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This diagram summarizes interchange fees really well: http://rortybomb.files.wordpress.com/2009/11/interchange_fee.jpg http://rortybomb.files.wordpress.com/200

by lsh123 12y ago

This diagram summarizes interchange fees really well: http://rortybomb.files.wordpress.com/2009/11/interchange_fee.jpg http://rortybomb.files.wordpress.com/2009/11/interchange_fee... While Square can develop the technical infrastructure, it might be tough from business perspective. This is a two-sided market and right now Square has penetration on the merchant side. The Square's P2P payments app might be an attempt to get into consumer market. It will be interesting to see how it will go. In the past similar attempts failed and the only recent example of a widely adopted 2-sided payments network is PayPal. Mobile is a very interesting space but nobody figured it out yet.

johnrob 12y ago
That diagram doesn't show how Visa/Mastercard make their money (unless they act as issuers or acquirers). Where is their cut?
- lsh123 12y ago
  Right. Both issuer and acquirer banks pay per-transaction and/or annual fees to Visa/MC to participate in the network. These deals are highly custom but it is roughly 0.1% of payment volume.