4 ms·

> 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

• 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 ago
  I 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 ago
      Apple Pay and Google Pay are not payment networks. Those are just Visa and Mastercard.
      • legitster 2y ago
        It depends on your payment gateway. I can setup a POS payment system with any payment gateway processor I want. Depending on the system you can essentially run direct deposit into Google Pay, and as a vendor I can direct deposit the money into my checking via my gateway. But that's not the issue being contested because there are hundreds of payment gateway processors available.
        • mattzito 2y ago
          Right, you CAN set that up, but in the US, not accepting visa and Mastercard is essentially untenable if you are a retailer or restaurant. You might be able to avoid accepting AmEx, but from talking with restaurant owners, the biggest spenders are often AmEx holders and are annoyed at having to use a backup card.
    • bluGill 2y ago
      Which of those is realistic though. They exist but you turn away customers with money who cannot pay.
    • lxgr 2y ago
      That's not how the payment market works, though. If a customer walks into your store and has exactly one (type of) card on them that they want to use to pay, you have a choice of accepting that card or losing their business. This makes competition between payment methods at the POS structurally very hard.
  • jamie_ca 2y ago
    Costco (in Canada at least) doesn't work with Visa. It's cash, bank debit cards, or Mastercard. (No AmEx/Discover either.) It can be done, at scale, but definitely a business risk.
    • lolinder 2y ago
      Costco in the US doesn't accept Discover but does accept Visa. Heck, they even offer a Visa credit card which stands in as your official membership card.
      • frumper 2y ago
        They used to only accept Amex and had a branded card. It worked fine for them that way too.
    • 8note 2y ago
      This change happened in 2015, for anyone who remembers Costco and amex being inseparable: https://www.costco.ca/_ax-faq.html https://www.costco.ca/_ax-faq.html
    • BeefWellington 2y ago
      In part this is because of the existence of Interac though. If Interac didn't exist it's possible they would feel they need to use VISA to not turn away too much membership. Having debit as a fallback means they can partner with whomever gives them favourable terms. I doubt Costco is paying Mastercard a % of the transaction the way most other retailers are. Despite it existing since the 80s, there's been constant pressure / lobbying to get rid of it.[1] [1]: https://www.theglobeandmail.com/report-on-business/interac-in-a-fight-for-its-life/article1364954/ https://www.theglobeandmail.com/report-on-business/interac-i...
    • toast0 2y ago
      In the US, bank debit cards are commonly Visa, although they can often be run on multiple networks, debit is confusing.
    • lxgr 2y ago
  • lumb63 2y ago
    There are tons of cash-only businesses.
    • indymike 2y ago
      There are also a lot of businesses that take cash because their owners have been banned from taking credit cards.
• ethbr1 2y ago
  Don't both Square and Venmo still have to interface with the Visa / MC / Discover / Amex networks? And therefore pay some fees?
  • legitster 2y ago
    Venmo gives you the option of direct deposit or using the network to instantaneously transfer the money for a fee. As for the merchant, unless they are getting their payment gateway directly from Visa they usually just deposit the money directly into their bank account.
    • ethbr1 2y ago
      The interesting metric would be what percent of Square/Venmo transactions come through legacy payment cards. I'd guess it's pretty high in the US...
• cortesoft 2y ago
  Square is part of that $7 billion VISA makes.
• madeofpalk 2y ago
  Anti-trust/monopoly doesn't actually hinge on a magical percentage number. The quote from the DOJ: > “We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” This is the thing that's illegal, not some forbidden percentage of market share. Illegally using your position in the market to distort it to your advantage, to prevent competitors from existing, and (generally) to raise prices. From the actual legal complaint https://www.documentcloud.org/documents/25173584-visa-lawsuit-doj https://www.documentcloud.org/documents/25173584-visa-lawsui... > Visa is a monopolist in the general purpose debit network services and general purpose card-not-present debit network services markets in the United States with market shares of at least 60% and 65%, respectively, by payment volume. Mastercard is the second largest debit network in the United States and processes less than 25% of debit transactions in either relevant market. No other competitor has more than a single digit share of debit transactions in either market. > Visa has monopoly power in the relevant debit markets because it has the power to control prices and exclude competition in each market. Of course, the whole court case will be arguing whether Visa has the power to control prices and exclude competition. DOJ thinks they do, I'm guessing Visa thinks they're fine!
• matthewdgreen 2y ago
  Whether 60% technically comprises a "monopoly" is a technical legal question that will be determined by the courts. Whether Visa carries an enormous amount of traffic and charges too much is an opinion, and it certainly feels like they do. Keep in mind that some percentage of fraud detection and prevention is determined by the vulnerability of the underlying technology used: fraud from card skimmers should not be a thing in 2024, yet it still is, and these payment networks are responsible for that.
  • yxhuvud 2y ago
    It probably won't, because it is irrelevant. What matters is that it is clear beyond reason that VISA have a lot of power in the marketplace. What the courts will decide if they used that power to do naughty things to further cement their position or earnings.
• visualphoenix 2y ago
  Cash is not necessarily an option. Did you know there is no federal requirement for a business to accept cash?
  • glitchinc 2y ago
    eCommerce is inherently cashless by design. Confined / captive environments (e.g. airplane cabins) are cashless. Concessions and merchandise counters at large events (sporting events, concerts, etc.) are cashless. Self-service kiosks for anything (or vending machines) are increasingly cashless. And if memory serves me correctly, I believe that using cash to purchase real estate via arms-length transaction is prohibited in the USA by law, even if the buyer and seller agree on the use of cash (and if it was logistically feasible to do so). I would argue that cash is not an option in more cases than it is an option.
• DidYaWipe 2y ago
  Come on. When you combine Visa and MasterCard, you have clear oligopoly and near-monopoly. And the situation is terrible for businesses, who are getting ripped off on every credit-card transaction with ever-escalating and variable percentages. A lady running a small diving shop told me that Capital One is the worst, jacking them for 4.5% or so. They are now out of business. Some businesses' entire profit margin is being wiped out by monopolistic middlemen. A business can't be cash-only and survive today; so no, cash is NOT an option. As for your assertion of fraud-prevention as a benefit, it's a joke. Credit-card issuers have, for some reason, ENABLED fraud in the USA. First they dragged their asses on issuing chip-based credit cards for what, a decade or more after the rest of the world had adopted them. And now that we finally have them, what did the issuers do? Defeat their purpose by neglecting to implement PINs. WTF. "Chip & PIN" is standard operating procedure across the industrialized world except in the USA. You could drastically curtail fraud overnight by simply implementing the PIN requirement. But we've gone the other way, with a lot of retailers giving up on ANY attempt at validation. There must be some tax benefit of fraud for the card issuers. Or they're clinging to the extra profits out of fraudulent transactions that are perpetrated but not caught. Regardless, there's no excuse for abetting it, or tolerating this consumer- and business-harming oligopoly.
• indymike 2y ago
  > Also, if you factor in that cash is an option, and the significant inroads being made by options like Square and Venmo The real competition is the NACHA's ACH system. Square and Venmo ride atop existing payment networks. The innovation is adding another level of ease of use over another layer of rent-seeking largely because Visa is slow to innovate and ACH is effectively a government product. > Visa, Mastercard, and Discover's primary value they provide is fraud detection and prevention. Most of this value is provided by the MSP and merchant banks, not by the card associations. ACH fraud protection is mostly reversable transactions. > independent, fly-by-wire cut-rate providers is in the public's best interests long term That is what we have today - tons of small MSPs and a few big ones. Square, for example, is a big one.
  • legitster 2y ago
    > Most of this value is provided by the MSP and merchant banks, not by the card associations. Not necessarily accurate. My bank does not offer the ability to reverse transactions or replace funds lost to merchants. They also can't remove fraudulent merchants from the payment network.
    • indymike 2y ago
      > Not necessarily accurate Actually accurate. "Merchant bank" is not the card holder's bank - it is the bank that actually settles transactions with the issuing bank (i.e. your credit card) and then deposits money into the merchant's actual bank account. Money flows through the merchant account. Incidentally, the merchant bank is at risk for fraudulent merchants as they are often advancing money (a few days early) to the merchant in anticipation of settling. Merchant banks can shut down merchants and they also have the power to require the merchants to leave an amount of money on deposit with them to mitigate risk. > My bank does not offer the ability to reverse transactions or replace funds lost to merchants Correct. Your bank does not have that power - you have to initiate a chargeback, and that is ultimately handled by the MSP. Incidentally, if you have a credit card, the issuer (often a bank) initiates the chargeback process.
• deleted 2y ago
  [deleted]
• jellicle 2y ago
  Luckily for the government, the law doesn't say "monopoly" or require them to prove there is only one company operating. The law just says that anyone that has market power (which one might have with only a tiny percent of the whole market) can't do certain things. It's anti-trust law, not anti-monopoly law.
• ilaksh 2y ago
  The only reason fraud is such a huge problem (and resolving it is such a 'benefit') is because credit cards are an obsolete, insecure model.
  • geodel 2y ago
    And what is secure model?
  • lxgr 2y ago
    Credit cards in the US, in particular. Almost everywhere else in the world, physical cards require a PIN, and online payments (above some amount/risk threshold, at least) require 3DS authentication. Both methods are pretty secure.
• MBCook 2y ago
  Monopoly is about far far more than market share. That’s a bit of it, but you can be abusing a monopoly at far far less than 95%.