The payment processors have a disproportionate amount of power over merchants because they form an oligopoly. The barrier to entry is extremely high, which sign

The payment processors have a disproportionate amount of power over merchants because they form an oligopoly. The barrier to entry is extremely high, which significantly distorts the markets. The payment processors used this asymmetry to force merchants to hide their costs from the market at large. The market can't affect something when it isn't allowed to set different prices for using the service or not! Yes, merchants could stop using the payment processors. But, crucially, consumers can't: if a merchant used a payment processor under the old scheme, even customers paying in cash had to pay a higher price to subsidize this! Couple this with the fact that the payment processor market is entirely dominated by a bare handful of large companies, and you get something really far from a "free" market.