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I'm a little shocked that of all the comments so far, no one has mentioned the financial risk borne by this whole value chain. OP is operating as if it's just a

I'm a little shocked that of all the comments so far, no one has mentioned the financial risk borne by this whole value chain. OP is operating as if it's just a debit system moving money from one account to another but: - For many consumers there isn't sufficient money in the account to settle all the one-time and ongoing transactions they are liable for -- credit cards are giving you a revolving loan, there's risk it will not be repaid, and that risk ends up reflected in processing fees - For many _businesses_ managing cash flow is existential -- as merchants they want to be paid as quickly as possible, but as B2B customers they want to have 30-60 days to sell the input goods they've purchased so they can pay for them upstream. There is a premium for that flexibility that gets reflected in processing fees. - For both consumers and merchants, fraud risk is real and while it's the most solvable part of all this it's a real (and costly!) factor today. That risk for fraud gets moved upstream to the networks/acquirers/processors/issuers and that premium shows up in (you guessed it) processing fees. If you want to switch the world to a debit-based system where economic transactions are limited by cash on hand, I'd argue that's a poorer and less dynamic world than the one we're operating in today.

functionmouse 8mo ago
I shouldn't have to pay for your usury economy if I'm using cash. If that were really the issue, these companies would have no problems with businesses charging different prices or offering discounts for cash.
- eastbayjake 8mo ago
  The networks allow cash discounts if it's posted clearly and the customer has an option to use a different payment method -- you see this on every gas station sign alongside every highway in America. (What's _not_ permitted is adding a secret surcharge or item mark-up for credit card payments)
  - bombcar 8mo ago
    The latter is allowed now - after the backs of the credit card processors were broken. They fought tooth and nail against cash discounts OR credit surcharges and they finally lost. In some areas it's rampant that you get a pretty substantial discount - often 4 or 5%, better than cash-back - and many places post "cash prices". You can get even more if you're willing to ride the hassle of the gift card train. The credit card companies know people spend more if they use credit cards, and they turn around and sell that to the merchants.
    - graemep 8mo ago
      The UK actually forbids cash discounts and cred surcharges by law - and has done so since at least 2012. Credit card companies are allowed to run cashback for using them. All in the name of "consumer rights": https://www.gov.uk/government/publications/payment-surcharges https://www.gov.uk/government/publications/payment-surcharge...
      - direwolf20 8mo ago
        Some European countries forbid a price difference but they also limit card fees very low, so the merchant doesn't lose money and you don't get cash back. Forbidding a price difference but allowing high fees is nothing but pure corruption.
      - iso1631 8mo ago
        Mainly because cash processing fees are higher than electronic, and the primary use of cash is to avoid paying tax
  - cmurf 8mo ago
    Surcharges are permitted in some states. Colorado law recently changed permitting merchants to pass on the actual cost of processing, except for cash, check and debit payments. https://colorado.public.law/statutes/crs_5-2-212 https://colorado.public.law/statutes/crs_5-2-212 This law overrides any prior contractual agreements with banks/processing companies that prohibit surcharges. This is previously how MasterCard and VISA coerced merchants into absorbing the processing fee, by contractually requiring credit same as cash pricing.
  - unethical_ban 8mo ago
    Not true. A chain of restaurants near me does not accept cash, and charges 3.5% markup from their list price to cover CC fees. Texas.
    - eastbayjake 8mo ago
      If you'd like to get that fixed: https://usa.visa.com/Forms/visa-rules.html https://usa.visa.com/Forms/visa-rules.html
- jonplackett 8mo ago
  Companies did do that - but I belive now it’s not allowed to charge less for cash.
  - nubg 8mo ago
    Yes this is exactly what GP is talking about (he just phrased it the other way round).
- alex43578 8mo ago
  Sure, as long as I don't have to pay for how much your cash costs the business in cash handling, security, theft, counterfeiting losses, and more. Studies show businesses pay more for a transaction in cash than on credit. If they really were losing out on taking cards, they wouldn't accept them.
Beretta_Vexee 8mo ago
There are many countries where debit cards are the norm and credit cards are extremely rare. In France, people are so afraid of consumer credit that cards are renamed ‘deferred debit cards’ rather than credit cards, otherwise people do not want them.
- consp 8mo ago
  There is also a major difference as I understand it. They need to be resolved at the end of a certain period. There is a legal difference from Credit cards as in there is no continual liability and thus no continued line of credit. Getting a true credit card is also a lot harder here (not France) than a deferred payment card (usually 1 month) and has stricter credit checks.
  - KellyCriterion 8mo ago
    Visa and MC have basicly all of these configurations, depending on country & legislation: - Direct Debit - Deffered Debit - Rolling Credit - Installment Credit And if you are a $MegaBigCorp customer of them, you can customize even more.
    - em-bee 8mo ago
      indeed. my credit card requires me to preload money from my bank account. it's like there is a second account that keeps a balance that i can spend using the credit card. whenever i use it, the balance is updated. how the credit is paid off i don't know. it could be either right away, or the amount is just hidden by my bank until it is time to pay off at the end of the month. either way, the credit limit is zero. so i can never spend more than i put in first. (though this may be based on how much i spend or be a configurable value.)
      - albumen 8mo ago
        So, your credit card is in practice a debit card?
niceguy1827 8mo ago
Your comment seems to miss the point. It is totally possible to enable the first two of your bullet points without Visa or Mastercard, for example banks could just give lines of credit directly to consumers. Indeed, the myriad of loan products is run without Visa and Mastercard.
- SomeUserName432 8mo ago
  Yet if the airline goes under, or I never receive the product I bought online, using Visa/Mastercard I'm not left holding the bag. If I take a random loan with the bank and use those funds to do the same purchases using debit, then I'm the one taking the loss.
  - deleted 8mo ago
    [deleted]
V__ 8mo ago
> For many consumers there isn't sufficient money in the account to settle all the one-time and ongoing transactions they are liable for This is a uniquely American viewpoint. In most of Europe you don't buy anything on credit ever.
- direwolf20 8mo ago
  Most places outside the USA actually. A liability is someone else's asset, and everyone wants USA assets, so the USA needs to generate a lot of liabilities.
- vidarh 8mo ago
  There are numerous credit providers in Europe that would beg to differ. By December 2025, consumer credit in the Euro area alone stood at an estimated €812 billion.
  - wiether 8mo ago
    Are you talking about the same thing? Sure, in Europe people will subscribe to a credit to buy a car or materials to improve their home. But buying your groceries or lunch with a credit card is quite a rare exception.
    - vidarh 8mo ago
      There is a significant amount both in credit card debt, buy-now-pay-later type offerings (e.g. Klarna), and payday loans - it's by no means all larger loans. It also varies greatly by country, but all major European countries still have significant credit card (not consumer, so excluding e.g. car loans) debt, with the most "credit willing" countries like the UK reaching around 1/3 the US average credit card balance (but you'd also want to adjust for average salaries before comparing these). There is no single attitude to this across Europe.
  - deleted 8mo ago
    [deleted]
- memsom 8mo ago
milesskorpen 8mo ago
I agree the risk transfer is very important, but Visa and Mastercard don't do that (they just facilitate it)
DetroitThrow 8mo ago
man who has only used the american financial system: the world not singularly using the american financial system is less dynamic. surely there are no counterexamples to this.
wiradikusuma 8mo ago
Hmm, maybe for countries with strong consumer protection, yes. I lost 3 credit cards INSIDE an airplane (hello AirAsia!). I only realized it when I turned on my phone while queuing at immigration and was bombarded with dozens of "Successful transaction" messages. That's ~30min from stepping off the airplane. When I checked my statements, I saw dozens of physical transactions (swipes/taps) with different merchants in different cities from the airport. All 3 cards have different PINs. All require a PIN for transactions above ~USD200. Yet the banks rejected my disputes because "it's a physical transaction, so you must be the one doing it." Apparently, they all think I could fly to different cities, buy different items, and fly back to wait in immigration, all in 30 minutes.
- direwolf20 8mo ago
  Lawsuit time! Against your bank.
- axus 8mo ago
  I had missed the warning that this tech is now widespread. Must have not logged into Hacker News that day https://www.kaspersky.com/blog/nfc-gate-relay-attacks-2026/55116/ https://www.kaspersky.com/blog/nfc-gate-relay-attacks-2026/5...
  - monksy 8mo ago
    But but my CC literally said "it's more secure" (I asked and complained about the contactless feature because it interfered with my transit card)
- a13n 8mo ago
  If my bank did this to me I would immediately drop them.
overfeed 8mo ago
> credit cards are giving you a revolving loan, there's risk it will not be repaid, and that risk ends up reflected in processing fees Neither Visa nor MasterCard are loaning customers their money. It's the European banks that hold the bulk of the risk for European credit card transactions.
- sjm-lbm 8mo ago
  Also worth noting that who owns the risk is a regulatory question, not a technical or product one - and, like all regulatory questions, is different for different countries/regions. Chip and pin and NFC transitions took off much quicker outside the US because merchants generally owned more of the chargeback risk than in the US, and therefore were willing to update their POS equipment accordingly. Risk (like debt) is another place where a US-centric view will likely lead you to misunderstand the purpose of Visa/MC.
  - avianlyric 8mo ago
    > Chip and pin and NFC transitions took off much quicker outside the US because merchants generally owned more of the chargeback risk than in the US, and therefore were willing to update their POS equipment accordingly. Not really. The risk of all fraud is initial borne by banks issuing the cards, after all they’re only parties that have an actual financial relationship with the person providing the cash/debt. If something which results in that person cash/debt being stolen, it’s between that person and their bank to figure out who’s liable for the lost money. Chargebacks are just a mechanism for banks to recover some of that lost money, once the liability between the card holder and the bank has been settled. One of the big reasons why Chip and PIN etc took off outside of the US, is that the US is very accepting of fraud, and charging crazy high interchange rates (up to 10x what they are in Europe) so the cost of fraud is spread over many individuals. Other parts of the world have regulations capping interchange rates, and providing better consumer protection, demanding that banks and payment networks tackle fraud, rather than increase the cost of everything by 1-2% to cover fraud losses.
  - marcosdumay 8mo ago
    Just to put another perspective there. In Brazil, chip and pin took off immediately (from non-existent to ubiquitous in about 6 months) after the government decided that the bank and card issuer were responsible for all the fraud risk. I have no idea what policy made the US hold into signatures for that long. But the seller and the buyer are the least powerful people on that entire chain, so I don't think it reasonable to look at them.
haspok 8mo ago
> credit cards are giving you a revolving loan I'm confused - is it not the issuing bank that gives you the loan, and the credit card company just provides the infrastructure? Btw. having an overdraft limit of a few hundred Euros is quite typical for those liquidity issues. You don't need a credit card for that.
- eastbayjake 8mo ago
  I used "value chain" euphemistically because you can get really complex on this and I wanted to spare the casual reader. I meant your credit card as an end-user product in your pocket and not meaning the card networks in isolation, but the value chain is roughly: 1. Merchant (bears little fraud risk but a lot of chargeback risk) 2. Payment Gateway (little direct risk but some liability risk) 3. Merchant Acquirer (more direct risk but mostly if merchants become insolvent) 4. Card Network (Visa/MC/AmEx - less risk but significant underlying costs managing a global technology that spans the financial system and needs to be distributed to almost every merchant of any scale in America) 5. Issuers (Banks + AmEx - most risk but get a big share of interchange fees) I've surely missed something here that the very smart (and increasingly grumpy these days!) HN community will doubtlessly pile-on to correct, so I apologize in advance for errors or omissions... and I bow down if @patio11 swoops in to tell me about the complexity I've missed in either payments or Japanese economic/cultural conventions Will also add that the benefit of credit is not overdraft but smoothing cash flow... if I'm living paycheck to paycheck and get paid every two weeks, I will incur essential expenses at the beginning of the fortnight that I can afford but lack cash in my account to pay now. I can't overdraft because I won't have the funds to deposit into that account for another two weeks. I'm getting a service that smooths my cashflow and there's a small premium added to reflect that. (Could you save up enough to avoid needing this? Is that a uniquely American way of living? I don't know! I'm making a descriptive claim not a normative one!)
  - alibarber 8mo ago
    Sadly I’ve noticed that comments on this topic usually devolve into tribal comments about how ‘things are done in the EU’ which always seem to not be actually that representative of the 27 different countries of the EU, but of course must be better than the US.
x3ro 8mo ago
> For many consumers there isn't sufficient money in the account to settle all the one-time and ongoing transactions they are liable for -- credit cards are giving you a revolving loan, there's risk it will not be repaid, and that risk ends up reflected in processing fees This is really much less of a thing in Europe, or at the very least in Germany and Spain. Mostly it's the overdraft from banks that you can use as what you call a revolving loan. Most of the visa and mastercards I've had in my life simply debit from my main account.
pmontra 8mo ago
Cash flow and fraud, yes. Credit, not much in most of Europe. AFAIK nobody has had something close to real credit cards until recently. They were called credit cards but it was a debit card with payment and deferred to the end of the month and backed only by the cash in the bank account linked to the card. I guess that no financial institution did like to risk any money on the behavior of European customers.
Hikikomori 8mo ago
Switch? We mostly use debit cards today.
direwolf20 8mo ago
That's all the bank's problem, not the network's.
AtlasBarfed 8mo ago
They are taking a percentage point or two on the entire consumer payment system. I think there's plenty of money to back all the activity. Especially if there are central banks willing to back them
- loeg 8mo ago
  > They are taking a percentage point or two on the entire consumer payment system. Visa/MC make about 0.1-0.13% of each transaction, not a 1-2%. The rest of the interchange (the vast majority) goes to the issuing bank.
  - scotty79 8mo ago
    Doesn't it depend on the country? Payments with Visa and MasterCard work very differently in various countires. In Poland you can pay 0.01€ with credit card and the seller will happily oblige. In Germany even few Euros they prefer to be paid in cash.
    - loeg 8mo ago
      That's their cut in the US, the market with the highest total interchange fees. In other markets with lower total fees, it's hard to imagine Visa/MC's cut being higher. They do a pretty useful service for a pretty reasonable fee. Patio11 doesn't name names or give precise figures, but: https://www.bitsaboutmoney.com/archive/how-credit-cards-make-money/ https://www.bitsaboutmoney.com/archive/how-credit-cards-make...
KellyCriterion 8mo ago
> For many _businesses_ managing cash flow is existential Err, no - for _all_ businesses managing cash flow is the _only_ NR 1 crucial thing, because if they dont, they will disappear by tomorrow :)
loeg 8mo ago
This risk is all covered by the banks, not the interchange networks?
lostlogin 8mo ago
> - For many consumers there isn't sufficient money in the account to settle all the one-time and ongoing transactions they are liable for -- credit cards are giving you a revolving loan, there's risk it will not be repaid, and that risk ends up reflected in processing fees. Their risk is covered multiple ways (as reflected in their profits). You pay an annual fee to have a card. You pay per transaction, you pay for paywave, you pay 21% in interest. They cover their risk by hitting every possible angle.
laurencerowe 8mo ago
Isn’t that financial risk of credit cards borne by the banks doing the lending? It’s not really any different to a debit card transaction on a bank account with an overdraft facility.
hshdhdhj4444 8mo ago
Visa/MC have built walled gardens which provide many services. Some of the services include: - Consumer Credit - Fraud protection - Payment network - Discount service (rewards, etc) - Concierge services - Rental/Ticketing services - etc No one is denying the utility of what they have created. The problem is they’ve built monopolistic walled gardens where these are all bundled together which raises overall costs while also prevents competition. These services can easily be unbundled (for example in India the payment network is open and cost free, so anyone can provide those other services on top of the payment network). What has made this far more urgent, however, is that these companies are located in the U.S. which has recently leveraged the power these networks have to attack EU citizens for frivolous reasons. So even if the MC/Visa business model was perfect, it would be foolish for even American allies to rely on them given the actions of the current administration.
olalonde 8mo ago
> If you want to switch the world to a debit-based system where economic transactions are limited by cash on hand, I'd argue that's a poorer and less dynamic world than the one we're operating in today. Disagree. Credit has its uses, but debit is superior for the vast majority consumer transactions: lower fees, lower risk, instant settlement, easy P2P transfers, and broader accessibility. That we've become used to credit card payment system in the West is largely a historical aberration that needs correcting. Also, I'm a bit biased since I live in China, but WeChat Pay and Alipay are so far superior to the credit card system that I can hardly find a single redeeming quality in the latter. China was lucky in that it leapfrogged the traditional credit card system since it didn't have that historical baggage.
- vkou 8mo ago
  Instant settlement is an anti-feature. I don't want some asshole to be able to instantly drain my bank account. If I did, I'd be carrying a suitcase of cash around with me.
  - deleted 8mo ago
    [deleted]
  - olalonde 8mo ago
    You can have instant settlement while still maintaining fraud safeguards (e.g. daily payment limits) and remediation mechanisms (e.g. reversing fraudulent transactions). With modern 2FA and device-based security, this risk is extremely low. Not a risk that justifies a 2.5% tax on every transaction plus all the other disadvantages of the credit-based system.
- _zagj 8mo ago
  > lower risk, instant settlement That's ridiculous. Why should I, as a consumer, care about the merchant's "risk?"
  - olalonde 8mo ago
    You don't have to, that's mostly a benefit for merchants. Although it does translate to lower prices and greater competition.
KaiserPro 8mo ago
You're mixing debit and credit cards. In the EU, debit cards are pretty common, and largely its a network effect. You need to get terminals that are supported by your payment provider. A lot of merchant terminals are provided by banks, and frankly they are itching to get a sweet sweet cut of each transaction. Not only the information, but the cut of each transaction. Something like 0.2-1.5% of each transaction. (I'm sure mastercard and visa give them a cut) For Credit cards, the banks/operator already handle most of the risk, and then pay visa a percentage for the privilege of charging usury like rates
- eastbayjake 8mo ago
  I'm not mixing -- if I have $0 in my bank account today and I don't get paid until Friday, I cannot buy food today with a debit card. Being able to buy things today on the promise of future cash flows is a risk-based financial product and risk comes with premiums. (Again: could you solve this problem by having more money in your account? Sure! But there are a lot of downstream consequences of every consumer and business in society operating that way and there are real trade-offs that should be discussed with more nuance than "monopoly hoard ledger boo")
Der_Einzige 8mo ago
Replacing EM dash with "--" doesn't take away LLM smell.
hermanzegerman 8mo ago
You know here in Europe you can just overdraw your bank account anytime without bullshit fees, just with interest that is still way lower than average US Credit Card Interest (around 11%)? Also bank transfers are easy, instant and free. > For many _businesses_ managing cash flow is existential -- as merchants they want to be paid as quickly as possible, but as B2B customers they want to have 30-60 days to sell the input goods they've purchased so they can pay for them upstream. There is a premium for that flexibility that gets reflected in processing fees. Yes those businesses use a bank loan for this, no need for a credit card again. > If you want to switch the world to a debit-based system where economic transactions are limited by cash on hand, I'd argue that's a poorer and less dynamic world than the one we're operating in today. Thinking that the world doesn't have credit just because they use debit cards is one of the most idiotic things I've read today
avianlyric 8mo ago
None of what you’ve mentioned has anything to do with Visa and Mastercard. Visa and Mastercard are just payment networks, their whole business is literally just transporting transaction information from payment terminals to banks and payment processors, plus keeping track of all the numbers (which is pretty important). Payment networks don’t provide credit or any kind of liquidity whatsoever, that entirely provided by the various financial entities that communicate via the payment network. The reason Visa and Mastercard haven’t been easily replaced is simple network effects, nobody wants to integrate with a payment network where there’s nobody to transact with.
- eastbayjake 8mo ago
  I replied downthread but I used "value chain" deliberately -- there are lots of intermediaries of which the card networks are just one link in the chain -- and the statement above is about risk being borne (and value being created for consumers) by the entire value chain that is different and difficult/impossible in a FedNow-style immediate settlement model: https://news.ycombinator.com/item?id=46964968 https://news.ycombinator.com/item?id=46964968
  - avianlyric 8mo ago
    Mastercard and Visa also use immediate settlement models and basically always have done. The settlement buffer between end parties is created entirely by entities that are all basically banks. There’s nothing special about Mastercard and Visa rails that prevents you recreating all the functionality that the broader ecosystem provides, without Visa and Mastercard. Hell all of that functionality could be provided by exactly the same companies and banks that provide it for Visa and Mastercard networks.
    - gizmo 8mo ago
      Because mastercard/visa don't personally bear any risk they are very happy to process refunds and chargebacks in the customer's favor. It's not a perfect system, but it's much better than direct bank debit where the customer has very little recourse. There is also a significant privacy issue. Today my bank can only see the sum total of my credit card purchases but not what I buy and from which vendor. Amex can see what I purchase but knows very little about me otherwise. I like this separation, and I like that it's hard for the government to get a complete picture of my financial affairs. I know credit cards get a lot of hate (here and elsewhere) but as a consumer I think they're exceptionally convenient.
vadoff 8mo ago
A debtless society probably wouldn't suffer as many catastrophic economic recessions/depressions though (usually a result of cascading liquidations/unpayable debts)
torginus 8mo ago
In Europe, credit cards for individual use are extremely rare. I've only had one to manage a company expenses account.
- disgruntledphd2 8mo ago
  In some parts of Europe. Credit cards are extremely common in the UK and Ireland, at least.
anigbrowl 8mo ago
Gotta echo other commenters here. Many people do not want revolving credit, or want to just use it to smooth out balance spikes and for emergencies. The American tropes of carrying a large debt balance or maxing out cards (eg to launch a business) as financial strategies are viewed as somewhere between gambling and fraud by a lot of people.
shswkna 8mo ago
In this response, I detect the typical European tendency of elevating risk over opportunity. This is not meant as a personal attack, or meant to be defamatory. I am detecting a familiar pattern, that is entrenched culturally. Further, I identify this cultural trait as one of the obstacles or reason for many European problems. It’s an opinion I have.
Etheryte 8mo ago
This shows a fundamental understanding about the market you're commenting on. The European market is nothing like the US market. The vast majority of transfers are already debit based. Most people have a credit card, but for most part it's not a daily driver. Many European countries don't have credit scores at all, and in the ones that do, it isn't nearly as important as in the US. Since there isn't much of a practical need to take on debt, most people don't do it (leaving aside mortgages and leases, but you don't take those on a credit card anyway).
- kakacik 8mo ago
  Yeah very disconnected comment I agree, Europe is different (and dare I say better or more stable long term in this regard). I have credit cards for decades with various institutions, but NEVER EVER went to minus, see no reason to change it. Just a bit of discipline. We don't have public credit score or similar dictatorial stuff here. The only loan I will ever have on my name is called mortgage on real estate, and beyond that is a line I'll never cross. Same goes for everybody I know - family, friends, coworkers. This comes from somebody working for a bank so not some clueless fool.
- Etheryte 8mo ago
  I meant to write misunderstanding, sorry about the typo.
beAbU 8mo ago
Unlike americans, the rest of the world isn't as addicted to credit cards, and operate on a mostly debit based system already.

functionmouse 8mo ago

I shouldn't have to pay for your usury economy if I'm using cash. If that were really the issue, these companies would have no problems with businesses charging different prices or offering discounts for cash.

eastbayjake 8mo ago
The networks allow cash discounts if it's posted clearly and the customer has an option to use a different payment method -- you see this on every gas station sign alongside every highway in America. (What's _not_ permitted is adding a secret surcharge or item mark-up for credit card payments)
- bombcar 8mo ago
  The latter is allowed now - after the backs of the credit card processors were broken. They fought tooth and nail against cash discounts OR credit surcharges and they finally lost. In some areas it's rampant that you get a pretty substantial discount - often 4 or 5%, better than cash-back - and many places post "cash prices". You can get even more if you're willing to ride the hassle of the gift card train. The credit card companies know people spend more if they use credit cards, and they turn around and sell that to the merchants.
  - graemep 8mo ago
    The UK actually forbids cash discounts and cred surcharges by law - and has done so since at least 2012. Credit card companies are allowed to run cashback for using them. All in the name of "consumer rights": https://www.gov.uk/government/publications/payment-surcharges https://www.gov.uk/government/publications/payment-surcharge...
    - direwolf20 8mo ago
      Some European countries forbid a price difference but they also limit card fees very low, so the merchant doesn't lose money and you don't get cash back. Forbidding a price difference but allowing high fees is nothing but pure corruption.
    - iso1631 8mo ago
      Mainly because cash processing fees are higher than electronic, and the primary use of cash is to avoid paying tax
- cmurf 8mo ago
  Surcharges are permitted in some states. Colorado law recently changed permitting merchants to pass on the actual cost of processing, except for cash, check and debit payments. https://colorado.public.law/statutes/crs_5-2-212 https://colorado.public.law/statutes/crs_5-2-212 This law overrides any prior contractual agreements with banks/processing companies that prohibit surcharges. This is previously how MasterCard and VISA coerced merchants into absorbing the processing fee, by contractually requiring credit same as cash pricing.
- unethical_ban 8mo ago
  Not true. A chain of restaurants near me does not accept cash, and charges 3.5% markup from their list price to cover CC fees. Texas.
  - eastbayjake 8mo ago
    If you'd like to get that fixed: https://usa.visa.com/Forms/visa-rules.html https://usa.visa.com/Forms/visa-rules.html
jonplackett 8mo ago
Companies did do that - but I belive now it’s not allowed to charge less for cash.
- nubg 8mo ago
  Yes this is exactly what GP is talking about (he just phrased it the other way round).
alex43578 8mo ago
Sure, as long as I don't have to pay for how much your cash costs the business in cash handling, security, theft, counterfeiting losses, and more. Studies show businesses pay more for a transaction in cash than on credit. If they really were losing out on taking cards, they wouldn't accept them.

Beretta_Vexee 8mo ago

There are many countries where debit cards are the norm and credit cards are extremely rare. In France, people are so afraid of consumer credit that cards are renamed ‘deferred debit cards’ rather than credit cards, otherwise people do not want them.

consp 8mo ago
There is also a major difference as I understand it. They need to be resolved at the end of a certain period. There is a legal difference from Credit cards as in there is no continual liability and thus no continued line of credit. Getting a true credit card is also a lot harder here (not France) than a deferred payment card (usually 1 month) and has stricter credit checks.
- KellyCriterion 8mo ago
  Visa and MC have basicly all of these configurations, depending on country & legislation: - Direct Debit - Deffered Debit - Rolling Credit - Installment Credit And if you are a $MegaBigCorp customer of them, you can customize even more.
  - em-bee 8mo ago
    indeed. my credit card requires me to preload money from my bank account. it's like there is a second account that keeps a balance that i can spend using the credit card. whenever i use it, the balance is updated. how the credit is paid off i don't know. it could be either right away, or the amount is just hidden by my bank until it is time to pay off at the end of the month. either way, the credit limit is zero. so i can never spend more than i put in first. (though this may be based on how much i spend or be a configurable value.)
    - albumen 8mo ago
      So, your credit card is in practice a debit card?

niceguy1827 8mo ago

Your comment seems to miss the point. It is totally possible to enable the first two of your bullet points without Visa or Mastercard, for example banks could just give lines of credit directly to consumers. Indeed, the myriad of loan products is run without Visa and Mastercard.

SomeUserName432 8mo ago
Yet if the airline goes under, or I never receive the product I bought online, using Visa/Mastercard I'm not left holding the bag. If I take a random loan with the bank and use those funds to do the same purchases using debit, then I'm the one taking the loss.
- deleted 8mo ago
  [deleted]

V__ 8mo ago

> For many consumers there isn't sufficient money in the account to settle all the one-time and ongoing transactions they are liable for This is a uniquely American viewpoint. In most of Europe you don't buy anything on credit ever.

direwolf20 8mo ago
Most places outside the USA actually. A liability is someone else's asset, and everyone wants USA assets, so the USA needs to generate a lot of liabilities.
vidarh 8mo ago
There are numerous credit providers in Europe that would beg to differ. By December 2025, consumer credit in the Euro area alone stood at an estimated €812 billion.
- wiether 8mo ago
  Are you talking about the same thing? Sure, in Europe people will subscribe to a credit to buy a car or materials to improve their home. But buying your groceries or lunch with a credit card is quite a rare exception.
  - vidarh 8mo ago
    There is a significant amount both in credit card debt, buy-now-pay-later type offerings (e.g. Klarna), and payday loans - it's by no means all larger loans. It also varies greatly by country, but all major European countries still have significant credit card (not consumer, so excluding e.g. car loans) debt, with the most "credit willing" countries like the UK reaching around 1/3 the US average credit card balance (but you'd also want to adjust for average salaries before comparing these). There is no single attitude to this across Europe.
- deleted 8mo ago
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memsom 8mo ago

milesskorpen 8mo ago

I agree the risk transfer is very important, but Visa and Mastercard don't do that (they just facilitate it)

DetroitThrow 8mo ago

man who has only used the american financial system: the world not singularly using the american financial system is less dynamic. surely there are no counterexamples to this.

wiradikusuma 8mo ago

Hmm, maybe for countries with strong consumer protection, yes. I lost 3 credit cards INSIDE an airplane (hello AirAsia!). I only realized it when I turned on my phone while queuing at immigration and was bombarded with dozens of "Successful transaction" messages. That's ~30min from stepping off the airplane. When I checked my statements, I saw dozens of physical transactions (swipes/taps) with different merchants in different cities from the airport. All 3 cards have different PINs. All require a PIN for transactions above ~USD200. Yet the banks rejected my disputes because "it's a physical transaction, so you must be the one doing it." Apparently, they all think I could fly to different cities, buy different items, and fly back to wait in immigration, all in 30 minutes.

direwolf20 8mo ago
Lawsuit time! Against your bank.
axus 8mo ago
I had missed the warning that this tech is now widespread. Must have not logged into Hacker News that day https://www.kaspersky.com/blog/nfc-gate-relay-attacks-2026/55116/ https://www.kaspersky.com/blog/nfc-gate-relay-attacks-2026/5...
- monksy 8mo ago
  But but my CC literally said "it's more secure" (I asked and complained about the contactless feature because it interfered with my transit card)
a13n 8mo ago
If my bank did this to me I would immediately drop them.

overfeed 8mo ago

> credit cards are giving you a revolving loan, there's risk it will not be repaid, and that risk ends up reflected in processing fees Neither Visa nor MasterCard are loaning customers their money. It's the European banks that hold the bulk of the risk for European credit card transactions.

sjm-lbm 8mo ago
Also worth noting that who owns the risk is a regulatory question, not a technical or product one - and, like all regulatory questions, is different for different countries/regions. Chip and pin and NFC transitions took off much quicker outside the US because merchants generally owned more of the chargeback risk than in the US, and therefore were willing to update their POS equipment accordingly. Risk (like debt) is another place where a US-centric view will likely lead you to misunderstand the purpose of Visa/MC.
- avianlyric 8mo ago
  > Chip and pin and NFC transitions took off much quicker outside the US because merchants generally owned more of the chargeback risk than in the US, and therefore were willing to update their POS equipment accordingly. Not really. The risk of all fraud is initial borne by banks issuing the cards, after all they’re only parties that have an actual financial relationship with the person providing the cash/debt. If something which results in that person cash/debt being stolen, it’s between that person and their bank to figure out who’s liable for the lost money. Chargebacks are just a mechanism for banks to recover some of that lost money, once the liability between the card holder and the bank has been settled. One of the big reasons why Chip and PIN etc took off outside of the US, is that the US is very accepting of fraud, and charging crazy high interchange rates (up to 10x what they are in Europe) so the cost of fraud is spread over many individuals. Other parts of the world have regulations capping interchange rates, and providing better consumer protection, demanding that banks and payment networks tackle fraud, rather than increase the cost of everything by 1-2% to cover fraud losses.
- marcosdumay 8mo ago
  Just to put another perspective there. In Brazil, chip and pin took off immediately (from non-existent to ubiquitous in about 6 months) after the government decided that the bank and card issuer were responsible for all the fraud risk. I have no idea what policy made the US hold into signatures for that long. But the seller and the buyer are the least powerful people on that entire chain, so I don't think it reasonable to look at them.

haspok 8mo ago

> credit cards are giving you a revolving loan I'm confused - is it not the issuing bank that gives you the loan, and the credit card company just provides the infrastructure? Btw. having an overdraft limit of a few hundred Euros is quite typical for those liquidity issues. You don't need a credit card for that.

eastbayjake 8mo ago
I used "value chain" euphemistically because you can get really complex on this and I wanted to spare the casual reader. I meant your credit card as an end-user product in your pocket and not meaning the card networks in isolation, but the value chain is roughly: 1. Merchant (bears little fraud risk but a lot of chargeback risk) 2. Payment Gateway (little direct risk but some liability risk) 3. Merchant Acquirer (more direct risk but mostly if merchants become insolvent) 4. Card Network (Visa/MC/AmEx - less risk but significant underlying costs managing a global technology that spans the financial system and needs to be distributed to almost every merchant of any scale in America) 5. Issuers (Banks + AmEx - most risk but get a big share of interchange fees) I've surely missed something here that the very smart (and increasingly grumpy these days!) HN community will doubtlessly pile-on to correct, so I apologize in advance for errors or omissions... and I bow down if @patio11 swoops in to tell me about the complexity I've missed in either payments or Japanese economic/cultural conventions Will also add that the benefit of credit is not overdraft but smoothing cash flow... if I'm living paycheck to paycheck and get paid every two weeks, I will incur essential expenses at the beginning of the fortnight that I can afford but lack cash in my account to pay now. I can't overdraft because I won't have the funds to deposit into that account for another two weeks. I'm getting a service that smooths my cashflow and there's a small premium added to reflect that. (Could you save up enough to avoid needing this? Is that a uniquely American way of living? I don't know! I'm making a descriptive claim not a normative one!)
- alibarber 8mo ago
  Sadly I’ve noticed that comments on this topic usually devolve into tribal comments about how ‘things are done in the EU’ which always seem to not be actually that representative of the 27 different countries of the EU, but of course must be better than the US.

x3ro 8mo ago

> For many consumers there isn't sufficient money in the account to settle all the one-time and ongoing transactions they are liable for -- credit cards are giving you a revolving loan, there's risk it will not be repaid, and that risk ends up reflected in processing fees This is really much less of a thing in Europe, or at the very least in Germany and Spain. Mostly it's the overdraft from banks that you can use as what you call a revolving loan. Most of the visa and mastercards I've had in my life simply debit from my main account.

pmontra 8mo ago

Cash flow and fraud, yes. Credit, not much in most of Europe. AFAIK nobody has had something close to real credit cards until recently. They were called credit cards but it was a debit card with payment and deferred to the end of the month and backed only by the cash in the bank account linked to the card. I guess that no financial institution did like to risk any money on the behavior of European customers.

Hikikomori 8mo ago

Switch? We mostly use debit cards today.

direwolf20 8mo ago

That's all the bank's problem, not the network's.

AtlasBarfed 8mo ago

They are taking a percentage point or two on the entire consumer payment system. I think there's plenty of money to back all the activity. Especially if there are central banks willing to back them

loeg 8mo ago
> They are taking a percentage point or two on the entire consumer payment system. Visa/MC make about 0.1-0.13% of each transaction, not a 1-2%. The rest of the interchange (the vast majority) goes to the issuing bank.
- scotty79 8mo ago
  Doesn't it depend on the country? Payments with Visa and MasterCard work very differently in various countires. In Poland you can pay 0.01€ with credit card and the seller will happily oblige. In Germany even few Euros they prefer to be paid in cash.
  - loeg 8mo ago
    That's their cut in the US, the market with the highest total interchange fees. In other markets with lower total fees, it's hard to imagine Visa/MC's cut being higher. They do a pretty useful service for a pretty reasonable fee. Patio11 doesn't name names or give precise figures, but: https://www.bitsaboutmoney.com/archive/how-credit-cards-make-money/ https://www.bitsaboutmoney.com/archive/how-credit-cards-make...

KellyCriterion 8mo ago

> For many _businesses_ managing cash flow is existential Err, no - for _all_ businesses managing cash flow is the _only_ NR 1 crucial thing, because if they dont, they will disappear by tomorrow :)

loeg 8mo ago

This risk is all covered by the banks, not the interchange networks?

lostlogin 8mo ago

> - For many consumers there isn't sufficient money in the account to settle all the one-time and ongoing transactions they are liable for -- credit cards are giving you a revolving loan, there's risk it will not be repaid, and that risk ends up reflected in processing fees. Their risk is covered multiple ways (as reflected in their profits). You pay an annual fee to have a card. You pay per transaction, you pay for paywave, you pay 21% in interest. They cover their risk by hitting every possible angle.

laurencerowe 8mo ago

Isn’t that financial risk of credit cards borne by the banks doing the lending? It’s not really any different to a debit card transaction on a bank account with an overdraft facility.

hshdhdhj4444 8mo ago

Visa/MC have built walled gardens which provide many services. Some of the services include: - Consumer Credit - Fraud protection - Payment network - Discount service (rewards, etc) - Concierge services - Rental/Ticketing services - etc No one is denying the utility of what they have created. The problem is they’ve built monopolistic walled gardens where these are all bundled together which raises overall costs while also prevents competition. These services can easily be unbundled (for example in India the payment network is open and cost free, so anyone can provide those other services on top of the payment network). What has made this far more urgent, however, is that these companies are located in the U.S. which has recently leveraged the power these networks have to attack EU citizens for frivolous reasons. So even if the MC/Visa business model was perfect, it would be foolish for even American allies to rely on them given the actions of the current administration.

olalonde 8mo ago

> If you want to switch the world to a debit-based system where economic transactions are limited by cash on hand, I'd argue that's a poorer and less dynamic world than the one we're operating in today. Disagree. Credit has its uses, but debit is superior for the vast majority consumer transactions: lower fees, lower risk, instant settlement, easy P2P transfers, and broader accessibility. That we've become used to credit card payment system in the West is largely a historical aberration that needs correcting. Also, I'm a bit biased since I live in China, but WeChat Pay and Alipay are so far superior to the credit card system that I can hardly find a single redeeming quality in the latter. China was lucky in that it leapfrogged the traditional credit card system since it didn't have that historical baggage.

vkou 8mo ago
Instant settlement is an anti-feature. I don't want some asshole to be able to instantly drain my bank account. If I did, I'd be carrying a suitcase of cash around with me.
- deleted 8mo ago
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- olalonde 8mo ago
  You can have instant settlement while still maintaining fraud safeguards (e.g. daily payment limits) and remediation mechanisms (e.g. reversing fraudulent transactions). With modern 2FA and device-based security, this risk is extremely low. Not a risk that justifies a 2.5% tax on every transaction plus all the other disadvantages of the credit-based system.
_zagj 8mo ago
> lower risk, instant settlement That's ridiculous. Why should I, as a consumer, care about the merchant's "risk?"
- olalonde 8mo ago
  You don't have to, that's mostly a benefit for merchants. Although it does translate to lower prices and greater competition.

KaiserPro 8mo ago

You're mixing debit and credit cards. In the EU, debit cards are pretty common, and largely its a network effect. You need to get terminals that are supported by your payment provider. A lot of merchant terminals are provided by banks, and frankly they are itching to get a sweet sweet cut of each transaction. Not only the information, but the cut of each transaction. Something like 0.2-1.5% of each transaction. (I'm sure mastercard and visa give them a cut) For Credit cards, the banks/operator already handle most of the risk, and then pay visa a percentage for the privilege of charging usury like rates

eastbayjake 8mo ago
I'm not mixing -- if I have $0 in my bank account today and I don't get paid until Friday, I cannot buy food today with a debit card. Being able to buy things today on the promise of future cash flows is a risk-based financial product and risk comes with premiums. (Again: could you solve this problem by having more money in your account? Sure! But there are a lot of downstream consequences of every consumer and business in society operating that way and there are real trade-offs that should be discussed with more nuance than "monopoly hoard ledger boo")

Der_Einzige 8mo ago

Replacing EM dash with "--" doesn't take away LLM smell.

hermanzegerman 8mo ago

You know here in Europe you can just overdraw your bank account anytime without bullshit fees, just with interest that is still way lower than average US Credit Card Interest (around 11%)? Also bank transfers are easy, instant and free. > For many _businesses_ managing cash flow is existential -- as merchants they want to be paid as quickly as possible, but as B2B customers they want to have 30-60 days to sell the input goods they've purchased so they can pay for them upstream. There is a premium for that flexibility that gets reflected in processing fees. Yes those businesses use a bank loan for this, no need for a credit card again. > If you want to switch the world to a debit-based system where economic transactions are limited by cash on hand, I'd argue that's a poorer and less dynamic world than the one we're operating in today. Thinking that the world doesn't have credit just because they use debit cards is one of the most idiotic things I've read today

avianlyric 8mo ago

None of what you’ve mentioned has anything to do with Visa and Mastercard. Visa and Mastercard are just payment networks, their whole business is literally just transporting transaction information from payment terminals to banks and payment processors, plus keeping track of all the numbers (which is pretty important). Payment networks don’t provide credit or any kind of liquidity whatsoever, that entirely provided by the various financial entities that communicate via the payment network. The reason Visa and Mastercard haven’t been easily replaced is simple network effects, nobody wants to integrate with a payment network where there’s nobody to transact with.

eastbayjake 8mo ago
I replied downthread but I used "value chain" deliberately -- there are lots of intermediaries of which the card networks are just one link in the chain -- and the statement above is about risk being borne (and value being created for consumers) by the entire value chain that is different and difficult/impossible in a FedNow-style immediate settlement model: https://news.ycombinator.com/item?id=46964968 https://news.ycombinator.com/item?id=46964968
- avianlyric 8mo ago
  Mastercard and Visa also use immediate settlement models and basically always have done. The settlement buffer between end parties is created entirely by entities that are all basically banks. There’s nothing special about Mastercard and Visa rails that prevents you recreating all the functionality that the broader ecosystem provides, without Visa and Mastercard. Hell all of that functionality could be provided by exactly the same companies and banks that provide it for Visa and Mastercard networks.
  - gizmo 8mo ago
    Because mastercard/visa don't personally bear any risk they are very happy to process refunds and chargebacks in the customer's favor. It's not a perfect system, but it's much better than direct bank debit where the customer has very little recourse. There is also a significant privacy issue. Today my bank can only see the sum total of my credit card purchases but not what I buy and from which vendor. Amex can see what I purchase but knows very little about me otherwise. I like this separation, and I like that it's hard for the government to get a complete picture of my financial affairs. I know credit cards get a lot of hate (here and elsewhere) but as a consumer I think they're exceptionally convenient.

vadoff 8mo ago

A debtless society probably wouldn't suffer as many catastrophic economic recessions/depressions though (usually a result of cascading liquidations/unpayable debts)

torginus 8mo ago

In Europe, credit cards for individual use are extremely rare. I've only had one to manage a company expenses account.

disgruntledphd2 8mo ago
In some parts of Europe. Credit cards are extremely common in the UK and Ireland, at least.

anigbrowl 8mo ago

Gotta echo other commenters here. Many people do not want revolving credit, or want to just use it to smooth out balance spikes and for emergencies. The American tropes of carrying a large debt balance or maxing out cards (eg to launch a business) as financial strategies are viewed as somewhere between gambling and fraud by a lot of people.

shswkna 8mo ago

In this response, I detect the typical European tendency of elevating risk over opportunity. This is not meant as a personal attack, or meant to be defamatory. I am detecting a familiar pattern, that is entrenched culturally. Further, I identify this cultural trait as one of the obstacles or reason for many European problems. It’s an opinion I have.

Etheryte 8mo ago

This shows a fundamental understanding about the market you're commenting on. The European market is nothing like the US market. The vast majority of transfers are already debit based. Most people have a credit card, but for most part it's not a daily driver. Many European countries don't have credit scores at all, and in the ones that do, it isn't nearly as important as in the US. Since there isn't much of a practical need to take on debt, most people don't do it (leaving aside mortgages and leases, but you don't take those on a credit card anyway).

kakacik 8mo ago
Yeah very disconnected comment I agree, Europe is different (and dare I say better or more stable long term in this regard). I have credit cards for decades with various institutions, but NEVER EVER went to minus, see no reason to change it. Just a bit of discipline. We don't have public credit score or similar dictatorial stuff here. The only loan I will ever have on my name is called mortgage on real estate, and beyond that is a line I'll never cross. Same goes for everybody I know - family, friends, coworkers. This comes from somebody working for a bank so not some clueless fool.
Etheryte 8mo ago
I meant to write misunderstanding, sorry about the typo.

beAbU 8mo ago

Unlike americans, the rest of the world isn't as addicted to credit cards, and operate on a mostly debit based system already.