Prices are set by what the market is willing to pay, rather than what the service costs to run. Visa, et al, charges what it does because most merchants are wi

Prices are set by what the market is willing to pay, rather than what the service costs to run. Visa, et al, charges what it does because most merchants are willing to pay it, evidenced by the relatively few "cash/check only" businesses out there. This doesn't mean that merchants wouldn't switch to a lower-cost payment system if it were available and there were enough customers using it, but it does mean that you can't just assume that Visa, et al, would not lower their prices if they felt the competition was serious enough. What their actually cost is, in such a circumstance, is harder to say. Their basic payment processing cost is probably quite low, even accounting for the people who maintain it, but they also provide fraud protection and frequently kickbacks to customers (cash back, airline miles, points); whether they could switch to chip-and-pin exclusively (in the US) and severely curtail kickbacks while still offering a desirable service to customers as well as merchants... [Their credit services are presumably well-funded through their high interest rates.]