange fees were capped to 0.3% for credit cards.
> I do know that explicitly raising prices to cover fees for card using customers is against most merchant account terms of service and you can report retailers that do so.
That's no longer the case after Visa, Mastercard, etc were sued[1] and reached a settlement in 2013 disallowing those terms. A few states have passed laws to reimpose that rule, but most haven't, afaik.
Just like credit cards, and the various digital currencies like Bitcoin (where exchanges have plenty of regulation and reporting requirements to deal with!), this will be subject to regulation and governmental oversight.
Note that I'm not a fan of this at all, due to the company behind it.
But it's not a groundbreaking new concept, or very scary if seen in isolation.