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In a market, participants woo customers with financial and other incentives to select their product. The price discovery stuff is pretty obvious. Do business w

In a market, participants woo customers with financial and other incentives to select their product. The price discovery stuff is pretty obvious. Do business with PayPal. It works great… until PayPal arbitrarily decides to freeze your account. Use Venmo or cash app… except sellers will pressure you to treat it like a gift vs. a purchase. You can use ACH, but now some random company has access to your checking account. Or… you can use a credit card, probably get a 2% kickback, and the merchant pays like 3% unless they’re in a high risk business. If there’s a problem like fraud, the bank eats it. The biggest whiners about fees are small businesses, especially restaurants. These are businesses where it’s super easy to launder cash and avoid tax reporting.

hattmall 2y ago
The bank doesn't eat the fraud. They charge it back to the merchant. That's why restaurants and bars don't like them, and if you fight the charge backs they raise the rates or drop you entirely.
- lxgr 2y ago
  That’s only true for online payments (and even then only if 3DS is not used). Merchants are not liable for fraud at the POS (which includes almost all restaurants, except maybe those doing deliveries or taking down payments for reservations via the phone etc.)
  - hattmall 2y ago
    Is this new? My bar got quite a bit of charge backs when I worked there but that was ~15 years ago.
AnthonyMouse 2y ago
> Do business with PayPal. It works great… until PayPal arbitrarily decides to freeze your account. Use Venmo or cash app… except sellers will pressure you to treat it like a gift vs. a purchase. You can use ACH, but now some random company has access to your checking account. Pretty much everything except for credit cards and ACH are really using one of those two behind the scenes, whereas what you want is something that allows you to transfer money using ACH-level fees without the totally unnecessary ACH misfeature that you can't revoke merchants or predefine limits on how much they can charge. But that's where the "Visa has captured the regulators to prevent things like that from existing" problem comes in. > The biggest whiners about fees are small businesses The biggest whiners about fees are small businesses because a) they have very thin margins to begin with, so 3% often means that Visa is taking more of the sale price than they keep themselves and can be the difference between a sustainable business and bankruptcy, and b) larger companies can negotiate deals and pay less than 3%, which creates another competitive advantage for big business that small businesses can't achieve, which small businesses rightfully dislike. 3% sounds like a small number until you're talking to someone with a 5% profit margin before they lose 3% of revenue to the credit card companies. Then you're telling them that they shouldn't care about losing 60% of their personal income to corrupt banking laws.

hattmall 2y ago

The bank doesn't eat the fraud. They charge it back to the merchant. That's why restaurants and bars don't like them, and if you fight the charge backs they raise the rates or drop you entirely.

lxgr 2y ago
That’s only true for online payments (and even then only if 3DS is not used). Merchants are not liable for fraud at the POS (which includes almost all restaurants, except maybe those doing deliveries or taking down payments for reservations via the phone etc.)
- hattmall 2y ago
  Is this new? My bar got quite a bit of charge backs when I worked there but that was ~15 years ago.

AnthonyMouse 2y ago

> Do business with PayPal. It works great… until PayPal arbitrarily decides to freeze your account. Use Venmo or cash app… except sellers will pressure you to treat it like a gift vs. a purchase. You can use ACH, but now some random company has access to your checking account. Pretty much everything except for credit cards and ACH are really using one of those two behind the scenes, whereas what you want is something that allows you to transfer money using ACH-level fees without the totally unnecessary ACH misfeature that you can't revoke merchants or predefine limits on how much they can charge. But that's where the "Visa has captured the regulators to prevent things like that from existing" problem comes in. > The biggest whiners about fees are small businesses The biggest whiners about fees are small businesses because a) they have very thin margins to begin with, so 3% often means that Visa is taking more of the sale price than they keep themselves and can be the difference between a sustainable business and bankruptcy, and b) larger companies can negotiate deals and pay less than 3%, which creates another competitive advantage for big business that small businesses can't achieve, which small businesses rightfully dislike. 3% sounds like a small number until you're talking to someone with a 5% profit margin before they lose 3% of revenue to the credit card companies. Then you're telling them that they shouldn't care about losing 60% of their personal income to corrupt banking laws.