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This argument gets brought up repeatedly on HN (most recently on Patrick’s last post about credit card rewards). The counter argument is that there are costs as

by sxg 2y ago

This argument gets brought up repeatedly on HN (most recently on Patrick’s last post about credit card rewards). The counter argument is that there are costs associated with securing transactions and fraud prevention that do benefit all credit card users. The “tax” does result in a downstream benefit.

konschubert 2y ago
Well, give customers a choice to pay extra for buyer protection. Most transactions are repeat business and require no trust intermediary.
- user90131313 2y ago
  Visa makes double digit $B profit. %100 reason it is not because of fraud. It's the lie they sell you. All card issuers and Stripe too.
- sxg 2y ago
  There is an alternative: use cash. > Most transactions are repeat business and require no trust intermediary. I'm not an expert in this field, but I know enough to be humble when it comes to cybersecurity. I don't think fraud prevention is that simple.
  - konschubert 2y ago
    I cannot use cash online and it’s a much bigger hassle offline. We have the computers to make easy instant payments cheap. Let’s do it.
- kevincox 2y ago
  I think this should be the main response. If the fees were charged to the customer they would be able to make an informed choice. But as it is the fees are already included in the price, so you are just losing if you don't use the credit card and get rewards. But it also isn't easy to charge the customer for the fee because it is different for different cards. I don't even know if there is a reliable way for the average business to know the fee, the card company just tells them at the end of the month.
  - lotsofpulp 2y ago
    Businesses don’t need to know they exact percentage to the thousandths decimal. They could easily charge all credit card users x%. If they do not, it is because they benefit by people using credit cards because the business is betting they will be able to collect more than x% via people being willing to spend more if they use a credit card rather than other methods of payment. Note that some businesses do not want to place this bet, and have long had lower debit card prices (such as US gas stations). https://link.springer.com/article/10.1023/A:1008196717017 https://link.springer.com/article/10.1023/A:1008196717017
- pixodaros 2y ago
  Dan Davies' book on frauds has a whole chapter on scams where you open a business, buy goods and pay in cash for a year or so, then order lots of goods on credit, sell them, take the money and run. Cryptocurrency people call their version rug pulling.
  - konschubert 2y ago
    You’re mixing two different scam concepts. None of this is a problem with a debit card that’s debited to a bank account on real time.
    - pixodaros 2y ago
      If you say "when I sent this business my money or goods in the past, they always send me goods or money, so I trust them" you are vulnerable to exit scams and rug pulling. One of Dan Davies' examples is a darkweb market where the mechanism to hold money in escrow until the buyer received the goods was expensive and annoying for sellers, so trusted sellers ask buyers to not use it; eventually those sellers take one last batch of orders, don't send anything, and disappear with the money.
      - konschubert 2y ago
        I don’t need Mastercard to intermediate my each and every one of my transactions with Amazon, Uber or Burger King. There is a time and place for intermediaries, but most transactions don’t need them.
        pixodaros 2y ago
        You are welcome to use many different payment rails with Amazon, Burger King, etc. Between them Patrick McKenzie and Dan Davies are pretty good on why people use the rails they do, and which blood wrote the financial regulations governing them.
        konschubert 2y ago
axelthegerman 2y ago
That is the biggest BS I've heard in some time. Maybe go ahead and compare the interchange fees of AMEX compared to other cards and then there benefits and income requirements. If it's not obvious it's the whole points/cashback scheme in Canada and especially the US what's driving up the fees for businesses and in the end all customers no matter the payment method. Either we should have regulated maximum fees like the EU introduced and/or allow sellers to charge fees for certain payment methods - now the only option is to not accept AMEX at all.

by sxg 2y ago

konschubert 2y ago

Well, give customers a choice to pay extra for buyer protection. Most transactions are repeat business and require no trust intermediary.

user90131313 2y ago
Visa makes double digit $B profit. %100 reason it is not because of fraud. It's the lie they sell you. All card issuers and Stripe too.
sxg 2y ago
There is an alternative: use cash. > Most transactions are repeat business and require no trust intermediary. I'm not an expert in this field, but I know enough to be humble when it comes to cybersecurity. I don't think fraud prevention is that simple.
- konschubert 2y ago
  I cannot use cash online and it’s a much bigger hassle offline. We have the computers to make easy instant payments cheap. Let’s do it.
kevincox 2y ago
I think this should be the main response. If the fees were charged to the customer they would be able to make an informed choice. But as it is the fees are already included in the price, so you are just losing if you don't use the credit card and get rewards. But it also isn't easy to charge the customer for the fee because it is different for different cards. I don't even know if there is a reliable way for the average business to know the fee, the card company just tells them at the end of the month.
- lotsofpulp 2y ago
  Businesses don’t need to know they exact percentage to the thousandths decimal. They could easily charge all credit card users x%. If they do not, it is because they benefit by people using credit cards because the business is betting they will be able to collect more than x% via people being willing to spend more if they use a credit card rather than other methods of payment. Note that some businesses do not want to place this bet, and have long had lower debit card prices (such as US gas stations). https://link.springer.com/article/10.1023/A:1008196717017 https://link.springer.com/article/10.1023/A:1008196717017
pixodaros 2y ago
Dan Davies' book on frauds has a whole chapter on scams where you open a business, buy goods and pay in cash for a year or so, then order lots of goods on credit, sell them, take the money and run. Cryptocurrency people call their version rug pulling.
- konschubert 2y ago
  You’re mixing two different scam concepts. None of this is a problem with a debit card that’s debited to a bank account on real time.
  - pixodaros 2y ago
    If you say "when I sent this business my money or goods in the past, they always send me goods or money, so I trust them" you are vulnerable to exit scams and rug pulling. One of Dan Davies' examples is a darkweb market where the mechanism to hold money in escrow until the buyer received the goods was expensive and annoying for sellers, so trusted sellers ask buyers to not use it; eventually those sellers take one last batch of orders, don't send anything, and disappear with the money.
    - konschubert 2y ago
      I don’t need Mastercard to intermediate my each and every one of my transactions with Amazon, Uber or Burger King. There is a time and place for intermediaries, but most transactions don’t need them.
      - pixodaros 2y ago
        You are welcome to use many different payment rails with Amazon, Burger King, etc. Between them Patrick McKenzie and Dan Davies are pretty good on why people use the rails they do, and which blood wrote the financial regulations governing them.
        konschubert 2y ago

axelthegerman 2y ago

That is the biggest BS I've heard in some time. Maybe go ahead and compare the interchange fees of AMEX compared to other cards and then there benefits and income requirements. If it's not obvious it's the whole points/cashback scheme in Canada and especially the US what's driving up the fees for businesses and in the end all customers no matter the payment method. Either we should have regulated maximum fees like the EU introduced and/or allow sellers to charge fees for certain payment methods - now the only option is to not accept AMEX at all.