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They provide antifraud protection via chargebacks, which account for a sizeable portion of their fees. Fees are about 3%, fraud is about 1-2%.

danieltillett 9y ago
The risk of fraud is covered by the merchant. The fees should be much lower than 3%.
- adrr 9y ago
  Only online transactions(CNP) where you ship the product to address other than card's billing address. If the merchant uses 3D secure for online transactions, issuer is fully liable for fraud. For card present transactions, issuer is fully liable for chip based transactions. Merchants only bear risk if its a stripe or a manually keyed in transaction. High cost of for credit card transactions is because merchant pays for the 60 day interest free loan on the money that the bank is giving the consumer to make the purchase. Debit network transactions are a lot lower, 0.5% for durbin amendment cards(90% of cards out there).
  - danieltillett 9y ago
    I am in Australia where the rules are different, but does 3D secure protect you against the CC owner claiming the item is not as described or was not received?
- treyfitty 9y ago
  It really depends on a lot of things (do you have a chip terminal? If not, are you a gas merchant and based in the US, and the total transaction is under $50? Are you enrolled in 3D Secure? Are you on the Full Fraud Recourse list?...etc.) How you answer those questions determine chargeback eligibility. Even if networks do issue a chargeback, you can provide a 2nd presentment with evidence supporting your claim that it wasn't your fault. Finally, if all else fails, you can go the Good Faith Credit route. Which leads me to say that the burden of fraud really falls on the network, not the merchant, since they have to abide by definitive chargeback policies set forth, and be willing to accept 2nd presentments for the sake of maintaining merchant relationships. Your conclusion still holds true- swipe fees should be less than 3%- probably closer to 1%... let's just say I work in the industry, and see how the proverbial sausage is made.
thomasthomas 9y ago
visa fees? way less. total fees to the merchant per swipe is way under 3% for any sizable businesses. something like 1.2% + $0.10 was average when I worked for a payment processor.
Nullabillity 9y ago
Fraud is only a problem in the first place because they refuse to implement sensible authentication.
- cortesoft 9y ago
  Authentication would only solve one type of fraud (using someone elses credit card). What about when you buy something online and the seller doesn't send you the item? Or sends you a broken item? What is a service breaks their contract with you? There are lots of kinds of fraud that aren't identity based.
robryan 9y ago
Visa itself is only charging a small portion of that fee, around 0.5% typically.
needusername 9y ago
> Fees are about 3% If you're paying 3% you're getting ripped off. There is no reason you should be paying more than 1%. In the EU interchange is 0.3% for credit and the scheme fee is less than that. Maybe if you're doing an unauthorised, interdomain transaction with an imprinter in a brothel then 3% is reasonable. [1] http://europa.eu/rapid/press-release_MEMO-16-2162_en.htm http://europa.eu/rapid/press-release_MEMO-16-2162_en.htm

danieltillett 9y ago

The risk of fraud is covered by the merchant. The fees should be much lower than 3%.

adrr 9y ago
Only online transactions(CNP) where you ship the product to address other than card's billing address. If the merchant uses 3D secure for online transactions, issuer is fully liable for fraud. For card present transactions, issuer is fully liable for chip based transactions. Merchants only bear risk if its a stripe or a manually keyed in transaction. High cost of for credit card transactions is because merchant pays for the 60 day interest free loan on the money that the bank is giving the consumer to make the purchase. Debit network transactions are a lot lower, 0.5% for durbin amendment cards(90% of cards out there).
- danieltillett 9y ago
  I am in Australia where the rules are different, but does 3D secure protect you against the CC owner claiming the item is not as described or was not received?
treyfitty 9y ago
It really depends on a lot of things (do you have a chip terminal? If not, are you a gas merchant and based in the US, and the total transaction is under $50? Are you enrolled in 3D Secure? Are you on the Full Fraud Recourse list?...etc.) How you answer those questions determine chargeback eligibility. Even if networks do issue a chargeback, you can provide a 2nd presentment with evidence supporting your claim that it wasn't your fault. Finally, if all else fails, you can go the Good Faith Credit route. Which leads me to say that the burden of fraud really falls on the network, not the merchant, since they have to abide by definitive chargeback policies set forth, and be willing to accept 2nd presentments for the sake of maintaining merchant relationships. Your conclusion still holds true- swipe fees should be less than 3%- probably closer to 1%... let's just say I work in the industry, and see how the proverbial sausage is made.

thomasthomas 9y ago

visa fees? way less. total fees to the merchant per swipe is way under 3% for any sizable businesses. something like 1.2% + $0.10 was average when I worked for a payment processor.

Nullabillity 9y ago

Fraud is only a problem in the first place because they refuse to implement sensible authentication.

cortesoft 9y ago
Authentication would only solve one type of fraud (using someone elses credit card). What about when you buy something online and the seller doesn't send you the item? Or sends you a broken item? What is a service breaks their contract with you? There are lots of kinds of fraud that aren't identity based.

robryan 9y ago

Visa itself is only charging a small portion of that fee, around 0.5% typically.

needusername 9y ago

> Fees are about 3% If you're paying 3% you're getting ripped off. There is no reason you should be paying more than 1%. In the EU interchange is 0.3% for credit and the scheme fee is less than that. Maybe if you're doing an unauthorised, interdomain transaction with an imprinter in a brothel then 3% is reasonable. [1] http://europa.eu/rapid/press-release_MEMO-16-2162_en.htm http://europa.eu/rapid/press-release_MEMO-16-2162_en.htm