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> What Visa did in response recently got it sued by the Justice Department, which accused Visa of using aggressive tactics with companies like CostcoCOST $956.1

by bko 2y ago

> What Visa did in response recently got it sued by the Justice Department, which accused Visa of using aggressive tactics with companies like CostcoCOST $956.14 (-0.29%) and AppleAAPL $258.99 (0.35%) to guarantee that a competitive payment network would not develop, The Wall Street Journal reported. I don't buy the reasoning as to how Visa built a moat. From the WSJ article linked in the article: >> Visa offered to pay Costco $150 million. One condition of the deal: Costco would not do a credit-card deal with a bank that had its own network, according to the people familiar with the matter and the court filings. That shut out Chase. Visa also offered Costco an exclusive discount on the interchange fees the store pays when someone makes purchases with Visa credit cards. So basically Visa offered Costco a discount if it allowed their cards exclusively. The thing with credit cards is that you can have more than one. I have a Visa and a Mastercard and when I shop at Costco I use Visa. I don't see this reason stopping someone wanting to compete as though if they can't get the Costco dollars, they have no product. That's not to say that Visa doesn't use lobbying and legal system to erect barriers to entry. But that really has to do with ridiculous regulations and things like KYC, but we're not ready to have that conversation yet.

deleted 2y ago
[deleted]
ToucanLoucan 2y ago
> The thing with credit cards is that you can have more than one. I have a Visa and a Mastercard and when I shop at Costco I use Visa. Well... yeah. No shit. Because you couldn't use the Mastercard if you wanted to. That's what this article is complaining about. And in their most recent quarter Costco posted a handy 80 billion in net sales, I'm betting those processing fees added up to a tidy sum for Visa, corroborated in the fact that they plunked down 150 million to keep it exclusive to them. > I don't see this reason stopping someone wanting to compete as though if they can't get the Costco dollars, they have no product. It's literally textbook pay for play. It's purchasing an advantage in an open market. Mastercard will receive no transaction fees from Costco this or any year unless this agreement is revisited, and not because people don't want to use Mastercards there, but because Visa paid Costco to not let them. How is that anything but anti-competitive?
- bko 2y ago
  Is it any different from a movie theatre or restaurant selling only Pepsi products due to exclusive agreement? Or Playstation paying for a game to be distributed only on their platform? How about a sports team only allowing Reebok or Nike or Adidas or whatever? Don't get me started on Netflix only movies!
  - ToucanLoucan 2y ago
    1) Whataboutism is not a counterpoint 2) Half of these are completely nonsensical and apples and oranges to the topic.
    - bko 2y ago
      It's not whataboutism. Whataboutism would be 'what about children dying in Darfur?' This is an explanation that this practice is normal in a competitive environment and trying to prevent exclusive deals is silly if you extrapolate it to other domains In other words, create a rule or principal that's clear and not specific to this situation. Because right now the principal seems to be exclusive deals between businesses should be illegal and I explained a handful of cases where this would obviously apply
      - lesuorac 2y ago
        The fact that monopolistic agreements are common place doesn't make them competitive. As with every single time something monopolistic comes up on HN. You can squash one instance of it at a time; you do not need to address every single one in a fell swoop.
  - deleted 2y ago
    [deleted]
  - abdullahkhalids 2y ago
    Yes, all these are anti-competitive. But illegally anti-competitive? That is not really possible to resolve in a HN comment. Every market in every region is different, and whether some exclusive contract is or is not anti-competitive has to be resolved in court, which looks at all the details of the matter.
dangerwill 2y ago
> thing with credit cards is that you can have more than one. I have a Visa and a Mastercard and when I shop at Costco I use Visa. I don't see this reason stopping someone wanting to compete as though if they can't get the Costco dollars, they have no product. I'm sorry, are we really saying that it's acceptable for the market to begin preferring one completely compatible payment network vs another? This is clearly an undue influence in the market due to monopolistic power being used as leverage. No one should have to open an account with visa just to shop at a retailer. Anti competitive and anti consumer to the core. > But that really has to do with ridiculous regulations and things like KYC, but we're not ready to have that conversation yet. Ahhh, fearmongering about KYC. Know your customer is an obviously good regulation for banks to know the type of business they are partnering with for both risk assessment and anti fraud protections. So, what scams are you in favor of allowing by removing KYC regulations?
- bko 2y ago
  > No one should have to open an account with visa just to shop at a retailer. You know you have to pay just to enter Costco right? What's the difference if they want to force customers to use cash or Visa. Do you feel the same way about businesses that reject Discover? I really don't understand the outrage. > Ahhh, fearmongering about KYC. Know your customer is an obviously good regulation for banks to know the type of business they are partnering with for both risk assessment and anti fraud protections. So, what scams are you in favor of allowing by removing KYC regulations? KYC and AML measures have a limited impact on stopping fraud and terrorism financing. Current efforts intercept only an estimated 0.1 to 0.2 percent of laundered money. A 2018 study suggested that the overall impact of AML policy intervention on criminal finances is less than 0.1 percent, which is considered negligible. This aligns with a 2011 UNODC report indicating that "much less than one percent (probably around 0.2 percent)" of the proceeds of crime laundered via the global financial system are seized and frozen. Regulations should not be judged by intentions but rather results https://www.gisreportsonline.com/r/why-anti-money-laundering-policies-are-failing/ https://www.gisreportsonline.com/r/why-anti-money-laundering...
  - dangerwill 2y ago
nottorp 2y ago
Interesting that here in Europe I have never seen a store accept Visa or Mastercard exclusively. Since neither company is above such tactics, I can only guess that it's a bit illegal.
matthewdgreen 2y ago
You can have a Mastercard, but now if you want to shop at Costco with credit you have to have a Visa. Not having a Visa card is much less of an option for many individual customers, and not accepting Visa is much less of an option for other merchants.
- aleph_minus_one 2y ago
  > You can have a Mastercard, but now if you want to shop at Costco with credit you have to have a Visa. Or you simply shop at Costco without a credit card, and pay cash instead. :-)
  - pton_xd 2y ago
    And simply pay 1-2% more than everyone else using a Visa card.
    - aleph_minus_one 2y ago
      Even if this is potentially true, 1 to 2 % is a very fair price to pay to be independent of their credit card network and paying much more anonymously.
      - pton_xd 2y ago
        This is Costco, you have a membership tied to your identity which they check every time you enter the store and checkout. Your order history is tied to your membership. There is no "anonymous" purchasing at Costco. They likely share your purchasing decisions with Visa whether you use the card or not.

by bko 2y ago

deleted 2y ago

[deleted]

ToucanLoucan 2y ago

> The thing with credit cards is that you can have more than one. I have a Visa and a Mastercard and when I shop at Costco I use Visa. Well... yeah. No shit. Because you couldn't use the Mastercard if you wanted to. That's what this article is complaining about. And in their most recent quarter Costco posted a handy 80 billion in net sales, I'm betting those processing fees added up to a tidy sum for Visa, corroborated in the fact that they plunked down 150 million to keep it exclusive to them. > I don't see this reason stopping someone wanting to compete as though if they can't get the Costco dollars, they have no product. It's literally textbook pay for play. It's purchasing an advantage in an open market. Mastercard will receive no transaction fees from Costco this or any year unless this agreement is revisited, and not because people don't want to use Mastercards there, but because Visa paid Costco to not let them. How is that anything but anti-competitive?

bko 2y ago
Is it any different from a movie theatre or restaurant selling only Pepsi products due to exclusive agreement? Or Playstation paying for a game to be distributed only on their platform? How about a sports team only allowing Reebok or Nike or Adidas or whatever? Don't get me started on Netflix only movies!
- ToucanLoucan 2y ago
  1) Whataboutism is not a counterpoint 2) Half of these are completely nonsensical and apples and oranges to the topic.
  - bko 2y ago
    It's not whataboutism. Whataboutism would be 'what about children dying in Darfur?' This is an explanation that this practice is normal in a competitive environment and trying to prevent exclusive deals is silly if you extrapolate it to other domains In other words, create a rule or principal that's clear and not specific to this situation. Because right now the principal seems to be exclusive deals between businesses should be illegal and I explained a handful of cases where this would obviously apply
    - lesuorac 2y ago
      The fact that monopolistic agreements are common place doesn't make them competitive. As with every single time something monopolistic comes up on HN. You can squash one instance of it at a time; you do not need to address every single one in a fell swoop.
- deleted 2y ago
  [deleted]
- abdullahkhalids 2y ago
  Yes, all these are anti-competitive. But illegally anti-competitive? That is not really possible to resolve in a HN comment. Every market in every region is different, and whether some exclusive contract is or is not anti-competitive has to be resolved in court, which looks at all the details of the matter.

dangerwill 2y ago

> thing with credit cards is that you can have more than one. I have a Visa and a Mastercard and when I shop at Costco I use Visa. I don't see this reason stopping someone wanting to compete as though if they can't get the Costco dollars, they have no product. I'm sorry, are we really saying that it's acceptable for the market to begin preferring one completely compatible payment network vs another? This is clearly an undue influence in the market due to monopolistic power being used as leverage. No one should have to open an account with visa just to shop at a retailer. Anti competitive and anti consumer to the core. > But that really has to do with ridiculous regulations and things like KYC, but we're not ready to have that conversation yet. Ahhh, fearmongering about KYC. Know your customer is an obviously good regulation for banks to know the type of business they are partnering with for both risk assessment and anti fraud protections. So, what scams are you in favor of allowing by removing KYC regulations?

bko 2y ago
> No one should have to open an account with visa just to shop at a retailer. You know you have to pay just to enter Costco right? What's the difference if they want to force customers to use cash or Visa. Do you feel the same way about businesses that reject Discover? I really don't understand the outrage. > Ahhh, fearmongering about KYC. Know your customer is an obviously good regulation for banks to know the type of business they are partnering with for both risk assessment and anti fraud protections. So, what scams are you in favor of allowing by removing KYC regulations? KYC and AML measures have a limited impact on stopping fraud and terrorism financing. Current efforts intercept only an estimated 0.1 to 0.2 percent of laundered money. A 2018 study suggested that the overall impact of AML policy intervention on criminal finances is less than 0.1 percent, which is considered negligible. This aligns with a 2011 UNODC report indicating that "much less than one percent (probably around 0.2 percent)" of the proceeds of crime laundered via the global financial system are seized and frozen. Regulations should not be judged by intentions but rather results https://www.gisreportsonline.com/r/why-anti-money-laundering-policies-are-failing/ https://www.gisreportsonline.com/r/why-anti-money-laundering...
- dangerwill 2y ago

nottorp 2y ago

Interesting that here in Europe I have never seen a store accept Visa or Mastercard exclusively. Since neither company is above such tactics, I can only guess that it's a bit illegal.

matthewdgreen 2y ago

You can have a Mastercard, but now if you want to shop at Costco with credit you have to have a Visa. Not having a Visa card is much less of an option for many individual customers, and not accepting Visa is much less of an option for other merchants.

aleph_minus_one 2y ago
> You can have a Mastercard, but now if you want to shop at Costco with credit you have to have a Visa. Or you simply shop at Costco without a credit card, and pay cash instead. :-)
- pton_xd 2y ago
  And simply pay 1-2% more than everyone else using a Visa card.
  - aleph_minus_one 2y ago
    Even if this is potentially true, 1 to 2 % is a very fair price to pay to be independent of their credit card network and paying much more anonymously.
    - pton_xd 2y ago
      This is Costco, you have a membership tied to your identity which they check every time you enter the store and checkout. Your order history is tied to your membership. There is no "anonymous" purchasing at Costco. They likely share your purchasing decisions with Visa whether you use the card or not.