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Visa, Mastercard Agree to Lower Swipe Fees, Settling Long-Running Lawsuit

183 points by mfiguiere 3y ago

notimpotent 3y ago
[flagged]
- deleted 3y ago
  [deleted]
siwakotisaurav 3y ago
Does this also apply to online transactions or are they free to keep boiling the frog?
- 6DM 3y ago
  This should apply to online transactions, which my employer does. My employer is pursuing this and are expecting to get a lot of money back as a result. Edit: "our company" -> "my employer" for clarity.
malfist 3y ago
It's interesting that operating a massive financial network and charging a 3% fee is too much, but app marketplaces with much less cap ex charge a 30% fee and they're just now being challenged. App market places where you have no option but to use, when you can always pay cash in person.
- marssaxman 3y ago
  > when you can always pay cash in person One might wish that were true, but I am seeing a disturbing proliferation of "no cash accepted" signs here in Seattle.
  - naasking 3y ago
    > I am seeing a disturbing proliferation of "no cash accepted" signs here in Seattle. Is that even legal? I thought retailers must accept all legal forms of tender.
    - devilbunny 3y ago
      They cannot refuse cash for a debt that is owed, but they can refuse to conduct a transaction with it beforehand.
      - deleted 3y ago
        [deleted]
      - naasking 3y ago
        What qualifies as a debt? If I walk into a cashless convenience store and eat a chocolate bar before paying, can I force them to accept cash?
        tredre3 3y ago
        In your scenario you're not accruing a legitimate debt, you stole something (admittedly with the intention of paying for it later).
        naasking 3y ago
        My question is, what formally distinguishes "outstanding payment" from "legitimate debt"?
        devilbunny 3y ago
        The judge. Can you leave the item behind? Were the terms explicitly stated?
    - astura 3y ago
      Of course it's legal. Its also common (try paying for anything on an airplane in cash, for one example). This is such a misconception that the federal reserve has a page on it. https://www.federalreserve.gov/faqs/currency_12772.htm https://www.federalreserve.gov/faqs/currency_12772.htm >There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.
- mschuster91 3y ago
  > App market places where you have no option but to use, when you can always pay cash in person. Try renting a car or hotel without a credit card.
  - _aavaa_ 3y ago
    debit card?
    - nkozyra 3y ago
      A lot of car rental companies still don't accept debit cards or if they do they make the process more difficult and/or expensive.
    - deleted 3y ago
      [deleted]
    - iamjake648 3y ago
      Countless times I've been at the Airport and overhear people complaining about not being able to use their Debit Card with a rental car, or that they don't have enough money in their account to cover would just be a pre-authorization on a credit card.
    - deathanatos 3y ago
      Rental car companies loathe debit cards, for reasons so sane person can fathom. Last time we rented, they (Hertz, as it was) outright refused our debit card.
      - avalys 3y ago
        They don’t like renting to people with bad credit.
        deathanatos 3y ago
        … you don't need to care about credit if you accept cold, hard cash. (Even still, I don't think "has credit card" is a good proxy for credit worthiness.)
- spencerflem 3y ago
  I agree 100%, but to be fair I buy at most $10/year in Android apps, and almost every single thing bought online & usually in person too, goes through a credit card.
- mperham 3y ago
  > when you can always pay cash in person. Legally no one has to accept cash except for "debts, public and private". If a business is selling you something, they can stipulate any form of payment since it isn't a "debt".
  - no_wizard 3y ago
    >debts, public and private And yet, I can't pay my mortgage off with a briefcase of cash. I think this has a lot of caveats too. Not least of which hide behind "KYC" and anti money laundering laws
    - Dylan16807 3y ago
      > And yet, I can't pay my mortgage off with a briefcase of cash. I won't worry too much about the word "off" since paying early is a fussy contract thing. Otherwise, have you tried? I'm pretty doubtful they can refuse.
    - brewdad 3y ago
      I'm sure you could but it would involve setting up an in-person appointment at a specific location of their choosing. Also, expect to fill out a bunch of extra paperwork to show where the cash came from.
  - ipqk 3y ago
    Many city/counties ban cashless retail.
  - _v7gu 3y ago
    What is a sales contract but the admittance of debts on both sides? The seller owes the buyer the good, and the buyer owes the seller the money. Everything is debt in contracts-land and it is quite fascinating. If you'd like, I can stipulate on how "no cash accepted" signs work even though you can force people to accept cash to settle debts.
- deleted 3y ago
  [deleted]
- KennyBlanken 3y ago
  It's not remotely comparable. App stores provide, among other things, the CDN for app downloads and updates. I don't know about you, but damn near every app on my phone is getting updates multiple times a week. That bandwidth, and the architecture to provide it at scale up to "hundreds of millions of devices", is not free. Google, for example, provides a massive toolkit of functions and services as part of the Play Store that's not built-in to Android itself. Both companies provide an entire development environment for free. Etc. Also not free is the infrastructure to run the stores, nor provide security and quality review services. Apple does a lot of automated and human inspection of apps, and while it's not perfect in many ways (and perfect is an impossible standard anyway) it's still an important, valuable service that costs a fuckton of money to run. Credit card networks mostly just pass transactions around, with some fraud stuff. Almost everything is handled by the processors and banks. Really, the problem here is that credit cards don't have competition from wire transfer services that are common in the EU, for example. For decades it's been possible to instantly pay another person or a merchant for a product or service and them to see the transfer happened. Zelle is the only thing that comes close in the US, and it was started by a couple of large banks who were fed up with the lack of modernization of the US wire transfer system. We're the laughing stock of the world, taking days for a wire transfer to go through...
  - alemanek 3y ago
    In the U.S. credit cards would still be superior to direct transfer services like they have in Europe. If someone gets my Card and Pin I don’t get back that money; at least not easily. But if someone steals my credit card I get that money back immediately. I travel quite a bit so I am aware that credit cards don’t work like that everywhere. But, for US issued credit cards the fraud protection alone make them hard to beat. Not great for the merchant though.
  - mixmastamyk 3y ago
    > Google, for example, provides a massive toolkit of functions and services They already did, as well as the expertise, so the extra expense is not large in relation.
- MatthiasPortzel 3y ago
  Just want to mention, these fees are ~3% plus some fixed cost between 5 and 30 cents. This does push the effective percentage up when looking at small transactions like those commonly made in an app store. Stripe is the highest I’ve seen with a 30 cents fixed charge, but this means for a $5 purchase, they’re effectively charging 8.9%.
  - nabakin 3y ago
    I mean you can say the inverse about merchant fees and large purchases. I think Stripe's way of doing things is better because it's inline with the actual expenses they incurr. To their servers, there's no difference between a $1000 purchase and a $1 purchase. The cost to them remains the same so the transaction fee should account for that cost. Let the customer figure out how to eliminate that cost without hiding it from them. Scaling by purchase amount subsidizes smaller purchases, but it allows merchants to take way more money than needed to process the transaction from larger transactions and most people don't even know that it's there and that they are paying significantly more money for an item than they need to. All these card rewards just waste people's time and in the end, the house always wins. This whole reward game is a direct result of this percentage merchant system and I'd rather not have it.
- whimsicalism 3y ago
  i mean the cap ex is that you have to build a phone.
cornholio 3y ago
The likes of Swipe, Venmo, Revolut, Wise etc. should get together and establish a new online payment standard they control, completely outside the reach of the credit card companies. The fees could be near zero and they would still cover the actual costs of running the infrastructure. It's incredible this day and age I have a more intuitive, user friendly and secure payment workflow for crypto - just scan a QR code - while for fiat payments I have to jump through hoops, manually copy static numbers and worry that someone else might steal and abuse the static password that secures access to my own money.
- dylan604 3y ago
  anyone trusting QR codes as the sole gatekeeper to financial transactions is just not being honest with the real world
  - ensignavenger 3y ago
    You don't trust the QR code, all that is is information (a public key, for example). You are trusting the underlying software. (Which in crypto, isn't always the best idea either).
  - cqqxo4zV46cp 3y ago
    The comment contains the words “crypto” and “fiat”. It should be obvious that it’s head-in-the-clouds thinking.
  - whimsicalism 3y ago
    works fine in china
  - Sohcahtoa82 3y ago
    A QR code is nothing more than an encoded string of text. I would expect that if there was a "scan this QR code to pay" system, that the app you're using to pay would show you the amount about to be charged and that you would have to approve it. I don't see anything wrong with it.
lapcat 3y ago
The litigation began in 2005, and the settlement might not be approved (if it is approved) until 2025. 20 years to get "justice" in our system. By the way, I think Mastercard-Visa shows that the question of whether Apple is a "monopoly" is largely irrelevant, as far as consumers and developers are concerned. Any way you slice it, in the US or worldwide, Apple and Google are a duopoly, and that's not healthy competition.
- comex 3y ago
  Not only that, but: > The pact would lower the rates by 0.04 percentage point and keep them there for five years. Seriously? I'm no expert and I know the numbers have to be small given costs and such, but… 0.04%? That said, this part looks more important in the long run: > The proposed settlement would create some changes to give merchants more choice on accepting cards, allowing them to guide consumers to cards that have lower fees. It would also give small businesses the ability to form groups to negotiate swipe fees, similar to what large retailers already do today.
  - ceejayoz 3y ago
    > allowing them to guide consumers to cards that have lower fees... "We don't take Amex" is already annoying enough without adding "we don't take Visa Signature/Infinite or Mastercard World Elite" to the mix.
    - barbazoo 3y ago
      or debit vs credit
  - barbazoo 3y ago
    Here in Canada I wish local merchants just told people they prefer debit given how much cheaper it's for them. Big corporations, thank you for those points. Even if everyone used debit they wouldn't lower the prices anyway.
- deleted 3y ago
  [deleted]
TheRealPomax 3y ago
Is there a non-paywalled link anywhere?
- willk 3y ago
  https://web.archive.org/web/20240326143617/https://www.wsj.com/finance/banking/visa-mastercard-agree-to-lower-swipe-fees-settling-long-running-lawsuit-d6e5f0a8 https://web.archive.org/web/20240326143617/https://www.wsj.c...
- nabakin 3y ago
  This has more of the article, but not all of it https://www.livemint.com/companies/visa-mastercard-agree-to-lower-swipe-fees-settling-long-running-lawsuit-11711463397303.html https://www.livemint.com/companies/visa-mastercard-agree-to-...
losvedir 3y ago
As someone who recently went down a rabbit hole into trying to optimize credit card rewards (and opting for cashback in the end), I'm still kind of perplexed how it all works. Like, who's paying for the flights? Consumers, merchants, airlines, banks? Is there a good primer on how all the pieces work and what the various incentives are and such? I found patio11's post[0] and this Fed investigation[1], and both were interesting but left me wanting more. [0] https://www.bitsaboutmoney.com/archive/how-credit-cards-make-money/ https://www.bitsaboutmoney.com/archive/how-credit-cards-make... [1] https://www.federalreserve.gov/econres/notes/feds-notes/credit-card-profitability-20220909.html https://www.federalreserve.gov/econres/notes/feds-notes/cred...
- dheera 3y ago
  > Like, who's paying for the flights? Mostly all the poor people in credit card debt pay for the flights of the rich. Interest income is the largest of their revenue sources, and interest + cash advance + penalty adds up to well more than half. https://www.fool.com/the-ascent/research/credit-card-company-earnings/ https://www.fool.com/the-ascent/research/credit-card-company...
  - ravenstine 3y ago
    This exactly. If you always pay down your credit card debt every billing period, you're considered a "deadbeat" because you're using the benefits of the credit card's payment processing but not paying in interest. The best customers of financial institutions aren't those whom are financially responsible or flush with cash, but those regularly incurring 14+% interest on every purchase and paying overdraft fees. For airlines in particular, the deals they allow through credit cards are more like loss leaders. They need to fill up seats because that's the nature of their business model. If you don't fill up enough seats to make up for the operating cost, the plane doesn't fly, and if the plane doesn't fly then that's one fewer route you'll have paying customers for. Airlines need to keep routes going, so they create incentives to keep people flying, which hopefully gets them into the habit of flying again even when they've used up all their rewards points.
    - 3y ago
pyrophane 3y ago
Reading the details, this settlement sounds pretty bad: > The settlement would lower those fees by at least 0.04 percentage point for a minimum of three years. > ... the settlement gives merchants the ability to impose surcharges on customers who have Mastercard or Visa cards... > ... merchants would be able to make deals with banks to get them to use what they consider to be a preferred card. Yikes. So, Visa/MC reduce their take but now the merchants are getting in on the game.
- londons_explore 3y ago
  > gives merchants the ability to impose surcharges on customers who have Mastercard or Visa cards. I fully support merchants being able to charge more for card or give a discount for cash. The fact they haven't been able to for 3+ decades is one of the reasons cash has died and everyone effectively has an extra 1% credit card tax on everything they buy. That 1% tax has probably been a pretty massive drag on GDP. Imagine how many new schools we could have had instead.
  - shuckles 3y ago
    Cash has died in societies without these rules though.
    - londons_explore 3y ago
      Across most of the world, Mastercard/Visa has used various threat tactics to basically tell merchants that if they charge a card fee they'll get banned from mastercard/visa. Obviously for most businesses, thats a death knell, so most capitulate. And the few places with competing payment methods (eg. Kaspi in Kazakhstan), Mastercard/Visa have ~zero fees, and sometimes even negative fees (eg. "special offer, you get half price use of the subway if you have a mastercard")
    - dheera 3y ago
      I don't think that is the reason cash has died. Cash has died because it is inconvenient, unsanitary, and risky to walk around with large amounts of it. When I pay cash it's because (a) I'm getting a discount (b) I want to be anonymous and not give any personal information (c) my credit card isn't working on their equipment (d) I'm giving tips and worried that their company will take some of it (e) I buying/selling used items from a stranger and want to use an irreversible method of money transfer. If it weren't for these reasons I wouldn't ever use cash. It's inconvenient. (e) can be served by cryptocurrency, I suppose, but there are other issues with it, like the stranger being able to see your account balance and then come at you with the $5 wrench.
Symbiote 3y ago
I was going to summarize the background to the EU's regulation limiting fees, but it's too long. A couple of snippets relevant to points being discussed: > (10) ... Competition between payment card schemes to convince payment service providers to issue their cards leads to higher rather than lower interchange fees on the market, in contrast with the usual price-disciplining effect of competition in a market economy. In addition to a consistent application of the competition rules to interchange fees, regulating such fees would improve the functioning of the internal market and contribute to reducing transaction costs for consumers. > (11) The existing wide variety of interchange fees and their level prevent the emergence of new pan-Union players on the basis of business models with lower or no interchange fees, to the detriment of potential economies of scale and scope and their resulting efficiencies. This has a negative impact on merchants and consumers and prevents innovation. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32015R0751 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32...
fennecbutt 3y ago
He he they know EU is going after Apple and that they'll be ripe to be targeted. The fees they charge are ridiculous, doesn't cost that much to keep a payment network up. I did work for visa one time and it was clear they had not just money, but m o n e y.
kaynelynn 3y ago
Highly recommend the Acquired Visa episode and the follow up on ACQ2 for those looking to learn more about the inner workings of these networks and economics and history of interchange fees and Cashback programs. These transactions can involve up to 5 (!) parties. This comment won’t do it justice, listen to the podcasts! https://www.acquired.fm/episodes/visa https://www.acquired.fm/episodes/visa https://www.acquired.fm/episodes/saving-the-planet-with-better-ai-data-centers-with-crusoe-ceo-chase-lochmiller https://www.acquired.fm/episodes/saving-the-planet-with-bett...
SebFender 3y ago
More and more stores in my region are simply dropping credit cards and accept cash or debit cards. Simple efficient and judging by repetition - seems to work out fine for them and the customer.

183 points by mfiguiere 3y ago

notimpotent 3y ago

[flagged]

deleted 3y ago
[deleted]

siwakotisaurav 3y ago

Does this also apply to online transactions or are they free to keep boiling the frog?

6DM 3y ago
This should apply to online transactions, which my employer does. My employer is pursuing this and are expecting to get a lot of money back as a result. Edit: "our company" -> "my employer" for clarity.

malfist 3y ago

It's interesting that operating a massive financial network and charging a 3% fee is too much, but app marketplaces with much less cap ex charge a 30% fee and they're just now being challenged. App market places where you have no option but to use, when you can always pay cash in person.

marssaxman 3y ago
> when you can always pay cash in person One might wish that were true, but I am seeing a disturbing proliferation of "no cash accepted" signs here in Seattle.
- naasking 3y ago
  > I am seeing a disturbing proliferation of "no cash accepted" signs here in Seattle. Is that even legal? I thought retailers must accept all legal forms of tender.
  - devilbunny 3y ago
    They cannot refuse cash for a debt that is owed, but they can refuse to conduct a transaction with it beforehand.
    - deleted 3y ago
      [deleted]
    - naasking 3y ago
      What qualifies as a debt? If I walk into a cashless convenience store and eat a chocolate bar before paying, can I force them to accept cash?
      - tredre3 3y ago
        In your scenario you're not accruing a legitimate debt, you stole something (admittedly with the intention of paying for it later).
        naasking 3y ago
        My question is, what formally distinguishes "outstanding payment" from "legitimate debt"?
        devilbunny 3y ago
        The judge. Can you leave the item behind? Were the terms explicitly stated?
  - astura 3y ago
    Of course it's legal. Its also common (try paying for anything on an airplane in cash, for one example). This is such a misconception that the federal reserve has a page on it. https://www.federalreserve.gov/faqs/currency_12772.htm https://www.federalreserve.gov/faqs/currency_12772.htm >There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.
mschuster91 3y ago
> App market places where you have no option but to use, when you can always pay cash in person. Try renting a car or hotel without a credit card.
- _aavaa_ 3y ago
  debit card?
  - nkozyra 3y ago
    A lot of car rental companies still don't accept debit cards or if they do they make the process more difficult and/or expensive.
  - deleted 3y ago
    [deleted]
  - iamjake648 3y ago
    Countless times I've been at the Airport and overhear people complaining about not being able to use their Debit Card with a rental car, or that they don't have enough money in their account to cover would just be a pre-authorization on a credit card.
  - deathanatos 3y ago
    Rental car companies loathe debit cards, for reasons so sane person can fathom. Last time we rented, they (Hertz, as it was) outright refused our debit card.
    - avalys 3y ago
      They don’t like renting to people with bad credit.
      - deathanatos 3y ago
        … you don't need to care about credit if you accept cold, hard cash. (Even still, I don't think "has credit card" is a good proxy for credit worthiness.)
spencerflem 3y ago
I agree 100%, but to be fair I buy at most $10/year in Android apps, and almost every single thing bought online & usually in person too, goes through a credit card.
mperham 3y ago
> when you can always pay cash in person. Legally no one has to accept cash except for "debts, public and private". If a business is selling you something, they can stipulate any form of payment since it isn't a "debt".
- no_wizard 3y ago
  >debts, public and private And yet, I can't pay my mortgage off with a briefcase of cash. I think this has a lot of caveats too. Not least of which hide behind "KYC" and anti money laundering laws
  - Dylan16807 3y ago
    > And yet, I can't pay my mortgage off with a briefcase of cash. I won't worry too much about the word "off" since paying early is a fussy contract thing. Otherwise, have you tried? I'm pretty doubtful they can refuse.
  - brewdad 3y ago
    I'm sure you could but it would involve setting up an in-person appointment at a specific location of their choosing. Also, expect to fill out a bunch of extra paperwork to show where the cash came from.
- ipqk 3y ago
  Many city/counties ban cashless retail.
- _v7gu 3y ago
  What is a sales contract but the admittance of debts on both sides? The seller owes the buyer the good, and the buyer owes the seller the money. Everything is debt in contracts-land and it is quite fascinating. If you'd like, I can stipulate on how "no cash accepted" signs work even though you can force people to accept cash to settle debts.
deleted 3y ago
[deleted]
KennyBlanken 3y ago
It's not remotely comparable. App stores provide, among other things, the CDN for app downloads and updates. I don't know about you, but damn near every app on my phone is getting updates multiple times a week. That bandwidth, and the architecture to provide it at scale up to "hundreds of millions of devices", is not free. Google, for example, provides a massive toolkit of functions and services as part of the Play Store that's not built-in to Android itself. Both companies provide an entire development environment for free. Etc. Also not free is the infrastructure to run the stores, nor provide security and quality review services. Apple does a lot of automated and human inspection of apps, and while it's not perfect in many ways (and perfect is an impossible standard anyway) it's still an important, valuable service that costs a fuckton of money to run. Credit card networks mostly just pass transactions around, with some fraud stuff. Almost everything is handled by the processors and banks. Really, the problem here is that credit cards don't have competition from wire transfer services that are common in the EU, for example. For decades it's been possible to instantly pay another person or a merchant for a product or service and them to see the transfer happened. Zelle is the only thing that comes close in the US, and it was started by a couple of large banks who were fed up with the lack of modernization of the US wire transfer system. We're the laughing stock of the world, taking days for a wire transfer to go through...
- alemanek 3y ago
  In the U.S. credit cards would still be superior to direct transfer services like they have in Europe. If someone gets my Card and Pin I don’t get back that money; at least not easily. But if someone steals my credit card I get that money back immediately. I travel quite a bit so I am aware that credit cards don’t work like that everywhere. But, for US issued credit cards the fraud protection alone make them hard to beat. Not great for the merchant though.
- mixmastamyk 3y ago
  > Google, for example, provides a massive toolkit of functions and services They already did, as well as the expertise, so the extra expense is not large in relation.
MatthiasPortzel 3y ago
Just want to mention, these fees are ~3% plus some fixed cost between 5 and 30 cents. This does push the effective percentage up when looking at small transactions like those commonly made in an app store. Stripe is the highest I’ve seen with a 30 cents fixed charge, but this means for a $5 purchase, they’re effectively charging 8.9%.
- nabakin 3y ago
  I mean you can say the inverse about merchant fees and large purchases. I think Stripe's way of doing things is better because it's inline with the actual expenses they incurr. To their servers, there's no difference between a $1000 purchase and a $1 purchase. The cost to them remains the same so the transaction fee should account for that cost. Let the customer figure out how to eliminate that cost without hiding it from them. Scaling by purchase amount subsidizes smaller purchases, but it allows merchants to take way more money than needed to process the transaction from larger transactions and most people don't even know that it's there and that they are paying significantly more money for an item than they need to. All these card rewards just waste people's time and in the end, the house always wins. This whole reward game is a direct result of this percentage merchant system and I'd rather not have it.
whimsicalism 3y ago
i mean the cap ex is that you have to build a phone.

cornholio 3y ago

The likes of Swipe, Venmo, Revolut, Wise etc. should get together and establish a new online payment standard they control, completely outside the reach of the credit card companies. The fees could be near zero and they would still cover the actual costs of running the infrastructure. It's incredible this day and age I have a more intuitive, user friendly and secure payment workflow for crypto - just scan a QR code - while for fiat payments I have to jump through hoops, manually copy static numbers and worry that someone else might steal and abuse the static password that secures access to my own money.

dylan604 3y ago
anyone trusting QR codes as the sole gatekeeper to financial transactions is just not being honest with the real world
- ensignavenger 3y ago
  You don't trust the QR code, all that is is information (a public key, for example). You are trusting the underlying software. (Which in crypto, isn't always the best idea either).
- cqqxo4zV46cp 3y ago
  The comment contains the words “crypto” and “fiat”. It should be obvious that it’s head-in-the-clouds thinking.
- whimsicalism 3y ago
  works fine in china
- Sohcahtoa82 3y ago
  A QR code is nothing more than an encoded string of text. I would expect that if there was a "scan this QR code to pay" system, that the app you're using to pay would show you the amount about to be charged and that you would have to approve it. I don't see anything wrong with it.

lapcat 3y ago

The litigation began in 2005, and the settlement might not be approved (if it is approved) until 2025. 20 years to get "justice" in our system. By the way, I think Mastercard-Visa shows that the question of whether Apple is a "monopoly" is largely irrelevant, as far as consumers and developers are concerned. Any way you slice it, in the US or worldwide, Apple and Google are a duopoly, and that's not healthy competition.

comex 3y ago
Not only that, but: > The pact would lower the rates by 0.04 percentage point and keep them there for five years. Seriously? I'm no expert and I know the numbers have to be small given costs and such, but… 0.04%? That said, this part looks more important in the long run: > The proposed settlement would create some changes to give merchants more choice on accepting cards, allowing them to guide consumers to cards that have lower fees. It would also give small businesses the ability to form groups to negotiate swipe fees, similar to what large retailers already do today.
- ceejayoz 3y ago
  > allowing them to guide consumers to cards that have lower fees... "We don't take Amex" is already annoying enough without adding "we don't take Visa Signature/Infinite or Mastercard World Elite" to the mix.
  - barbazoo 3y ago
    or debit vs credit
- barbazoo 3y ago
  Here in Canada I wish local merchants just told people they prefer debit given how much cheaper it's for them. Big corporations, thank you for those points. Even if everyone used debit they wouldn't lower the prices anyway.
deleted 3y ago
[deleted]

TheRealPomax 3y ago

Is there a non-paywalled link anywhere?

willk 3y ago
https://web.archive.org/web/20240326143617/https://www.wsj.com/finance/banking/visa-mastercard-agree-to-lower-swipe-fees-settling-long-running-lawsuit-d6e5f0a8 https://web.archive.org/web/20240326143617/https://www.wsj.c...
nabakin 3y ago
This has more of the article, but not all of it https://www.livemint.com/companies/visa-mastercard-agree-to-lower-swipe-fees-settling-long-running-lawsuit-11711463397303.html https://www.livemint.com/companies/visa-mastercard-agree-to-...

losvedir 3y ago

As someone who recently went down a rabbit hole into trying to optimize credit card rewards (and opting for cashback in the end), I'm still kind of perplexed how it all works. Like, who's paying for the flights? Consumers, merchants, airlines, banks? Is there a good primer on how all the pieces work and what the various incentives are and such? I found patio11's post[0] and this Fed investigation[1], and both were interesting but left me wanting more. [0] https://www.bitsaboutmoney.com/archive/how-credit-cards-make-money/ https://www.bitsaboutmoney.com/archive/how-credit-cards-make... [1] https://www.federalreserve.gov/econres/notes/feds-notes/credit-card-profitability-20220909.html https://www.federalreserve.gov/econres/notes/feds-notes/cred...

dheera 3y ago
> Like, who's paying for the flights? Mostly all the poor people in credit card debt pay for the flights of the rich. Interest income is the largest of their revenue sources, and interest + cash advance + penalty adds up to well more than half. https://www.fool.com/the-ascent/research/credit-card-company-earnings/ https://www.fool.com/the-ascent/research/credit-card-company...
- ravenstine 3y ago
  This exactly. If you always pay down your credit card debt every billing period, you're considered a "deadbeat" because you're using the benefits of the credit card's payment processing but not paying in interest. The best customers of financial institutions aren't those whom are financially responsible or flush with cash, but those regularly incurring 14+% interest on every purchase and paying overdraft fees. For airlines in particular, the deals they allow through credit cards are more like loss leaders. They need to fill up seats because that's the nature of their business model. If you don't fill up enough seats to make up for the operating cost, the plane doesn't fly, and if the plane doesn't fly then that's one fewer route you'll have paying customers for. Airlines need to keep routes going, so they create incentives to keep people flying, which hopefully gets them into the habit of flying again even when they've used up all their rewards points.
  - 3y ago

pyrophane 3y ago

Reading the details, this settlement sounds pretty bad: > The settlement would lower those fees by at least 0.04 percentage point for a minimum of three years. > ... the settlement gives merchants the ability to impose surcharges on customers who have Mastercard or Visa cards... > ... merchants would be able to make deals with banks to get them to use what they consider to be a preferred card. Yikes. So, Visa/MC reduce their take but now the merchants are getting in on the game.

londons_explore 3y ago
> gives merchants the ability to impose surcharges on customers who have Mastercard or Visa cards. I fully support merchants being able to charge more for card or give a discount for cash. The fact they haven't been able to for 3+ decades is one of the reasons cash has died and everyone effectively has an extra 1% credit card tax on everything they buy. That 1% tax has probably been a pretty massive drag on GDP. Imagine how many new schools we could have had instead.
- shuckles 3y ago
  Cash has died in societies without these rules though.
  - londons_explore 3y ago
    Across most of the world, Mastercard/Visa has used various threat tactics to basically tell merchants that if they charge a card fee they'll get banned from mastercard/visa. Obviously for most businesses, thats a death knell, so most capitulate. And the few places with competing payment methods (eg. Kaspi in Kazakhstan), Mastercard/Visa have ~zero fees, and sometimes even negative fees (eg. "special offer, you get half price use of the subway if you have a mastercard")
  - dheera 3y ago
    I don't think that is the reason cash has died. Cash has died because it is inconvenient, unsanitary, and risky to walk around with large amounts of it. When I pay cash it's because (a) I'm getting a discount (b) I want to be anonymous and not give any personal information (c) my credit card isn't working on their equipment (d) I'm giving tips and worried that their company will take some of it (e) I buying/selling used items from a stranger and want to use an irreversible method of money transfer. If it weren't for these reasons I wouldn't ever use cash. It's inconvenient. (e) can be served by cryptocurrency, I suppose, but there are other issues with it, like the stranger being able to see your account balance and then come at you with the $5 wrench.

Symbiote 3y ago

I was going to summarize the background to the EU's regulation limiting fees, but it's too long. A couple of snippets relevant to points being discussed: > (10) ... Competition between payment card schemes to convince payment service providers to issue their cards leads to higher rather than lower interchange fees on the market, in contrast with the usual price-disciplining effect of competition in a market economy. In addition to a consistent application of the competition rules to interchange fees, regulating such fees would improve the functioning of the internal market and contribute to reducing transaction costs for consumers. > (11) The existing wide variety of interchange fees and their level prevent the emergence of new pan-Union players on the basis of business models with lower or no interchange fees, to the detriment of potential economies of scale and scope and their resulting efficiencies. This has a negative impact on merchants and consumers and prevents innovation. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32015R0751 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32...

fennecbutt 3y ago

He he they know EU is going after Apple and that they'll be ripe to be targeted. The fees they charge are ridiculous, doesn't cost that much to keep a payment network up. I did work for visa one time and it was clear they had not just money, but m o n e y.

kaynelynn 3y ago

Highly recommend the Acquired Visa episode and the follow up on ACQ2 for those looking to learn more about the inner workings of these networks and economics and history of interchange fees and Cashback programs. These transactions can involve up to 5 (!) parties. This comment won’t do it justice, listen to the podcasts! https://www.acquired.fm/episodes/visa https://www.acquired.fm/episodes/visa https://www.acquired.fm/episodes/saving-the-planet-with-better-ai-data-centers-with-crusoe-ceo-chase-lochmiller https://www.acquired.fm/episodes/saving-the-planet-with-bett...

SebFender 3y ago

More and more stores in my region are simply dropping credit cards and accept cash or debit cards. Simple efficient and judging by repetition - seems to work out fine for them and the customer.