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Competition drives prices down in a fair market, but the credit card business is an oligopoly - with huge regulatory and structural barriers to entry. That is,
by Reason077 3y ago
Competition drives prices down in a fair market, but the credit card business is an oligopoly - with huge regulatory and structural barriers to entry. That is, despite Visa and MasterCard’s enormous profits, there is little chance of new players entering the market and increasing competition.
Regulation is warranted in monopoly/oligopoly situations. Either by changing the rules to favour/promote increased competition, or, as the EU has done here, by capping the fees which they can charge.
- eru 3y agoHere in Asia we have alternatives to Visa and Mastercard popping up. Merchants are typically happy to take them, because their fees are lower. > Regulation is warranted in monopoly/oligopoly situations. Either by changing the rules to favour/promote increased competition, or, as the EU has done here, by capping the fees which they can charge. I suspect you might want to look into lightening regulations, so that upstart competitors have an easier time entering the market. Instead of piling on ever more regulations that only those who are big enough to afford an army of lawyers and accountants and lobbyists can manage.
- Reason077 3y agoRight. That’s exactly what I mean by “changing the rules to promote increased competition”. This is unlikely to happen in the US, however, where market-dominant corporations have huge lobbying power and can ensure the rules are written in their favour, and any potential upstarts drowned in a sea of red tape.
- eru 3y agoYes. My emphasis was that the specific rule changes you want are probably the removal of special rules, whenever possible.