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The duopoly isn’t really as problematic as the concept itself. Credit cards, where customers are bribed to insert a middleman into all transactions and supplier

The duopoly isn’t really as problematic as the concept itself. Credit cards, where customers are bribed to insert a middleman into all transactions and suppliers are largely powerless to refuse it; are a plague. The switching costs of a consumer to a different credit card are small. The switching cost of a business saying they no longer allow certain payment types is potentially very painful.

Spooky23 2y ago
Credit cards are probably the most consumer friendly innovation ever — a product of the time they were developed. It was an era when the federal government functioned and the credit card operations were so problematic a heavy hand was required. Every supposedly better alternative adds margin for the supplier, increases the risk of fraud, and leaves the user with poor recourse due to the lack govnerment regulation. Adding a 3% overhead is cheap for the value. Let the suppliers be squeezed - it’s tiny for big merchants and the little ones are bitching because they’d rather lose sales than pay taxes.
- lxgr 2y ago
  If they provide that much value to consumers intrinsically, then why are banks paying the same consumers to use them? I completely agree that credit (and just as much, if not more, debit) cards are an incredibly useful invention and great accelerator for online commerce. I don't know of any other way of paying a merchant I know next to nothing of that will allow me to get my money back if they do not deliver on their side of the contract. But at the same time, the price discovery mechanisms for what exact value they provide (and who, i.e. the networks or the issuing banks, and to whom!) are next to nonexistent. In an efficient market, credit card cashback would not be a thing, for example. You could argue that that doesn't matter, that the status quo is good enough, but that's what people used to say about incumbent phone companies as well. The EU just demonstrated that an alternative is very possible (at least on the interchange side, which is the bulk of what merchants pay).
  - dangus 2y ago
    I think you're missing the point here a little bit. To break this down more simply: Credit cards: Merchants pay 3% and pass the cost on to the customer, IRS gets the vast majority of business taxes paid (no way to under-report taxable income), average person gets all the benefits of a fully funded government plus 1-2% of their purchase back in credit card rewards. Average person also gets a revolving credit line with okay-ish interest rates considering how no collateral is needed and approval is instant. Cash: Merchants broadly and easily commit tax fraud and under-report earnings, average person then has to pay a higher tax rate to overcome the tax fraud rates and get the same government services in return, merchant still pays something similar to or higher than 3% in transaction costs to handle cash (shrinkage (employees stealing, miscounting, lost cash), physical storage, movement, and processing, armored truck service, etc) and passes those costs on to the customer. Customers have no access to revolving credit which is totally fine but before credit cards people would resort to much more poorly regulated/higher interest/illegal sources of short term loans. I would also point out that debit card swipe fees are already regulated to under 1% and have many of the same benefits as credit cards.
    - lxgr 2y ago
      With your last sentence, you supply your own counterexample demonstrating that "tax-evasion-enabling cash or credit cards costing the merchant 2-3%, pick one" is a false dichotomy. As I've mentioned, another counterexample is that Visa and Mastercard credit cards very much continue to exist in the EU, even after consumer credit card interchange rates have been capped to 0.3%.
      - bruce511 2y ago
        I'm shocked, shocked, to discover that in the land of the "free market" the market optimizes for corporate profit not low prices. This is not news. In the US people vote for politicians who promise low regulation, business friendly and "economy" priorities. Those politicians run with corporate money and favor corporations. Other places (like the EU) have people who vote differently and have more appetite for reigning in the "free market" while serving consumers as the priority. It's not impossible for people to change, just unlikely. We tend to assume the pond we live in has the best water.
- throw0101d 2y ago
  > Credit cards are probably the most consumer friendly innovation ever Depends on the consumer. Vendors often have to raise their prices to keep their own margins, which is passed onto the consumer. If you're too poor or otherwise 'unwanted' to be given a credit card then you are paying higher prices without any benefit. * https://www.cnbc.com/2023/05/27/lower-income-americans-pay-for-wealthys-credit-card-rewards-some-economists-say.html https://www.cnbc.com/2023/05/27/lower-income-americans-pay-f... * https://www.vox.com/the-goods/22454885/who-pays-for-credit-card-rewards https://www.vox.com/the-goods/22454885/who-pays-for-credit-c... * http://archive.is/https://www.nytimes.com/2023/03/04/opinion/credit-card-rewards-points-poor-interchange-fees.html http://archive.is/https://www.nytimes.com/2023/03/04/opinion...
  - worik 2y ago
    Here (Aotearoa) merchants add fees to credit cards they do not add to debit cards or cash Seems to work well
anon-3988 2y ago
I mean, you could email customer support and mail them cash? Why do you think this middleman is unnecessary? Whats the alternative?
- jncfhnb 2y ago
  The problem is not that credit cards exist; it’s that the market dynamics do not force it to be a minimal profit service layer. We have credit cards regifting multiple percentage points off of every purchase which creates a vicious incentive that businesses are largely powerless against

Spooky23 2y ago

Credit cards are probably the most consumer friendly innovation ever — a product of the time they were developed. It was an era when the federal government functioned and the credit card operations were so problematic a heavy hand was required. Every supposedly better alternative adds margin for the supplier, increases the risk of fraud, and leaves the user with poor recourse due to the lack govnerment regulation. Adding a 3% overhead is cheap for the value. Let the suppliers be squeezed - it’s tiny for big merchants and the little ones are bitching because they’d rather lose sales than pay taxes.

lxgr 2y ago
If they provide that much value to consumers intrinsically, then why are banks paying the same consumers to use them? I completely agree that credit (and just as much, if not more, debit) cards are an incredibly useful invention and great accelerator for online commerce. I don't know of any other way of paying a merchant I know next to nothing of that will allow me to get my money back if they do not deliver on their side of the contract. But at the same time, the price discovery mechanisms for what exact value they provide (and who, i.e. the networks or the issuing banks, and to whom!) are next to nonexistent. In an efficient market, credit card cashback would not be a thing, for example. You could argue that that doesn't matter, that the status quo is good enough, but that's what people used to say about incumbent phone companies as well. The EU just demonstrated that an alternative is very possible (at least on the interchange side, which is the bulk of what merchants pay).
- dangus 2y ago
  I think you're missing the point here a little bit. To break this down more simply: Credit cards: Merchants pay 3% and pass the cost on to the customer, IRS gets the vast majority of business taxes paid (no way to under-report taxable income), average person gets all the benefits of a fully funded government plus 1-2% of their purchase back in credit card rewards. Average person also gets a revolving credit line with okay-ish interest rates considering how no collateral is needed and approval is instant. Cash: Merchants broadly and easily commit tax fraud and under-report earnings, average person then has to pay a higher tax rate to overcome the tax fraud rates and get the same government services in return, merchant still pays something similar to or higher than 3% in transaction costs to handle cash (shrinkage (employees stealing, miscounting, lost cash), physical storage, movement, and processing, armored truck service, etc) and passes those costs on to the customer. Customers have no access to revolving credit which is totally fine but before credit cards people would resort to much more poorly regulated/higher interest/illegal sources of short term loans. I would also point out that debit card swipe fees are already regulated to under 1% and have many of the same benefits as credit cards.
  - lxgr 2y ago
    With your last sentence, you supply your own counterexample demonstrating that "tax-evasion-enabling cash or credit cards costing the merchant 2-3%, pick one" is a false dichotomy. As I've mentioned, another counterexample is that Visa and Mastercard credit cards very much continue to exist in the EU, even after consumer credit card interchange rates have been capped to 0.3%.
    - bruce511 2y ago
      I'm shocked, shocked, to discover that in the land of the "free market" the market optimizes for corporate profit not low prices. This is not news. In the US people vote for politicians who promise low regulation, business friendly and "economy" priorities. Those politicians run with corporate money and favor corporations. Other places (like the EU) have people who vote differently and have more appetite for reigning in the "free market" while serving consumers as the priority. It's not impossible for people to change, just unlikely. We tend to assume the pond we live in has the best water.
throw0101d 2y ago
> Credit cards are probably the most consumer friendly innovation ever Depends on the consumer. Vendors often have to raise their prices to keep their own margins, which is passed onto the consumer. If you're too poor or otherwise 'unwanted' to be given a credit card then you are paying higher prices without any benefit. * https://www.cnbc.com/2023/05/27/lower-income-americans-pay-for-wealthys-credit-card-rewards-some-economists-say.html https://www.cnbc.com/2023/05/27/lower-income-americans-pay-f... * https://www.vox.com/the-goods/22454885/who-pays-for-credit-card-rewards https://www.vox.com/the-goods/22454885/who-pays-for-credit-c... * http://archive.is/https://www.nytimes.com/2023/03/04/opinion/credit-card-rewards-points-poor-interchange-fees.html http://archive.is/https://www.nytimes.com/2023/03/04/opinion...
- worik 2y ago
  Here (Aotearoa) merchants add fees to credit cards they do not add to debit cards or cash Seems to work well

anon-3988 2y ago

I mean, you could email customer support and mail them cash? Why do you think this middleman is unnecessary? Whats the alternative?

jncfhnb 2y ago
The problem is not that credit cards exist; it’s that the market dynamics do not force it to be a minimal profit service layer. We have credit cards regifting multiple percentage points off of every purchase which creates a vicious incentive that businesses are largely powerless against