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I would imagine that it is because brick and mortar merchants are a lower fraud risk than an online property. Don't forget that visa and MasterCard suck up frau

I would imagine that it is because brick and mortar merchants are a lower fraud risk than an online property. Don't forget that visa and MasterCard suck up fraud on both sides of the transaction. Which is not to say that there aren't shenanigans going on, but there's a reason that consumers really like MasterCard and visa, they both look after customer interests, sometimes at the expense of merchants.

tomp 12y ago
What kind of fraud is there to suck up at the merchant part of the transaction? Isn't it so that if the merchant doesn't deliver, they don't get paid?
- gambiting 12y ago
  In the EU, merchants have to pay for swipe card fraud. Let's say you buy something with a swipe card, scribble a signature on the receipt, then ring your bank few hours later saying that there is a transaction you don't recognize. Then your bank requests the receipt from the merchant, the signatures don't match = you get reimbursed full amount, the merchant has no money and no goods - because in EU it is the merchant's responsibility to check if the signatures match. If they don't, they didn't do their job properly, therefore they have to pay. This is the reason why pretty much nobody accepts swipe cards in EU anymore - there's very few places which even have swipe terminals, it's all chip and pin. The couple times when my chip didn't work, the cashier had to key in the number of the card manually, because she didn't have a swipe terminal at the till.
netcan 12y ago
MasterCard and Visa have the ability to put the full cost of fraud (including a fee for dealing with it) onto merchants in many/most cases. This includes "friendly fraud" of the false chargeback variety (customer falsely claims they did not receive a product) taking advantage of consumer protection guarantees offered by MasterCard and Visa to their customers as a value add. IE, CC companies offer their customers consumer protection to encourage use of their product. They charge merchants when a consumer uses the product. Then, they unload the risks, costs and other burdens inherent in offering this add on service onto merchants as well. This is why they put little effort into investigating claims, making it feasible for merchants to dispute them or otherwise preventing fraudulent claims. It's has a distinct odor of oligopoly. Oligopoly also allows for price setting. IE, the forces pushing the cost of a good or service closer to the (marginal) cost of producing it are weak. It could also be that "card present" is cheaper because in-store purchases have to compete with cash purchases. IE, they might be charging the higher fees because they can, not because they have to.

tomp 12y ago

What kind of fraud is there to suck up at the merchant part of the transaction? Isn't it so that if the merchant doesn't deliver, they don't get paid?

gambiting 12y ago
In the EU, merchants have to pay for swipe card fraud. Let's say you buy something with a swipe card, scribble a signature on the receipt, then ring your bank few hours later saying that there is a transaction you don't recognize. Then your bank requests the receipt from the merchant, the signatures don't match = you get reimbursed full amount, the merchant has no money and no goods - because in EU it is the merchant's responsibility to check if the signatures match. If they don't, they didn't do their job properly, therefore they have to pay. This is the reason why pretty much nobody accepts swipe cards in EU anymore - there's very few places which even have swipe terminals, it's all chip and pin. The couple times when my chip didn't work, the cashier had to key in the number of the card manually, because she didn't have a swipe terminal at the till.

netcan 12y ago

MasterCard and Visa have the ability to put the full cost of fraud (including a fee for dealing with it) onto merchants in many/most cases. This includes "friendly fraud" of the false chargeback variety (customer falsely claims they did not receive a product) taking advantage of consumer protection guarantees offered by MasterCard and Visa to their customers as a value add. IE, CC companies offer their customers consumer protection to encourage use of their product. They charge merchants when a consumer uses the product. Then, they unload the risks, costs and other burdens inherent in offering this add on service onto merchants as well. This is why they put little effort into investigating claims, making it feasible for merchants to dispute them or otherwise preventing fraudulent claims. It's has a distinct odor of oligopoly. Oligopoly also allows for price setting. IE, the forces pushing the cost of a good or service closer to the (marginal) cost of producing it are weak. It could also be that "card present" is cheaper because in-store purchases have to compete with cash purchases. IE, they might be charging the higher fees because they can, not because they have to.