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DOJ accuses Visa of monopoly that affects price of 'nearly everything’
- dzonga 2y agoif 'crypto' wasn't used for scams / crime. it would have been the perfect candidate to break the Visa / Mastercard duopoly. but alas....
- deleted 2y ago[deleted]
- goda90 2y agoI'd say the bigger issue was the speculative trading. Why would you use it to buy things that will depreciate in value if you think the currency itself will go up in value? Likewise, why would you buy currency if tomorrow its value can tank really hard?
- beaglesss 2y agoThe reason floating crypto isn't viable as a domestic currency is it's a taxable capital gains/loss event every transaction, and not directly useful in paying those taxes. A recordkeeping nightmare, intentionally created by the tax masters.
- killjoywashere 2y agoUh, who do I use if not Visa (1.15 to 2.4%) or Mastercard (1.15 to 2.5%)? Square (2.6 to 2.9%)? AMEX (up to 3.3%)? Paypal (3 to 3.5%)?
- m463 2y agoIt is more the others that don't exist. visa was able to "impose a web of exclusionary agreements on merchants and banks. These agreements penalize Visa’s customers who route transactions to a different debit network or alternative payment system."
- kristofferR 2y agoYup. Here in Norway all debit/credit cards are combo BankAxept and Visa/Mastercard. BankAxept is used for 8/10 in-country transactions. BankAxept charges maximum 0.135% fees, even less for high-transaction businesses: https://bankaxept.no/hjelp/priser-for-bankaxept https://bankaxept.no/hjelp/priser-for-bankaxept
- decremental 2y ago[dead]
- sublinear 2y ago> More than 60% of debit transactions in the U.S. run over Visa rails, helping it charge more than $7 billion annually in processing fees, according to the DOJ complaint. Is that really a monopoly though?
- eagerpace 2y agoAs with many things, it’s a duopoly with Mastercard that has another 30% of the market.
- ethbr1 2y agoDuopoly scenarios are why the trifecta of historical anti-trust criteria were one of more of: - Monopoly market share - Negative impact to customers (e.g. higher prices) - Collusion to thwart competition Prosecuted under a variety of laws, but all illegal at scale. The latter two are more relevant to modern global enterprise competition. A duopoly isn't really optimally lowering prices for anything, as there's limited risk of defection and price signaling is pretty easy.
- HideousKojima 2y agoThat works out to ~$22 per American per year. Not sure what Visa's operating costs for their network are, and I'm no big fan of them (or any other credit card company) but that's far cheaper than I would have expected given the convenience provided by almost never needing cash or checks. So as far as its impact on prices go, it doesn't sound like it's really a huge amount.
- popcalc 2y ago>far cheaper than I would have expected given the convenience provided by almost never needing cash or checks Is there no alternative system that succeeds in affording both convenience and low (even state-subsidized) costs?
- egypturnash 2y agoVisa acts as a censor, too. If you are making perfectly legal porn, for instance, then every few years you need to find a new way to take payment because your old one got big enough for Visa to notice it and say "hey no porn".
- popcalc 2y ago[flagged]
- teractiveodular 2y agoReally? I'm not sure how many HNers there are at Visa/MC, the primary beneficiaries of the status quo. (Which are owned by major banks, who thus also get their take.) That said, this is only about debit fees, which are much less {lucrative,exploitative} than credit card fees.
- eastbound 2y ago[flagged]
- ethbr1 2y agoMicrosoft/IE (2001) [0] Basically the reason we have a diversity of browsers these days and Microsoft doesn't own the internet. But that was in their more rapacious Ballmer days... [0] https://en.m.wikipedia.org/wiki/United_States_v._Microsoft_Corp https://en.m.wikipedia.org/wiki/United_States_v._Microsoft_C....
- eastbound 2y agoMicrosoft was condemned, but then the sentence wasn’t applied. Microsoft kept IE, and a few years later only got slapped by the EU commission.
- ethbr1 2y agoAs a result, Microsoft had to enter into a consent decree, allow additional non-Microsoft software on PCs, and share a variety of interop protocols. That's far from nothing, and the web would have been substantially worse without it. Imagine if IE was the only Windows browser, MS JScript had dominated over JavaScript, IE-only AJAX was the only option, etc. Measure not against perfection, but against the status quo. (I'd also argue the entire experience fundamentally changed MS into the company it is today, where interoperability and "growing the pie" again seem important, vs the Borg-like domination trajectory its leadership was then on)
- jimbob45 2y agoOther browsers were allowed to exist in Windows restriction-free. The DoJ simply took umbrage with MS bundling IE with Windows. The judgment was vacated a year later and IE still ships with Windows and never took over the world. Conversely, the Apple App Store does not allow competitors and is directly the reason you can't buy your app anywhere else. Further, MS never profited directly off of IE whereas a sizeable portion of Apple's profits comes directly from their app store. Also, most of US v Microsoft took place prior to Ballmer coming into power.
- sunflowerfly 2y agoEvery terminal should be required to run any legitimate card on its own network.
- chinathrow 2y agoAnd every transaction should have a fixed cost, no matter what the amount is.
- milesskorpen 2y agoRisk & value scale with transaction size
- yxhuvud 2y agoAnd with account type.
- s1artibartfast 2y agoWhy? If I want to make a terminal, why should that be illegal. What regulators should really focus on in my opinion is any uncompetitive contractual obligations visa is imposing on vendors.
- zug_zug 2y agoBecause interoperability is key to competition...? Imagine a universe where different hardware doesn't interoperate (e.g. androids can't call iphones, Macs can't use google.com, ChatGPT is only accessible to Comcast subscribers) I hope we can all agree it's a nightmare scenario. Sometimes the free market gets it right without intervention, sadly sometimes it does not.
- cmeacham98 2y ago> androids can't call iphones Oh, you mean like how iOS has a private text chat system Androids can't access, and they're only kinda partially giving access to some of the features a decade later? Wouldn't that be crazy.
- donatj 2y agoWhy now is the real question? Hasn't this basically been the state of things since the late 1990s? What changed that they're going after them now?
- BobaFloutist 2y agoFTC is staffed with people that think monopolies are bad.
- DannyBee 2y agoThat's both unfair and untrue. The FTC has been staffed with very good antitrust lawyers for a long time. The career employees give a crap or they wouldn't be there - every single one of them could make a lot more in private practice. They are at the FTC because they give a crap and are good. As such, there's no need to denigrate them without any evidence.
- snackjack_38294 2y ago[dead]
- roughly 2y agoBecause the Biden administration has effective antitrust regulation as a policy goal and has staffed the FTC with competent people empowered to pursue that.
- lolinder 2y agoAnd, notably, it's an election year and the Biden administration wants everyone to see what's at stake in the election. Yes, they probably also believe in what they're doing and yes, they've been putting this together for a while, but it's not a coincidence that we've had a regular cadence of these announcements for the past few months. Edit: Recognizing when your party is playing a political game is a healthy part of the democratic process even if you agree with their goals. Pretending your preferred party is above political showmanship isn't even party loyalty, it's just naivete. Everyone needs to put on the show to accomplish their goals.
- legitster 2y ago> More than 60% of debit transactions in the U.S. run over Visa rails, helping it charge more than $7 billion annually in processing fees, according to the DOJ complaint. 60% seems pretty well short of monopoly. Also, if you factor in that cash is an option, and the significant inroads being made by options like Square and Venmo, Visa doesn't actually even have a majority in the market. I'm skeptical of this action overall. I love competition as much as the next guy, but Visa, Mastercard, and Discover's primary value they provide is fraud detection and prevention. There are enormous economies of scale at play, and it's hard to believe that breaking up the big guys into dozens of independent, fly-by-wire cut-rate providers is in the public's best interests long term. That is, unless the federal government wants to come in and actually pursue small-time fraud.
- bthrn 2y ago> Also, if you factor in that cash is an option Lots of places stopped taking cash. In many places my only option is to pay with a card.
- advisedwang 2y agoI think of it this way: does a business have an option not to do business with Visa? Realistically no. They have all the market power that a monopoly has.
- legitster 2y ago> does a business have an option not to do business with Visa? Absolutely. There's Discover, Mastercard, Google Pay, Apple Wallet, crypto, checks, and good old-fashioned cash.
- madeofpalk 2y agoApple Pay and Google Pay are not payment networks. Those are just Visa and Mastercard.
- legitster 2y ago
- ethbr1 2y agoIt's nice to see the DOJ taking a more aggressive approach towards monopoly charges again. ~1900... ~1950... ~1980... ~2000... About time for the wheel to turn around.
- deleted 2y ago[deleted]
- deleted 2y ago[deleted]
- jmyeet 2y agoIf you ever encounter someone who says that companies can't be policed or that government is ineffective, I want you to point them to the FTC. For context, the current chair of the FTC is Lina Khan who is only 35 years old. She became famous while a student at Yale Law School for writing Amazon's Antitrust Paradox [1], which has come to revolutionize the thinking on antitrust. A recent example is asthma inhalers. An asthma inhaler in the US costs ~$500. In France it's $7. Now we can't just import from overseas. That's illegal (because reasons). So how are generic inhalers blocked? By tricks to extend patents. In this case, the patent holder justifies a patent extension with a small piece of plastic on the cap so you don't lose it. That's all capitalism does: it builds enclosures, on this case on "intellectual" property and by buying the government to create a monopoly by banning imports and banning Medicare from negotiating prices. Just the threat of FTC action and a Senate investigation has created concessions by (so far) 3 of the 4 inhaler makers agreeing to cap inhaler costs at $35. From $500. With just a threat. Companies are so concerned about this that big donors to the Harris campaign want Lina Khan fired [2] (she is, of course, history in the event of a Trump victory in November). This should be a lesson in both the necessity of regulation and how easy it can be if you halfway try. The idea that the government is bloated and ineffective is propaganda by those who want to poison the water supply to make a slightly higher profit. Personally, I want the FTC to go after national ISPs. And I fully support investigation and regulation of the Visa payment network. [1]: https://www.yalelawjournal.org/note/amazons-antitrust-paradox https://www.yalelawjournal.org/note/amazons-antitrust-parado... [2]: https://www.bloomberg.com/news/articles/2024-09-06/kamala-harris-donors-privately-want-ftc-s-lina-khan-sec-s-gary-gensler-removed?embedded-checkout=true https://www.bloomberg.com/news/articles/2024-09-06/kamala-ha...
- anon291 2y ago> That's all capitalism does: it builds enclosures, on this case on "intellectual" property and by buying the government to create a monopoly by banning imports and banning Medicare from negotiating prices. Patents and import restrictions are orthogonal to capitalism as an economic system. They're obviously not the invisible hand of the market, but the actions of the very draconian hand of the government
- 2y ago
- ChrisArchitect 2y agoOfficial release: https://www.justice.gov/opa/pr/justice-department-sues-visa-monopolizing-debit-markets https://www.justice.gov/opa/pr/justice-department-sues-visa-...
- hnburnsy 2y agoIt looks like Visa debit fees are about $0.21 + 0.05%. Compare that to cash handling... >The idea that accepting cash is cheap is actually a myth. While some business owners might think the 3 percent fee for processing credit cards is a burden, research from IHL Group shows that cash handling costs many retailers between 4.7 and 15.3 percent. This means for every $100 sale, a business is paying between $4.70 and $15.30 just to manage their cash. And, the cost is only increasing as more businesses and consumers trend away from cash. >Handling cash also comes with many unwanted risks. The process business owners must go through to manage cash is a clear burden. They have to account for it; count the drawer nightly and rely on employees to use the honor system when doing so; package it up and either hire a courier or send an employee to transport it to a bank; pay fees for processing and handling; and ultimately run the risk of exposing the employee, cash, and the business to liabilities that may not be recoverable. https://www.plainscapital.com/blog/the-cost-of-accepting-cash/ https://www.plainscapital.com/blog/the-cost-of-accepting-cas...
- sunshowers 2y agoWell, the comparison is not cash but a counterfactual market that's more competitive and where fees are lower.
- deleted 2y ago[deleted]
- axus 2y agoThe cost of handling cards is more than the fees, obviously the machinery and network needed to use them costs something. It's always going to beat cash, but cash should always be available as a fallback for disaster situations and "off-grid" individuals. I don't think government should be setting prices. But disrupting monopolies is one of those things governments are good for.
- chaostheory 2y agoOne big reason that it’s still favored is because it allows some tax evasion
- lolinder 2y ago
- BadHumans 2y agoI think it is great that the DOJ is finally interested in breaking monopolies but unfortunately a lot of these cases are going to be pending the election. Depending on who wins there is a high chance we see all antitrust action die. And let me be very blunt so people aren't confused, I think if Trump wins, the people he installs in the DOJ will be less than motivated in pursuing these cases.
- sapphicsnail 2y agoI think this could happen even if Harris wins. There are a lot of big donors to her campaign that want Lina Khan out.
- alaxhn 2y agoI'm not completely convinced Lina Khan would be out if Trump wins. JD Vance has mentioned support for her by name on several occasions.
- JumpCrisscross 2y ago> JD Vance has mentioned support for her by name on several occasions JD Vance has approximately as much policy control in a Trump administration as Kamala Harris would.
- skissane 2y ago> JD Vance has approximately as much policy control in a Trump administration as Kamala Harris would. VPs don’t have “policy control” but they do have access to the President and the opportunity to influence them. If Trump wins, Vance will be meeting with Trump regularly, and have the opportunity to try to talk Trump into things - I doubt Vance will always succeed, but he probably will sometimes. Whereas a defeated Harris won’t be meeting Trump regularly and so will lack the same opportunity.
- JumpCrisscross 2y ago
- SpicyLemonZest 2y agoI feel like this article is leaving out the important parts. You'd think from the text that it's purely a price thing, where DOJ has some subjective idea of what a transaction ought to cost and are mad that Visa charges too much. The actual complaint and the DOJ statement on it both make it clear that the real problem is specific steps Visa has allegedly taken to stop people from competing with them.
- bryanrasmussen 2y agoI mean that is what I would assume (specific steps allegedly taken) given the title has the word "monopoly" in it.
- JumpCrisscross 2y ago> what I would assume (specific steps allegedly taken) given the title has the word "monopoly" That’s a bad assumption. Being a monopoly isn’t illegal. You have to also behave anti-competitively.
- vdfs 2y agoIf you are not anti-competitive you won't be a monopoly. "I didn't get rich by writing a lot of checks" -- Bill Gates
- soperj 2y agoThat's a quote from the character Bill Gates in the Simpsons, not actually Bill Gates. A true quote from Bill would likely be much worse.
- SpicyLemonZest 2y agoSure you do. ASML has a famous 100% monopoly on advanced photolithography machines, but I've never heard anyone accuse them of anticompetitive behavior - there's just nobody else who knows how to make them so well. I guess it's not how Visa works though.
- 2y ago
- ilaksh 2y agoI know I will get absolutely thrashed and buried for saying this on this website, but I am going to say it anyway. The starting point for any modern money system should be cryptocurrency. It should not be necessary to have a middleman at all. This will eliminate most of the types of 'fraud' where thieves or scammers charge a card in an unauthorized way, because cryptocurrency does not require giving away credentials with that capability. Instead, specific transactions are authorized. There is no such thing as giving out your whole master card number for a transaction. If you want to add middlemen as companies built on the cryptocurrency, you can and for some things they might be useful. But you absolutely should not need them by default in the contemporary era where we have cryptography and the internet.
- benced 2y agoPart of the design of modern credit cards is that even authorized purchases can be reverted if the customer is not delivered the promised goods. My understanding is that crypto people think that is a design flaw, not a feature, but most folks disagree and that's what counts when trying to get most people to adopt your solution.
- ilaksh 2y agoThat is in there because of the core obsolete design flaw I pointed out -- credit card credentials are master keys authorizing arbitrary transactions. This is because it is an obsolete design that predates modern ubiquitous cryptography.
- lxgr 2y agoDispute resolution, for non-fraud disputes, is completely orthogonal with fraud that happens due to insecure cardholder authentication. What if the seller goes bankrupt after accepting payment, but before shipping an order? What if they're an outright scammer? What if the buyer says they are, but the real scammer is the buyer? Somebody's got to figure all of that stuff out. The established card schemes provide a framework for that. It's flawed, it's taking a ton of automated and manual resources, nobody in their right mind would rebuild the same thing if given the opportunity from scratch, but it's there and it kind of works. That's a lot better than what crypto has to offer.
- cubefox 2y ago> Visa and its smaller rival Mastercard have surged over the past two decades, reaching a combined market cap of roughly $1 trillion. In the US there actually exists (begins to exist) now a cheaper alternative to credit card payments: FedNow. See https://en.wikipedia.org/wiki/FedNow https://en.wikipedia.org/wiki/FedNow It's an instantaneous bank transfer, without a credit card company in the middle extracting rents. For dodgy/disreputable online shops, credit cards will still be better, due to the possibility of chargeback. And of course for actually buying things on credit. But for most regular cases, this shouldn't be necessary. Systems like FedNow are already highly successful in India (UPI) and several other countries.
- evilfred 2y agoFedNow is for institutions not individuals
- cubefox 2y agoNot true
- wslh 2y agoPix [1] is super successful in Brazil though. [1] https://en.wikipedia.org/wiki/Pix_(payment_system)?wprov=sfti1 https://en.wikipedia.org/wiki/Pix_(payment_system)?wprov=sft...
- drawnwren 2y agoPix is so prevalent in Brazil that it's quite inconvenient to do even simple transactions there without the requisite ID because they expect everyone to just have it.
- cubefox 2y agoI think you mean "also", not "though". (UPI in India was just one example.)
- vouaobrasil 2y agoYeah, one of the few things that Brazil has over North America is Pix.
- lend000 2y agoReminder that Visa isn't really the problem: [0] [0] https://www.reddit.com/r/stocks/comments/1dyb7t0/whats_going_on_with_visa_sales_by_pelosi/ https://www.reddit.com/r/stocks/comments/1dyb7t0/whats_going...
- cdaringe 2y agoSeems largely mutually exclusive. Both undesirable
- dotnet00 2y agoI've been waiting for this for a while, this has been pretty blatant for a while now. Credit card processors end up having unjust influence over every business that has a significant online component, and the processors don't hold back from using that influence to force the hand of many businesses that aren't big enough to fight back. They simply threaten to block the business for having X objectionable but legal content.
- loeg 2y agoThis article seems to specifically be talking about debit transactions, rather than credit cards (unless I misunderstand it).
- dotnet00 2y agoI tend to use the two interchangeably, since most websites don't really differentiate between them on the user-facing side.
- killjoywashere 2y agoMy wife runs her own occupational therapy business (OT is consistently assessed to be one of the jobs least likely to ever be automated). Credit card processors still rule her life.
- Cclayt1123 2y agoIt's easy to forget the long-term economic damage monopolies can cause... but hey, this might be the perfect time for the new open-source payment rails to rev up new, real competition.
- chemmail 2y agoThis sounds good, but i can't help but feel is Visa is brought down, we will have a hundred hydra heads feed on us instead.
- molave 2y agoIt should be treated as a natural monopoly (i.e. digital utility) along with all that it entails.
- danielmarkbruce 2y agoLike what? Price setting? Visa pricing is tiny.
- kelnos 2y agoIn Europe, sure. In the US, not so much. Unless you want to make the argument that the fees charged in the US are effectively subsidizing European cardholders and merchants who enjoy a legally-mandated lower fee, Visa seems feel the European market is worth it even with their lower profit margins. And even if you did want to make that argument, I'm not sure I care to subsidize Visa's profit margins in other places; capping fees in the US to a similar level as in Europe would be fine with me. (Except maybe not really: I do very well with rewards from credit cards. Mandated lower fees would make those disappear overnight. Of course I can't prove that I wouldn't still be saving more money with mandated lower fees, though. But I think the average person would probably save with capped fees, and that's what's most important from a policy perspective.) (Of course this presupposes that merchants set prices in order to pass along CC fees to the customer, rather than just charging whatever highest price the market will bear. If CC fees get reduced, prices might stay the same.)
- ywvcbk 2y ago> European market is worth it even with their lower profit margins. Overall fee (bank + network) seems to be around 1% in Europe and 2-3% in the US. So if we subtract the cashbacks/rewards which are almost nonexistent in the EU these days I’m not sure that the difference is that huge. Also credit cards usually have monthly fees in Europe which be more than $€10 per month or so. Of course benefits like travel insurance etc. might balance that out.
- mihaic 2y agoThe US payments market is a symphony of abusive practices that gouge everyone. Besides Visa and Mastercard, you have the chargeback cards that basically make things cheaper for the rich. Merchants have even figured out how to get in on the action by creating non-fungible money called "gift-cards". And all that on top of random people telling stories of how their merchant account was shut down suddenly and without appeal. But, God forbid that the government build any infrastructure for the economy's main highway, and crypto is the only alternative possible.
- danielmarkbruce 2y agoEver heard of FedNow? Payments is going to change here soon enough. If you've ever paid a merchant with Zelle, imagine a better system than that which everyone can use. Instant push payments.
- RecycledEle 2y agoThe only thing worse than a VISA monopoly is a government monopoly.
- cdaringe 2y agoIs there such a thing as a country with multi federal governments?
- known 2y ago[dead]
- specproc 2y agoIn an increasingly cashless society, and as a European, I find it deeply troubling that it's very difficult to conduct the most basic financial transactions without a foreign (US) intermediary.
- bgnn 2y agoExactly this! Not only Visa, now we have Google Pay or Apple Pay for NFC on our phones. Banks e ded up using these instead of implementing their own NFC apps. All my data is at Visa, Mastercard and Google..
- sharpshadow 2y agoIn a cashless world money transfers must be fee free. That’s also one of the main criticisms. If you pass around a 50$ bill it stays 50$. If you pass around 50$ online fees eat it up and it’s gone.
- beryilma 2y agoOn a slight tangent, the type of transactions you can make through your banking app in a developing country like Turkey is insane compared to US. Without exaggeration, you can make instant money transfers across banks; buy stocks, gold, insurance, bonds, foreign currency; pay taxes and other government fees; make international SWIFT transfers; open retirement accounts; buy private healthcare; instantly open as many checking, savings, CD accounts as you want; and many more. And in the US, they try to sell Zelle as the biggest innovation in banking. It's just pathetic.