2) Much of it goes to the credit card interchanges (Visa / MC / Amex / Discover). Those are the folks that end up with the bulk of all these fees. Processors ar

2) Much of it goes to the credit card interchanges (Visa / MC / Amex / Discover). Those are the folks that end up with the bulk of all these fees. Processors are middle-men that make a surcharge on those rates. Many "traditional" merchants offer interchange-plus rates now. As for 1), the emergence of mobile devices have really enabled this to happen. Square is really useful in the mobile environment. Prior to that, it was Internet merchants and traditional POS systems.