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I am reading so much incorrect information in this thread it’s maddening. The card network (Visa, Mastercard, etc) do NOT make money on Interchange. It’s hard

I am reading so much incorrect information in this thread it’s maddening. The card network (Visa, Mastercard, etc) do NOT make money on Interchange. It’s hard to have a healthy dialogue on this topic if folks don’t understand the basics of how the card networks generate revenue. Below is a decent primer. https://www.investopedia.com/articles/markets/032615/how-mastercard-makes-its-money-ma.asp https://www.investopedia.com/articles/markets/032615/how-mas...

jedberg 6y ago
I mean, technically no they don't. But that's just being pedantic. They charge the bank based on gross dollar volume, and the bank gets the money to pay for that from... interchange fees. The more volume the bank does, the more they pay and the more they get from interchange fees. Interchange fee pricing is set based on how much mastercard charges the banks, so while technically true, the interchange fees are basically set by mastercard's pricing.
- ComputerGuru 6y ago
  Interchange fee pricing is set based on how much MasterCard charges the bank That’s not true though, or at least is a massive oversimplification. In the US, interchange fees are extremely inflated to allow banks to recuperate the rewards they give out to distinguish their card offerings from one another. The 2% cashback has to come from somewhere.
  - jedberg 6y ago
    Sure, but the base rate comes from MC/Visa. Precessing credit cards is a low margin business. It's basically a race to see who can charge as close to the MC/Visa rates as possible.
    - an_opabinia 6y ago
      This isn't really about Visa-MasterCard, it's about a darling like Stripe charging 2.95% because 3% is customary. People will freak about their customary rent/take being threatened. They gotta come out of the woodwork and justify the charge... somehow. A HN proxy battle!
      - GoblinSlayer 6y ago
        They want to eat too.
  - jariel 6y ago
    "The 2% cashback has to come from somewhere." Yes, but in reality, the program comes from an upside down approach to overcoming the obviously anti-competitive practices that VISA/MC use to forbid retailers from offering discounts for not using VISA etc.. You can't say "Get 2% if you use cash instead of VISA". (Notice that nobody ever advertises that?) Because VISA doesn't allow it. You also can't say "$1.99 + 20 cents processing charge" - no, the price must be listed including charges. (Notice that nobody every does this?) But you can possibly find ways to give points, or 'cash-back'. Until now ... [1] VISA is now saying that even such 'cash back' rewards programs are a violation of its rules. Have a look at the press release - it's positively Orwellian: "In order to maintain a level playing field" -> "In order to avoid all transparency and maintain our hidden monopoly" we require that nobody can take steps which highlight the how our transaction fees are embedded in the price. These are pretty blatant anti-competitive practices and taking them on is tantamount to taking on the entire banking system. It's not going to happen. There would need to be an 'outside disruptor' like the Word Processor to the Typewriter kind of thing. [1] https://www.pymnts.com/visa/2018/non-compliant-cash-discount-card-fees/ https://www.pymnts.com/visa/2018/non-compliant-cash-discount...
    - wolco 6y ago
      Like some kind of virtual coin.
      - zaxu 6y ago
        The ability to purely make transactions is trivial - you can just use a debit card. The value of credit cards comes from other factors like fraud protection, SCI compliance, actual credit, etc.
        eru 6y ago
        Debit cards also charge some fees, but typically lower. The fraud protection of credit cards mostly comes out of the pockets of the merchant, I think? So the merchant could give people a discount for using means of payment without a chargeback, like cash. You are right about the actual credit. Though eg in Germany people usually use their overdraft in a same way that American seem to be using their credit cards for short term credit. (For either convenience is the main selling point. The fees and interest rates for overdraft and credit card debt are usually quite high, I think?)
  - Reason077 6y ago
    In the EU, interchange fees are capped at 0.2% of transaction value for debit cards, and 0.3% for credit cards. This has indeed meant that rewards and cashback credit cards have largely disappeared (with the exception of Amex, which operates outside the interchange system?). Rewards/cashback cards that do still exist are typically tied to specific retailers, with whom the issuing bank has cut their own deals.
    - paranoidrobot 6y ago
      > with the exception of Amex, which operates outside the interchange system? Right, but try using Amex in Europe. Outside of major international hotel chains, or where you can do your purchase online through Paypal, you may as well not bother asking if they accept it.
      - reaperducer 6y ago
        Outside of major international hotel chains, or where you can do your purchase online through Paypal, you may as well not bother asking if they accept it. It's very interesting to hear that. When I first started traveling to Europe, having an American Express card (or even better, AmEx travelers checks) was the best way for an American to pay for things. It's even written into some classic books and movies. My how things have changed.
        Galanwe 6y ago
        I don't think American Express card have ever been a practical way of paying for things in Europe. I would guess 90% of Europeans have never even seen one of these cards, unless they work in international hotels or tourist places.
        mcv 6y ago
        I'm Dutch, and my dad had both an American Express and a Diner's Club card from his work. I never really understood why those would be better than other credit cards.
  - gruez 6y ago
    >In the US, interchange fees are extremely inflated to allow banks to recuperate the rewards they give out to distinguish their card offerings from one another. The 2% cashback has to come from somewhere. And that's a bad thing, because it's essentially the poor subsidizing the rich. People who aren't able to get credit cards (or the "good" cash back credit cards) tend to be worse off financially than people who do.
    - granshaw 6y ago
      This has always struck me as one of the more blatant and out-in-the-open financial inequalities in this country.
      - cryptonector 6y ago
        At least we don't have hyperinflation. That's even worse for the poor. Though to be sure I agree with you. We really need to fix this, but it's not going to happen. Right now we're paying an enormous -unprecedented?- political attention tax that is starving lots of important issues of oxygen.
        arcticbull 6y ago
        Inflation doesn't affect the poor so long as wages keep up with inflation. If you don't have money, there's nothing to inflate.
        samatman 6y ago
        They did say hyperinflation. Characteristic of hyperinflation, is that nothing keeps up with it. Forget wages keeping up: your very paycheck is worth less at the end of two weeks than it was when you received it.
        gruez 6y ago
        > Inflation doesn't affect the poor so long as wages keep up with inflation Does it? In an inflationary environment the status quo is that your wages shrink. I guess it’s better than holding cash because you can renegotiate your wages back, but I don’t think rich people have most of their assets as cash.
- Nasrudith 6y ago
  So formula wise it would be something like this? d = dollars t = transactions count I(d,t) = Interchange total profit/cost to a bank from fees in and out F(d) = scaling function for interchange returns based on cash pushed through as an arbitrary function G(t) = transaction cost function based upon arbitrary scaling. I(d,t) =F(d) - G(t)
- netcan 6y ago
  I agree with the OP that we need to be informed in order to have the conversation. But..... You have the main point here. The whole premise of monopolies is that monopolies dominate bottlenecks, and use them to generate outsize revenue and protection from competition. Facebook doesn't make money directly from whatsapp. It can be used to generate data for FB's main advertising business. Most importantly, it helps maintain facebook's dominant position in social media. That position is revenue generating. I agree that understanding the mechanics are important. But, we can't keep treating monopolies as innocent of monopolistic practice until proven guilty. The reason we have antitrust in the first place is that monopoly positions lead to monopolistic practices. We need to assume monopolistic practices exist in the case of a monopoly. When one monopolistic practice (eg amazon marketplace or adwords) has been proven in court, this should be treated as proof of monopoly, not a standalone violation. Same with the CCs.
- hef19898 6y ago
  And these technicalities matter a lot. They make, in some cases, the difference between legal an illegal. Not understanding them leads to wrong conclusions.
jariel 6y ago
The article does not indicate that VISA/MC makes their money directly from the 'interchange' but it's perfectly valid to indicate that VISA/MS are in fact the lynch-pin of the credit card 'system oligarchy'. In particular, it is they that are able to set rates for transactions, and do anti-competitive things like ban e-retailers from offering relative discounts like 'save 2.5% if you use cash' etc.. It's absolutely an ancient cabal banking network, that would be disrupted in any normal, competitive system. 2.5% of a transaction considerably too much, were there efficiency, it would be less than 0.5%. Edit: monopoly->oligarchy
- ian0 6y ago
  >> It's absolutely an ancient cabal banking network, that would be disrupted in any normal, competitive system. The fact that banking wasn't a cabal led to the creation of Visa & MC, they provide the function of operating a deliberately independent interchange so competitive banks can work together without having to talk. The fact they havent been replaced isnt due to a lack of "normal competition", its just a system that has built in network effects (but is sticky unlike most social networks). Dont get me wrong - banks love cabals! Thats why domestic switches (led by central banks) are replacing the scheme networks in most countries for domestic transactions with the domestic switches being linked for international transactions, pushing Visa & MC out. >> 2.5% of a transaction considerably too much, were there efficiency, it would be less than 0.5%. I think your wrath is misdirected - that 2.5% may be stated in a Visa/MC press release, but it doesn't actually come from Visa or MC! The banks set interchange through the schemes. You add in 5000 different schemes thats not gonna change the fact that your bank is going to try to get the best bang for their buck if they "acquire" merchants or "issue" cards. The porn thing is linked too, banking is a heavily regulated space, easy to put pressure on. Acquiring banks get in trouble easily, they rely on schemes to blacklist anything which could land them in hot water. Even if there was no MC/VISA banks would still be paying random service providers to operate blacklists. The only difference would be that it would be cheaper. And typically thats not a good thing.
  - jariel 6y ago
    Banks are a cabal, that they needed VISA/MC was merely a need to 'standardise' a transactional network. The evidence that they are an oligarchy lies in their power to set prices. Which points right to the definition of what a monopoly is. If such systems were truly competitive, and we had say, 5 completely different systems that were truly competitive, the price would not be a total of 2.5%. The price would be set by the market, not the providers of the service and it would be much, much lower than 2.5%.
vmception 6y ago
> It’s hard to have a healthy dialogue on this topic if folks don’t understand the basics of how the card networks generate revenue. same for so many finance and legal topics you should see the stuff people say in cryptocurrency land, you can even agree with their technology but still be surrounded by the weakest arguments
- FridgeSeal 6y ago
  This is one of the reasons I generally stopped paying attention to the cryptocurrency world. The number of voices with an accurate understanding is far outweighed by the number of people with some kind of personal and ideological axe to grind about (insert some combination of one or more of: government/regulation/inflation/economics/etc) and from my perspective the whole scene got increasingly wild.
  - eru 6y ago
    George Selgin sometimes writes on cryptocurrencies. He knows what he's doing. Though I mostly read him for his writings on eg the private mints that solved the British small change shortage during the industrial revolution. https://www.goodreads.com/book/show/3392302-good-money https://www.goodreads.com/book/show/3392302-good-money
- kiplkipl 6y ago
  I wonder if this could be done intentionally. It's cheaper to make a view popular with a niche, disliked group than to make the opposite view popular with a large voting bloc
  - vmception 6y ago
    I wouldn't say intentionally, there is solidarity around frustration with domestic and global banking systems, but they've just evolved from a limited view within the community.
dathinab 6y ago
True, also in many EU countries credit cards do matter much less. For example in Germany card payment is normally done with EC cards (girocard,vpay,etc), including NFC based payment. For long term recurring payments SEPA is common, for one time payments simple bank transactions over online banking. This includes online payment for services like Amazon. Oh an not to large local payments (e.g. restaurant) are also very often done in cash. Credit cards are only needed for a German person in two cases: Travel and non EU online shops (but which often have pay pal through which you can use your EC card!!). EDIT: Warning in some German cities (e.g. Berlin) you will find a lot of cash only restaurants, mostly due to high costs of payment terminals not being worth it due to most people paying with cash anyway. Like the a local restaurant from where I live they bought a payment terminal it broke in some stupid accident no insurance want's to cover so now it's back to cash only.
- arachnid92 6y ago
  I just want to present a counterpoint to your claim that in the EU, CCs matter less: there are countries in the EU like Sweden where cash is virtually non-existent. Basically everything is card-based here, I've even seen panhandlers who accept electronic payments in Stockholm.
  - PeterisP 6y ago
    Card != CC. The point is that in EU there's less motivation to use credit cards than in USA because the situation is better for payment cards that are not credit cards. If you refer to Sweden, I believe that the split there is that something like 40% of the cards are credit cards, and the majority are not.
    - carlhjerpe 6y ago
      As a Swede, I thought the CC number would be lower. Most people my age never had a credit card. I do have a Visa DC and a MC CC for redundancy if my bank is down, most people I know doesn't even get why.
random3 6y ago
Well they "do not" in the same sense inflation is "not" a tax on anyone holding cash, right? One way or another every fee must be absorbed by someone that pays.
- PeterisP 6y ago
  No, it's that the wrong "they" is used. Interchange goes to issuing banks, not Visa/Mastercard, and that's a big part of why the system is so stable as any competing scheme with a lower interchange will not be offered to customers because it won't be as profitable for the issuers. And, if needed, they can use the whole interchange amount for marketing and cashbacks to make any new scheme uncompetitive, because if it has lower interchange, then it can't match that without losing money.
- Mirioron 6y ago
  And the someone that pays is ultimately the consumer. They are the ones all of this is for and produced by.
morninglight 6y ago
( MASTER Card Ha! They are both making a SLAVE out of you.
- deleted 6y ago
  [deleted]

jedberg 6y ago

I mean, technically no they don't. But that's just being pedantic. They charge the bank based on gross dollar volume, and the bank gets the money to pay for that from... interchange fees. The more volume the bank does, the more they pay and the more they get from interchange fees. Interchange fee pricing is set based on how much mastercard charges the banks, so while technically true, the interchange fees are basically set by mastercard's pricing.

ComputerGuru 6y ago
Interchange fee pricing is set based on how much MasterCard charges the bank That’s not true though, or at least is a massive oversimplification. In the US, interchange fees are extremely inflated to allow banks to recuperate the rewards they give out to distinguish their card offerings from one another. The 2% cashback has to come from somewhere.
- jedberg 6y ago
  Sure, but the base rate comes from MC/Visa. Precessing credit cards is a low margin business. It's basically a race to see who can charge as close to the MC/Visa rates as possible.
  - an_opabinia 6y ago
    This isn't really about Visa-MasterCard, it's about a darling like Stripe charging 2.95% because 3% is customary. People will freak about their customary rent/take being threatened. They gotta come out of the woodwork and justify the charge... somehow. A HN proxy battle!
    - GoblinSlayer 6y ago
      They want to eat too.
- jariel 6y ago
  "The 2% cashback has to come from somewhere." Yes, but in reality, the program comes from an upside down approach to overcoming the obviously anti-competitive practices that VISA/MC use to forbid retailers from offering discounts for not using VISA etc.. You can't say "Get 2% if you use cash instead of VISA". (Notice that nobody ever advertises that?) Because VISA doesn't allow it. You also can't say "$1.99 + 20 cents processing charge" - no, the price must be listed including charges. (Notice that nobody every does this?) But you can possibly find ways to give points, or 'cash-back'. Until now ... [1] VISA is now saying that even such 'cash back' rewards programs are a violation of its rules. Have a look at the press release - it's positively Orwellian: "In order to maintain a level playing field" -> "In order to avoid all transparency and maintain our hidden monopoly" we require that nobody can take steps which highlight the how our transaction fees are embedded in the price. These are pretty blatant anti-competitive practices and taking them on is tantamount to taking on the entire banking system. It's not going to happen. There would need to be an 'outside disruptor' like the Word Processor to the Typewriter kind of thing. [1] https://www.pymnts.com/visa/2018/non-compliant-cash-discount-card-fees/ https://www.pymnts.com/visa/2018/non-compliant-cash-discount...
  - wolco 6y ago
    Like some kind of virtual coin.
    - zaxu 6y ago
      The ability to purely make transactions is trivial - you can just use a debit card. The value of credit cards comes from other factors like fraud protection, SCI compliance, actual credit, etc.
      - eru 6y ago
        Debit cards also charge some fees, but typically lower. The fraud protection of credit cards mostly comes out of the pockets of the merchant, I think? So the merchant could give people a discount for using means of payment without a chargeback, like cash. You are right about the actual credit. Though eg in Germany people usually use their overdraft in a same way that American seem to be using their credit cards for short term credit. (For either convenience is the main selling point. The fees and interest rates for overdraft and credit card debt are usually quite high, I think?)
- Reason077 6y ago
  In the EU, interchange fees are capped at 0.2% of transaction value for debit cards, and 0.3% for credit cards. This has indeed meant that rewards and cashback credit cards have largely disappeared (with the exception of Amex, which operates outside the interchange system?). Rewards/cashback cards that do still exist are typically tied to specific retailers, with whom the issuing bank has cut their own deals.
  - paranoidrobot 6y ago
    > with the exception of Amex, which operates outside the interchange system? Right, but try using Amex in Europe. Outside of major international hotel chains, or where you can do your purchase online through Paypal, you may as well not bother asking if they accept it.
    - reaperducer 6y ago
      Outside of major international hotel chains, or where you can do your purchase online through Paypal, you may as well not bother asking if they accept it. It's very interesting to hear that. When I first started traveling to Europe, having an American Express card (or even better, AmEx travelers checks) was the best way for an American to pay for things. It's even written into some classic books and movies. My how things have changed.
      - Galanwe 6y ago
        I don't think American Express card have ever been a practical way of paying for things in Europe. I would guess 90% of Europeans have never even seen one of these cards, unless they work in international hotels or tourist places.
        mcv 6y ago
        I'm Dutch, and my dad had both an American Express and a Diner's Club card from his work. I never really understood why those would be better than other credit cards.
- gruez 6y ago
  >In the US, interchange fees are extremely inflated to allow banks to recuperate the rewards they give out to distinguish their card offerings from one another. The 2% cashback has to come from somewhere. And that's a bad thing, because it's essentially the poor subsidizing the rich. People who aren't able to get credit cards (or the "good" cash back credit cards) tend to be worse off financially than people who do.
  - granshaw 6y ago
    This has always struck me as one of the more blatant and out-in-the-open financial inequalities in this country.
    - cryptonector 6y ago
      At least we don't have hyperinflation. That's even worse for the poor. Though to be sure I agree with you. We really need to fix this, but it's not going to happen. Right now we're paying an enormous -unprecedented?- political attention tax that is starving lots of important issues of oxygen.
      - arcticbull 6y ago
        Inflation doesn't affect the poor so long as wages keep up with inflation. If you don't have money, there's nothing to inflate.
        samatman 6y ago
        They did say hyperinflation. Characteristic of hyperinflation, is that nothing keeps up with it. Forget wages keeping up: your very paycheck is worth less at the end of two weeks than it was when you received it.
        gruez 6y ago
        > Inflation doesn't affect the poor so long as wages keep up with inflation Does it? In an inflationary environment the status quo is that your wages shrink. I guess it’s better than holding cash because you can renegotiate your wages back, but I don’t think rich people have most of their assets as cash.
Nasrudith 6y ago
So formula wise it would be something like this? d = dollars t = transactions count I(d,t) = Interchange total profit/cost to a bank from fees in and out F(d) = scaling function for interchange returns based on cash pushed through as an arbitrary function G(t) = transaction cost function based upon arbitrary scaling. I(d,t) =F(d) - G(t)
netcan 6y ago
I agree with the OP that we need to be informed in order to have the conversation. But..... You have the main point here. The whole premise of monopolies is that monopolies dominate bottlenecks, and use them to generate outsize revenue and protection from competition. Facebook doesn't make money directly from whatsapp. It can be used to generate data for FB's main advertising business. Most importantly, it helps maintain facebook's dominant position in social media. That position is revenue generating. I agree that understanding the mechanics are important. But, we can't keep treating monopolies as innocent of monopolistic practice until proven guilty. The reason we have antitrust in the first place is that monopoly positions lead to monopolistic practices. We need to assume monopolistic practices exist in the case of a monopoly. When one monopolistic practice (eg amazon marketplace or adwords) has been proven in court, this should be treated as proof of monopoly, not a standalone violation. Same with the CCs.
hef19898 6y ago
And these technicalities matter a lot. They make, in some cases, the difference between legal an illegal. Not understanding them leads to wrong conclusions.

jariel 6y ago

The article does not indicate that VISA/MC makes their money directly from the 'interchange' but it's perfectly valid to indicate that VISA/MS are in fact the lynch-pin of the credit card 'system oligarchy'. In particular, it is they that are able to set rates for transactions, and do anti-competitive things like ban e-retailers from offering relative discounts like 'save 2.5% if you use cash' etc.. It's absolutely an ancient cabal banking network, that would be disrupted in any normal, competitive system. 2.5% of a transaction considerably too much, were there efficiency, it would be less than 0.5%. Edit: monopoly->oligarchy

ian0 6y ago
>> It's absolutely an ancient cabal banking network, that would be disrupted in any normal, competitive system. The fact that banking wasn't a cabal led to the creation of Visa & MC, they provide the function of operating a deliberately independent interchange so competitive banks can work together without having to talk. The fact they havent been replaced isnt due to a lack of "normal competition", its just a system that has built in network effects (but is sticky unlike most social networks). Dont get me wrong - banks love cabals! Thats why domestic switches (led by central banks) are replacing the scheme networks in most countries for domestic transactions with the domestic switches being linked for international transactions, pushing Visa & MC out. >> 2.5% of a transaction considerably too much, were there efficiency, it would be less than 0.5%. I think your wrath is misdirected - that 2.5% may be stated in a Visa/MC press release, but it doesn't actually come from Visa or MC! The banks set interchange through the schemes. You add in 5000 different schemes thats not gonna change the fact that your bank is going to try to get the best bang for their buck if they "acquire" merchants or "issue" cards. The porn thing is linked too, banking is a heavily regulated space, easy to put pressure on. Acquiring banks get in trouble easily, they rely on schemes to blacklist anything which could land them in hot water. Even if there was no MC/VISA banks would still be paying random service providers to operate blacklists. The only difference would be that it would be cheaper. And typically thats not a good thing.
- jariel 6y ago
  Banks are a cabal, that they needed VISA/MC was merely a need to 'standardise' a transactional network. The evidence that they are an oligarchy lies in their power to set prices. Which points right to the definition of what a monopoly is. If such systems were truly competitive, and we had say, 5 completely different systems that were truly competitive, the price would not be a total of 2.5%. The price would be set by the market, not the providers of the service and it would be much, much lower than 2.5%.

vmception 6y ago

> It’s hard to have a healthy dialogue on this topic if folks don’t understand the basics of how the card networks generate revenue. same for so many finance and legal topics you should see the stuff people say in cryptocurrency land, you can even agree with their technology but still be surrounded by the weakest arguments

FridgeSeal 6y ago
This is one of the reasons I generally stopped paying attention to the cryptocurrency world. The number of voices with an accurate understanding is far outweighed by the number of people with some kind of personal and ideological axe to grind about (insert some combination of one or more of: government/regulation/inflation/economics/etc) and from my perspective the whole scene got increasingly wild.
- eru 6y ago
  George Selgin sometimes writes on cryptocurrencies. He knows what he's doing. Though I mostly read him for his writings on eg the private mints that solved the British small change shortage during the industrial revolution. https://www.goodreads.com/book/show/3392302-good-money https://www.goodreads.com/book/show/3392302-good-money
kiplkipl 6y ago
I wonder if this could be done intentionally. It's cheaper to make a view popular with a niche, disliked group than to make the opposite view popular with a large voting bloc
- vmception 6y ago
  I wouldn't say intentionally, there is solidarity around frustration with domestic and global banking systems, but they've just evolved from a limited view within the community.

dathinab 6y ago

True, also in many EU countries credit cards do matter much less. For example in Germany card payment is normally done with EC cards (girocard,vpay,etc), including NFC based payment. For long term recurring payments SEPA is common, for one time payments simple bank transactions over online banking. This includes online payment for services like Amazon. Oh an not to large local payments (e.g. restaurant) are also very often done in cash. Credit cards are only needed for a German person in two cases: Travel and non EU online shops (but which often have pay pal through which you can use your EC card!!). EDIT: Warning in some German cities (e.g. Berlin) you will find a lot of cash only restaurants, mostly due to high costs of payment terminals not being worth it due to most people paying with cash anyway. Like the a local restaurant from where I live they bought a payment terminal it broke in some stupid accident no insurance want's to cover so now it's back to cash only.

arachnid92 6y ago
I just want to present a counterpoint to your claim that in the EU, CCs matter less: there are countries in the EU like Sweden where cash is virtually non-existent. Basically everything is card-based here, I've even seen panhandlers who accept electronic payments in Stockholm.
- PeterisP 6y ago
  Card != CC. The point is that in EU there's less motivation to use credit cards than in USA because the situation is better for payment cards that are not credit cards. If you refer to Sweden, I believe that the split there is that something like 40% of the cards are credit cards, and the majority are not.
  - carlhjerpe 6y ago
    As a Swede, I thought the CC number would be lower. Most people my age never had a credit card. I do have a Visa DC and a MC CC for redundancy if my bank is down, most people I know doesn't even get why.

random3 6y ago

Well they "do not" in the same sense inflation is "not" a tax on anyone holding cash, right? One way or another every fee must be absorbed by someone that pays.

PeterisP 6y ago
No, it's that the wrong "they" is used. Interchange goes to issuing banks, not Visa/Mastercard, and that's a big part of why the system is so stable as any competing scheme with a lower interchange will not be offered to customers because it won't be as profitable for the issuers. And, if needed, they can use the whole interchange amount for marketing and cashbacks to make any new scheme uncompetitive, because if it has lower interchange, then it can't match that without losing money.
Mirioron 6y ago
And the someone that pays is ultimately the consumer. They are the ones all of this is for and produced by.

morninglight 6y ago

( MASTER Card Ha! They are both making a SLAVE out of you.

deleted 6y ago
[deleted]