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Credit card users in the EU have a different situation: https://en.wikipedia.org/wiki/Interchange_fee https://en.wikipedia.org/wiki/Interchange_fee > ... inte

Credit card users in the EU have a different situation: https://en.wikipedia.org/wiki/Interchange_fee https://en.wikipedia.org/wiki/Interchange_fee > ... interchange fees are typically a flat fee plus a percentage of the total purchase price (including taxes). In the United States, the fee averages approximately 2% of transaction value.[2] In the EU, interchange fees are capped to 0.3% of the transaction for credit cards and to 0.2% for debit cards.[3] That 1.8% difference pays for a lot of rewards, marketing, etc. As a small merchant accepting cards in the US, the best rate one will see is about 1.65% for a high-volume business (plus lots of fiddly fees). Square ran 2.95% when we first started using it, but was worth the difference to a small business to avoid all the fiddly fees (per-transaction, per-month for statements, per-month for online access! (years ago)). We have seen card usage go from 80/20 cash/card to 20/80 cash card over the last 15 years, and the ease of making additional sales on credit has increased our volume a lot. YMMV. Most merchant agreements disallow charging customers a penalty for paying by card, but (implicitly) allow a discount for paying by cash (or having 2 prices: cash xor credit). This decision about Amex is part of the same perspective. True disruption will not reach the US card payment market until some business big enough to take on Visa & MasterCard offers card acceptance to merchants at much lower fees - perhaps without all the rewards, points, and other faddle they now pay to card users.

lostcolony 8y ago
A no/low reward card that charges far lower merchant fees? We have those. They're called "debit cards". Sure, not quite the same, but the only way to do it (since debit cards also remove the risk that credit cards do, namely, defaulted payments, which causes the fees to inflate a bit).
- dmckeon 8y ago
  Good point. To be more explicit, I'd like to see credit cards with good fraud protection for card-holders, no rewards/points systems, far lower & competitive merchant fees, and minimal fees to card-holders, other than interest on balances, of course. It sounds like card issuers in the EU and AU are doing this, or most of it, but that those in the US are not, presumably because they are making a nice profit doing it at 2%-3% now, and have a good moat around their businesses. By "good fraud protection" I mean the kind that US banks do for credit-card holders now, and not the kind they do for debit-card holders.

lostcolony 8y ago

A no/low reward card that charges far lower merchant fees? We have those. They're called "debit cards". Sure, not quite the same, but the only way to do it (since debit cards also remove the risk that credit cards do, namely, defaulted payments, which causes the fees to inflate a bit).

dmckeon 8y ago
Good point. To be more explicit, I'd like to see credit cards with good fraud protection for card-holders, no rewards/points systems, far lower & competitive merchant fees, and minimal fees to card-holders, other than interest on balances, of course. It sounds like card issuers in the EU and AU are doing this, or most of it, but that those in the US are not, presumably because they are making a nice profit doing it at 2%-3% now, and have a good moat around their businesses. By "good fraud protection" I mean the kind that US banks do for credit-card holders now, and not the kind they do for debit-card holders.