What do Visa and Mastercard do? An intro to card networks

Posted by evakhoury 4 days ago

Comments

Comment by losvedir 3 days ago

I play the credit card "game" because I hate feeling like I'm leaving money on the table, but I really wish I didn't have to. Some degrees of fees make sense, to run the network, and handle fraud, but it's ridiculous that people have this sense that shopping should somehow fund your vacation.

Where I am it's increasingly common to see credit card fees when checking out. I get it, because merchants are being charged 3-5% of their total revenue. I wish there was a low fee credit card network that merchants didn't charge a fee for, so I could continue the simplicity of digital payments but opt out of this crazy Visa Infinite rewards accounting boondoggle.

Comment by ianhawes 3 days ago

There is, it's called debit cards, but Stripe et al. "simplified" pricing by charging a percentage regardless of card type instead of the traditional interchange-plus pricing. Merchant banks "used to" make money by tacking on fixed fees, i.e. a set-up fee, terminal fee, monthly fee, etc, but then Stripe came along and provided (1) a better dev experience, (2) better onboarding, and (3) simplified pricing.

Comment by karlosvomacka 3 days ago

For US readers - in my country in europe I'd say that 95% of people have only debit card, not credit card. it's very not common to have a credit card here. Card payments are extremely common, but everyone uses debit card.

Comment by avianlyric 3 days ago

The EU caps all card interchange fees at 0.3% for credit cards and 0.2% for debit, which is an order of magnitude lower than some of the fees in the US.

That’s why you don’t see the same kinds of credit card deals in the EU compared to the US.

Comment by bux93 2 days ago

Note that the caps were introduced because the EU already had widespread use of bank cards, but local schemes were being replaced with Mastercard/Visa debit - the caps were brought in to prevent the duopoly from profiteering. (Apple/Google pay also use Mastercard/Visa virtual cards in the EU.) Before the cap, credit cards had way higher fees and there were some reward cards, which led to merchants simply not accepting Mastercard/Visa. Local schemes included Mastercard-owned Maestro (used in Germany, The Netherlands and for some reason Brazil) but also local schemes like Belgium's Bancontact/MrCash. It's unfortunate some of those schemes didn't just merge and started competing in foreign countries as well.

Comment by _bernd 2 days ago

At least in Germany as far as I'm aware all banking cards are in fact "simple" visa cards who uses "V-pay", since 2012/2014?

Personally I "like" or prefer V-pay because it made payment in the EU more easily for me without the need of a credit card even 8 years ago. Since the pandemic, I only pay for a (real) credit card (with daily billing) because some goods or services can only be paid with a "real" card, like more expensive cars at a car renting company or sometimes hotel rooms and the like.

In general I try to pay with cash so nobody needs to pay extra fees. But more and more smaller businesses prefer electronic payments. Then I use the banking card with V-pay and to state it again, the real visa card is only used when no other options are available.

Comment by KellyCriterion 2 days ago

> o nobody needs to pay extra fees

Processing cash is by far >not free<! In fact, it costs a lot of money due to all the things involved (counting/collection/recycling etc). Anf it inwolves additional risks for the handling party.

Comment by _bernd 2 days ago

In the past I handled cash as an employee and as a volunteer. Like even a quiet night at a bar can sum up to a few thousand EUR.

Yes handling cash is not free. But compared to some charges or fees it's often quiet cheap.

Sure you need to think a head like how much small change money you will need or how much cash for change in general. You also need kind of routine and flow for counting and handling but even if I had to count up to 10k EUR in small bills t does not needed more then half an hour incl putting it into the safe or on the way home putting it into the banking machine... At least in Germany it's not that big of a deal breaker.

Comment by sorenjan 2 days ago

That time costs money, the safe costs money, having cash attracts criminal elements like robbers or dishonest employees, your employee might get robbed on their way to the banking machine making it a workplace hazard, security guards costs money.

In 2009 Sweden had 58 armored car robberies, in 2018 there were 1. This used to be a big concern in Sweden, now it's basically a nonissue.

There were 1154 store robberies in 2009, in 2018 there were 515. Muggings are also down considerably. 2022 was the first year with zero bank robberies. This is mostly thanks to the much lower use of cash.

https://www.riksbank.se/sv/betalningar--kontanter/sa-betalar...

https://bra.se/download/18.54e1fb8a19c479963d63601e/17731372...

Comment by KellyCriterion 2 days ago

half an our - every day.

I know of a large restaurant chain with some "bigger" branches: They often have to count two or three times with different people to be sure, that the amount is correct. Every evening.

Then you have transport companies which pick up the cach (or refill ATM) - you pay there for every time they stop, and you pay a tiny fraction per bill processed etc. (though, most restaurants do not use these services)

Then you finally have the very high risk of getting robbed.

Comment by coredog64 2 days ago

You just triggered my PTSD. Worked in a gas station in college and changing over the till was a PITA -- I had to account for every cent, could be written up over 50 cents (too much or too little) and it was always this crazy dance to change over when we were busy since it messed with the counts.

Comment by KellyCriterion 2 days ago

Sorry! :-)

I know: It is just hell! There is a gas station near my location, which closes the door from 23.45 to 24.00 for just doing this and handing over to the group.

Comment by _bernd 21 hours ago

It's funny. I have lurked or followed the gas station anecdote of yours but from the other side.

After school I've worked at a gas station as well and we did not need to close because the shift swap was the same as over the day.

You exert your cashier(?) and the next one inserts the new. And you count in the office and take the time you need.

Half an hour incl. Some other minor takes was part of the shift. Simple as that.

Comment by yayachiken 2 days ago

People often say that but does the cost for handling cash really scale (even approximately) proportionally with the number of transactions or revenue?

Or is it more binary that you have to decide, you either handle any cash and have the cost associated with it, or you refuse to take cash at all? If the latter is the case, then avoiding cash altogether seems somewhat unrealistic where I am from. And if it doesn't scale then it makes a lot of sense cost-wise to try to do as many of your transactions with cash as possible.

Comment by raverbashing 2 days ago

> but does the cost for handling cash really scale (even approximately) proportionally with the number of transactions or revenue?

Yes, it sounds weird but it does

- Providing change is a pain and it's a "fixed time" cost

- Moving money around (also some banks charge for money deposits for commercial accounts)

- Dealing with "shrinkage" in various ways (even if you have insurance)

Comment by KellyCriterion 2 days ago

Depends on, sure there is some "efficient frontier" where it flips.

Think about all the supermarket chains, handling millions of cash daily; in my region, those are relying heavily on outsourced cash recycling companies - why? Its more effort/cost if they would do this themself.

Comment by krzyk 2 days ago

I'm quite opposite. I avoid any places that don't accept card payments, because it usually means they are avoiding taxes. And I don't have cash on me, or wallet. Only phone or sometimes only my garmin watch (with garmin pay).

Comment by adrian_b 2 days ago

I think that there was a recent HN thread that linked to an article which argued that the credit card system of USA has the purpose of taking money from the poor and giving them to the rich, and the estimated amount of the money transferred in this way was huge.

The EU limits for card fees prevent this in Europe, which is very good.

Comment by skybrian 2 days ago

Assuming they pay their credit card bill themselves, it's effectively a volume discount for big spenders (though that "volume" goes to multiple vendors). The argument that the money "comes from" other customers is sort of like claiming that when you "save money" by buying things on sale, the money comes from other customers who paid full price. Actually you aren't "saving money" at all; you're spending money.

Similarly, the "whales" in a casino get lots of "free" benefits, but only because they're losing a lot of money gambling. They paid for them.

Contrast with frequent-flier miles where businesses pay for plane tickets but the points go to individuals. That's pretty clearly siphoning off business expenses.

Comment by 8note 2 days ago

ok, but what about for equivalent spenders?

one cash, one credit?

the credit payer is clearly paying less, with the difference paid by increased prices overall. That is the cash purchaser paying the credit one

Comment by CaptainNegative 2 days ago

That is the cash purchaser paying the retailer more than they need to. There's no conservation law stating that store revenue is a constant and missed revenue from one customer must be made up for by another, nor that every additional operating cost must be directly pushed onto customers.

Similarly, we do not say that October shoppers transfer wealth to Black Friday shoppers, even though the only tangible difference from your scenario is an irrelevant temporal one.

Comment by adrian_b 2 days ago

> Actually you aren't "saving money" at all; you're spending money.

You are spending money, but you are spending far less money than the poor spend when paying for exactly the same products or services.

If I want to buy a few server CPUs or a few server computers or a few "datacenter" GPUs, I have to pay at least 2 or 3 times more than billionaires pay for them.

The same if I want to buy any other kinds of components that can be used to build things, e.g. power MOSFET transistors.

There is no "economy of scale" here, because those products are already fabricated in the high volumes that reduce their production costs.

For shipping, the costs are typically the same, regardless if the recipient is a big company or a small company or an individual, so they do not justify the price differences.

Even when the handling and shipping costs were bigger for small quantities, a small business or an individual could just pay the difference in handling and shipping prices, but that does not happen in reality, when the discounts given to the rich are many times higher than the shipping costs.

This policy of huge discounts is one of the main causes why all the markets end up in being dominated by monopolies or quasi-monopolies, because it is impossible for new entrants to compete with the incumbents, who pay much less than them for everything. Thus the biggest companies end up selling mostly between themselves, excluding any others.

Comment by samus 2 days ago

Discounts on volume deals are yet another thing since a higher volume helps the business exceed the break-even threshold faster. Also, volume deals have a favorable management effort to income ratio compared to single transactions.

Huge numbers reduce manufacturing costs, but only because they justify investments that are uneconomical at lower volumes. The business would still go bankrupt if they don't read breakeven.

Economies of scale are a real thing and not just because of monopolies wanting to deny new incumbents.

Comment by johnnyanmac 2 days ago

The model is inverted here, though. The whales essentially get the big discounts at the expense of those who go into debt for one reason or another. That's why there's an argument of wealth transfer up. The "biggest spenders" will end up paying little or no interest

Comment by canjobear 2 days ago

A refutation of that view: https://www.complexsystemspodcast.com/episodes/credit-card-r...

Comment by SkiFire13 2 days ago

I reached the midpoint of the podcast without seeing a proper argument against this then I gave up.

It tries to argue that higher reward rates are necessary to attrach customers that pay a lot (for credit card companies) and that lower income people are generally subsidized by taxes (obvious but unrelated), but at no point (until where I read) it seems to address the issue of merchants having to generally increase prices due to these cards.

Comment by johnnyanmac 2 days ago

> lower income people are generally subsidized by taxes

Pretty flimsy argument to begin with. Because the rich then argue to lower their taxes and/or simply not pay them and the whole system falls apart. Not to mention that lower income people paying more to keep afloat debt than taxes (which at worst is a much better interest deal for an installment plan) is a much worse model for society.

Comment by adrian_b 2 days ago

Looking now at that, it does a poor job of making a true refutation.

What that article explains, is that the system of credit card fees and rewards that is used in USA is extraordinarily complicated, variable and obfuscated in comparison with other countries, so it is extremely difficult to discover who gains most and who loses most.

So the conclusion is more like "there is insufficient evidence because we cannot access all the required financial information" for the claims of the other article and the refutation itself presents no evidence that the claims of wealth redistribution are incorrect.

Comment by shimman 2 days ago

Do you have a link? Highly interested in that thread. Do you know if people discussed how state solutions faired? I'm assuming something like Pix from the Brazilian Central Bank does an even better job at prevention while providing a public service.

Comment by crossroadsguy 2 days ago

https://www.library.hbs.edu/working-knowledge/how-credit-car... probably this

Pix, UPI, and a few more

Comment by gpvos 2 days ago

That would be this post of 16 days ago, 453 comments: https://news.ycombinator.com/item?id=49432201

Comment by rootusrootus 2 days ago

> has the purpose of taking money from the poor and giving them to the rich

Are you saying it is intentional? Is it not more simply explained as simple greed by two companies colluding to keep competitors out of their market?

Comment by johnnyanmac 2 days ago

It may be a partial factor. Similar to how CC companies have a logical reason to reject high charge chargeback items , but may also be ideologically driven to push certain agendas as well.

Comment by pocksuppet 2 days ago

But simple corporate greed is the same thing as taking money fro the poor and giving it to the rich?

Comment by mayli 2 days ago

Yep, pretty much the credit card tax. One of the most ugly things.

Comment by derektank 2 days ago

Wouldn’t it be simpler for European countries to simply raise the VAT and redistribute the proceeds to poor people, rather than regulate the interchange fees if the concern is inequality

Comment by klrefg 2 days ago

So.. you’d have both higher taxes and higher interchange fees? What’s the appeal of that?

Comment by dns_snek 2 days ago

VAT is a regressive consumption tax. Raising VAT, hurting poor people the most, skimming a bit off the top and then "redistributing" it back to them would make no sense.

Do you mean a higher corporate tax paid by companies like VISA and Mastercard?

Either way, the solution is already on the horizon: Digital Euro.

Comment by post-it 2 days ago

Your solution sounds significantly more complicated actually.

Comment by derektank 2 days ago

In what way? There are many sources of inequality. Trying to play whack a mole with each one seems much more laborious than simply deciding how much inequality you want in society, and then setting it with the tax code

Comment by opinion-is-bad 2 days ago

Inequality isn’t as simple as pulling one tax lever, and not all levers are equally effective at all points of the pull. Dead-weight loss is an important concept when designing tax policies, otherwise why not simply eliminate ALL taxes in place of an expanded VAT or income tax or corporate tax or whatever.

Comment by alibarber 2 days ago

Note that these are interchange fees charged by the networks. Unless you're operating at massive scale, merchant account suppliers still charge the shop whatever they want. The shop is paying far more than 0.2 / 0.3%.

2.5% for credit and 25c fixed for debit is the usual ballpark.

Comment by erincandescent 2 days ago

The rates you're quoting are far higher than you get without negotiation from various providers these days . SumUp, as one random example, quote a flat 1.39% _on their free plan_.

Comment by danvayn 2 days ago

Yes, it’s because Americans have to build credit or otherwise optimize their credit score to finance large purchases. In most other countries there either isn’t a credit score concept or your credit score does not have to be built up over a long period to be effective like it does here. It doesn’t help that a third of Americans dont really have savings either; credit helps them to work around this

Comment by smelendez 2 days ago

I use credit for the purchase protection (I believe many debit cards have this as well but it’s easier when you haven’t yet paid the charge, and seems better enshrined in law for credit), for the rewards (which including signup bonuses can be huge), for the float period, and for security — if somebody fraudulently uses a credit card versus a debit card, there’s no actual money missing while the situation gets resolved.

Comment by enaaem 2 days ago

Every time I had issues with fraud it was with a cc. The fraud protection is just bandage for an inherently unsafe system that you are paying for yourself.

That being said, I do get that for US individuals it is completely rational to use cc's. I would do that too. If you are paying 3% Visa/MC tax anyway, then you might as well use their perks.

Comment by Shog9 2 days ago

What smelendez is alluding to is the matter of who is liable while fraud is being resolved.

In the US, a charge on your bank card results in at least a hold on your bank account - money you can't spend on anything else until the hold is lifted. Worst-case, there can be significant fees associated with this (overdraft, declined payments, etc.).

For most of us, that's a much bigger problem than a debt we may or may not end up paying interest on.

From personal experience, getting a credit card company to quickly resolve fraud cases is also much easier than getting a bank to do the same, even when it's ultimately the same institution.

Comment by johnnyanmac 2 days ago

Yeah, it's all a huge con. The best fiscal habits involves not spending money you don't have, so you should never need a CC to begin with. But if you take that route, you end up being unable to finance a car or apartment because companies can't snoop into how you spend money. So you're forced to either play the game or be so rich you can buy everything you need in cash (which, ironically qualifies you for the best kinds of CC's anyway).

Now, if you DO manage to that threshold... you still want to delay finances. Because installments now become ways to give your money more time to make money and offset whatever you are paying for. The models and incentives are completely at odds.

Comment by ghosty141 2 days ago

In germany a similar scheme exists (Schufa) but it's less important.

Comment by fsuts 2 days ago

Uk law gives significantly more protection on credit card purchases than debit card. As it’s treated as a finance product so the lender is has responsibilities.

Comment by LelouBil 2 days ago

I don't know for other European countries, but in France a lot of people call them "Cartes de crédit" AKA Credit cards, even though, like you said, they are actually debit cards for 95% of people, so this adds to the confusion

Comment by sersi 2 days ago

Yup and even when they are credit cards, "cartes à débit différé", they behave more like automated charge cards. The amount is automatically taken out of your account at the end of the month, you are supposed to pay in full and don't have the option of making minimum payments. So the poor banks cannot make nearly as much money with interest rates and instead are forced to have relatively high account maintenance fees (that are published and much more transparent to the customer).

That said as a French person with a ssn living in Asia, I don't have a french credit card because it's so expensive and foreign conversion fees are very high, whereas I use a us card because the currency conversion rate is very close to the market rate and it costs a lot less to maintain the account.

Comment by gnfargbl 2 days ago

This is not a universal, however. In the UK, two-thirds of adults have a credit card.

Comment by TacticalCoder 2 days ago

> For US readers - in my country in Europe I'd say that 95% of people have only debit card, not credit card. it's very not common to have a credit card here.

In the countries I've been to in the EU (Belgium, France, Spain, Luxembourg), when they give you cards they give you typically both a debit and a credit card. It's extremely common to have both. I've got debit cards, a pre-paid debit card (which I top up when I plan to spend) and credit cards.

And getting up to 2% cashback in the EU (even if the fees vendors can add in the EU are maximum 0.3) is not that hard.

It's very common to pay for mostly everything with a debit card and then use a credit card to, say, book a plane or vacations or to open a tab when you check-in at some hotel.

Heck, I don't even know if you can book a plane with a debit card!? (and anyway then you probably don't get the cancellation insurance etc. that you typically automatically get with a credit card).

Comment by klrefg 2 days ago

How do any of they rent cars when they travel? I think that still requires a credit pretty much anywhere in Europe.

I’s bet the proportion is way higher than 5% even if the overwhelming majority use their credit cards the same was as debit.

Comment by franga2000 2 days ago

The only time I "needed" a credit card is when I tried to sign up for some US company's service. It rejected my debit card because it wanted credit, so I just took my business elsewhere.

Other than that, I've rented cars, rented other things with a "X will be charged to your card if you return it late", unattended gas stations... all the usual places you'd think need a credit card. It's fine.

We do have a "negative limit" that banks often give you, which means you can go into the red and pay it back later, but that has nothing to do with the card, it works even for normal bank transactions.

Comment by brnt 2 days ago

I had a car rental in Oslo that only allowed debit cards if you took out their full insurance. I was already insured, we rented though some sort of front, but they only allowed that on a credit credit card.

Comment by _bernd 2 days ago

IIRC then normal bank cards and debit cards can be charged with these future payments up to 500 Eur. So for small and normal cars this works.

I too have a real credit card to be able to rent for instance "bigger" cars like even an Audi A6.

Most often hotels also block 500 Eur, or they state upfront that you need a proper/real credit card and not just a debit card.

That's for me the only reason I have VISA and use it like 3 or 4 times a year...

Comment by AnAfrican 2 days ago

I've encountered this issue recently for the first time.

Usually, there is a deposit pre-authorized on the card. The additional insurance plans would lower the deposit (to a few hundred for fuel basically). I usually take the insurance plans anyway because I've had bad experiences that made me happy I had it.

Now, I was in a place where rental companies required credit cards except for the lower end models. It took me a few attempts for one to realize that I would take the additional insurance anyway.

Comment by samus 2 days ago

I got by fine with a debit card. But of course it can be inconvenient since they usually lock quite a large charge as a deposit, which gets released when everything turns out fine.

Comment by yxhuvud 2 days ago

If you don't accept debit cards you get no customers.

Comment by LelouBil 2 days ago

You pay a deposit with your debit card and get it refunded afterwards ?

Comment by jimbob45 3 days ago

You have to wait for the investigation to complete to receive compensation if you’re hit by fraud on a debit card. Credit cards don’t share that issue. If you’re poor or living paycheck-to-paycheck, debit cards are potentially a risk to your livelihood.

Comment by seabre 3 days ago

As someone who has been hit with fraud on a debit card and a credit card, the process to recover money from fraud on a credit card is so much easier and more hassle-free than a debit card.

The big difference is that with a debit card, it's your money that is hit by fraud. The debit card is basically just a proxy. You have to go file a police report. You have to hope the bank will give you the money back.

When the credit card gets hit, it's the credit card company's money and they will seemingly chase the fraud to the ends of the earth to recover it.

Comment by thechao 2 days ago

> The big difference is that with a debit card, it's your money that is hit by fraud.

I kind of disagree. I think what's happened is the bank would prefer you to believe that. Imagine I kept my money at the bank, and deposited $10000 with the teller. Immediately afterward a robber follows in and steals that $10000 from the teller. Does the bank say "oh no Mr. TheChao! A robber stole your $10000!". I mean, no? The bank got robbed. Just because the bank's digital security is more tied one-to-one to dollars and its easier for a robber to steal from "my till" doesn't mean it was me who was robbed. It's the bank's job to stop that.

Comment by Johnny555 2 days ago

But that's not what happened when someone steals your debit card number. Once the teller enters the deposit and you walk away from the window, the money in your account is yours, the cash the robbers stole is the banks.

When someone steals your debit card number and uses it, it's your money that is debited from your account, not the banks, and debit card transactions have much different rules than credit card transactions where you're generally not held responsible at all for fraudulent transactions)

But with debit card transactions, you can be responsible for up to $50 of fraudulent transactions reported within 2 days, and $500 for those reported within 60 days. And the bank is not required to return the money while they investigate the fraud.

Though many banks waive those liabilities and treat debit card disputes the same as credit card disputes (but still may not return your money while they investigate, so you could be bouncing checks when someone makes a $1000 fraudulent transaction if you can't float the $1000 yourself while they investigate)

I refused to allow the bank to issue me a debit/ATM card against my primary checking account, fortunately they are one of the few banks that still offer a dedicated ATM card so even if I lose the card, it's useless without the PIN.

Comment by crdrost 2 days ago

This was also the subject of a brief sketch on That Mitchell and Webb Look:

> Bank official: Sit down Mr. Coleman, I'm, I'm afraid I've got bad news about your account.

> Mr. Coleman: Really?

> Bank official: I'm very sorry to say that someone's stolen your identity.

> Mr. Coleman: Oh God! Do you know who it was?

> Bank official: Well -- they said they were you, but uh--

> Mr. Coleman: Of course. So, um, what happened?

> Bank official: Well it was on the bank website, someone logged in, and committed identity theft electronically.

> Mr. Coleman: I see. Did they take anything else?

> Bank official: Uh, no.

> Mr. Coleman: Oh good, so all the money's still there...

> Bank official: What?

> Mr. Coleman: Well: it's just my identity that's gone -- none of your money?

> Bank official: Well no, they did -- they, they, emptied your account. It's identity theft, they took all the money.

> Mr. Coleman: That sounds more like a bank robbery.

[continued] -- see https://www.youtube.com/watch?v=CS9ptA3Ya9E for the full skit.

Just as a handy thing to chuckle over and then link others to, if the topic comes up again.

Comment by Hardwired8976 2 days ago

Eh when you deposit money with a teller, it gets added to your account, which is in physical terms probably just a big storage and a database who has how much.

But in the case of debit card, the card ties the money to your account. It is actually that.

It's as if someone would steal from a personal safe at the bank.

Comment by lxgr 2 days ago

Except that you have strong statutory rights and commercial agreements between your bank and the card networks making it very likely that you’ll be made whole.

Comment by Johnny555 2 days ago

Eventually you'll probably be made whole (unless the bank isn't one of the ones that waives your $50/$500 liability). But usually they won't return your money until after they resolve the dispute so your account is still missing the disputed money which could make you bounce checks or be unable to use your debit card until the dispute is resolved.

Comment by dqv 2 days ago

> likely

> will

Which is why the credit card is still the better option. Especially given that the max liability on a credit card is always $50 if caught within the first 60 days, while the max liability on a debit card is $50 only if caught within the first two days, then up to $500 if reported after up to 60 days.

They may post a provisional credit when I report the fraud on the debit card or they can wait up to 10 days to do so. With a credit card, no money has left my account and I get the final say on whether I want to part ways with my real money. If the bank really wants to fuck me over by saying it's not fraud, I get to make it as unprofitable as possible for them, which includes forcing them to sue me if they really want the money.

I will take the ding to my credit report and a lawsuit over actual money taken directly out of my account any day.

Comment by lxgr 2 days ago

> while the max liability on a debit card is $50 only if caught within the first two days

Within two days of learning of the fraudulent use or the loss of an "access device" (i.e. a card). Otherwise you have 60 days from the statement date as well.

> I will take the ding to my credit report and a lawsuit over actual money taken directly out of my account any day.

That's definitely true for many people, but probably not for many others, e.g. anyone wanting to buy a house or even rent an apartment.

Comment by dqv 11 hours ago

If the money is taken out of your checking account and you can't pay a bill or rent, you are in the same exact situation of having your credit/rental history ruined. The time horizon for that happening is just sooner. The credit card still wins.

Comment by avianlyric 3 days ago

This depends heavily on the country you’re in. In the UK banks are required to refund you within a single business day if they don’t have any evidence that the customer isn’t trying to defraud the bank themselves.

They try to squirm out of that of course. But in general getting your money back isn’t too tricky even with a debit card.

Comment by seabre 2 days ago

Oh yeah. I should definitely caveat: I am in the US. I think banks here are required to cap your loss to $50 USD if you report unauthorized fraud within two business days. But still, the onus is on you. Meanwhile, virtually all credit cards in the US offer $0 liability protection. Which means at most you pay nothing.

Comment by arjvik 2 days ago

2 business days is a lot more strict than credit cards, which at the very least would not blink an eye at 2 weeks.

Comment by labcomputer 2 days ago

Er what?

You don’t even pay for the fraudulent credit card transactions in the first place! There’s no money for them to return!

Comment by rootusrootus 2 days ago

This is where you find out which banks suck, and which do not. I will say that while USAA is a long ways from perfect, when someone swiped my wife's debit card and took $5000 from our checking account, they put that money back within a day while the investigation was pending. No police report necessary, either.

Comment by lxgr 2 days ago

I don’t thing Regulation E allows banks to require a police report before processing an unauthorized payment, nor can they outright refuse to do so.

Practically, Reg E is essentially as strong as Reg Z.

Comment by dqv 2 days ago

> Practically, Reg E is essentially as strong as Reg Z.

Not even practically, but that's beside the point. The point is that with regulation E, I am potentially put in a position where I have to work to get my money back; I have to file a lawsuit against the bank if I think their determination is wrong (and that's assuming there isn't an arbitration provision, but many people don't realize they agreed to binding arbitration).

With regulation Z, the bank has to work to get their money back. They have to file the lawsuit against me if they really want the money. And it's $0 liability under many circumstances mandated through the regulation, not just a revocable promise from the bank.

Comment by lxgr 2 days ago

> With regulation Z, the bank has to work to get their money back.

Yes, but you potentially have to work to get your credit back.

> And it's $0 liability under many circumstances mandated through the regulation, not just a revocable promise from the bank.

Debit card liability is also largely mandated to be $0 under card scheme rules.

Comment by abdullahkhalids 2 days ago

The underlying problem is that the whole concept of cards is insane. Basically, you go around telling every shopkeeper the code for your safe, and ask them to take however much cash you owe them out of the safe.

Sane ways to organize payments:

- Merchant gives you a bill-id. You input it into your bank website - where you see the bill amount being charged. You accept, and bank pays merchant.

- You give merchant your card number (that's the only information - no expiry, no ccv, no name). A notification pops up on your bank website asking if you want to pay what the merchant is requesting. You accept.

- You go to your bank website and obtain a random number, either allowing a single transaction or a recurring transaction. You give the merchant the number. After merchant charges it, no other merchant can charge the same number.

Comment by dqv 2 days ago

This would also solve a major annoyance I have with card payments, which is no way to link a particular purchase back to a transaction.

With checks, you write a check and can write down the check number with a note about what the payment was for. When the payment posts, the check number is part of the transaction. With a card payment, they charge your card and, sometimes days later, there's a pre-authorization with some obscure transaction description. So many scary transaction descriptions that make me think "wait is this fraud".

With this method, the approval flow would also allow people to add a blurb for what the transaction is for.

Comment by KptMarchewa 2 days ago

> You go to your bank website and obtain a random number, either allowing a single transaction or a recurring transaction. You give the merchant the number. After merchant charges it, no other merchant can charge the same number.

That's basically how Blik works in Poland. With the exception being that the number is random 6 digits randomly generated when you open the app, that is active for ~2 minutes. So you don't deal with the issue of very long and error prone numbers to copy.

Much better way to pay online.

https://en.wikipedia.org/wiki/Blik

Comment by lxgr 2 days ago

Cards have supported strong, positive cardholder authentication at the POS (chip and PIN) and online (3DS) since the 90s.

It’s entirely the US credit card industry and its regulating bodies’ fault that it has made neither mandatory in the way that e.g. the EU did, and is in fact fighting any attempt to do so tooth and nail (please think of the conversion rate!!)

Comment by dizhn 2 days ago

Can you guys still write a check at the supermarket checkout? No pin credit cards are small potatoes next to personal checks in terms of weirdness. But I wish we had that trust culture everywhere.

Comment by lxgr 2 days ago

Which guys? :)

I haven't seen checks being used to pay for groceries in either the US or EU in the past few years, in any case.

Comment by dizhn 1 day ago

Americans :). Glad it's not being used anymore.

Comment by kevin_thibedeau 3 days ago

I've always had fraudulent debit charges automatically reverted. Typically the bank's fraud detection disables the card and you clear up the matter on the phone. Or they call you to verify if a suspicious charge outside your profile was actually yours. The banks aren't required to do this but they can choose to provide this level of service.

Comment by bijowo1676 2 days ago

the cc fraud (and fraud protection) is THE main selling point of Visa/MC credit cards.

it is that different treatment of debit/cc fraud that pushes people towards high fee cc.

it is cc fraud protection that justifies high cc processing fees.

without cc fraud there is no need in visa/mc duopoly.

Comment by pocksuppet 2 days ago

I thought the main selling point was that they work almost anywhere. Whereas my EFTPOS card only works in Australia, my Girocard only works in Germany and my Pix account only works in Brazil.

Comment by pyreko 2 days ago

Eh... I guess YMMV, at least for a low amount it took me literally an afternoon, I just froze my card, walked to the bank, explained the issue, and they refunded me on the spot (also switched out the card for a new one). They said technically it could be clawed back after investigation but they never did.

Comment by ryall 3 days ago

Weird take, credit card debt is much more of a risk to that demographic than debit cards ever will be

Comment by numpad0 2 days ago

Debit cards still go through the same credit card infrastructure. The practical difference at this point is whether the card company backend defer payment until collection date for the benefit of customers, or don't wait and just call APIs on the spot. There's a whole "internet" of credit card infra that lets you pay using those numbers on the card like they are phone numbers.

Stripe don't do handle their own payment, they just wrap someone else's API, and pay them in percentages and dollars per API calls(idk about the ones behind Stripe, but I think I saw somewhere that those middlemen often charge both? Egregious, but they're literally old boys money men and they have lots of leverages against you).

What are truly different to credit/debit card systems are things like PayPal, Apple/Google and such gift cards with scratch areas, and Chinese QR payment apps. Those are the ones that don't (always) go through the CC ecosystem.

Comment by masom 2 days ago

Not necessarily, in Canada there's a separate network/infrastucture named [Interact](https://www.interac.ca/en/). All the banks are on it and most merchants have terminals that supports it.

It had chip and pin ahead of credit cards, and has lower fees. That's what powers our e-transfers, no need for venmo or other systems.

Comment by cobbzilla 2 days ago

Stripe connects directly to Visa/MC, there’s nothing “behind them” in terms of some other card processor API they’re wrapping.

Stripe is a credit and debit card processor (and also a card issuer). They are NOT a bank, but do control some BINs (notably 4242 which is used for the famous test card 4242x4)

Comment by ghosty141 2 days ago

PayPal and Apple Pay use my debit card so they somewhat do use it.

Comment by losvedir 3 days ago

Debit cards aren't that, in practice, because as you say they typically get the same 3% fee whenever I've asked. Toast and other point of sale networks just charge it based on the network and not the card type.

But even so, I still prefer the credit card instrument, used as a "charge card". For those that don't know, a "charge card" is common with businesses and is expected to be paid off every month. But it helps with managing your cashflow - e.g. you can keep your money in a savings account all month and make one transaction at the end - and it keeps your actual money from being at risk of fraud.

Most Europeans seem confused with how Americans use credit cards for everything, but about half of us use them as charge cards, paying them off every month.

That is a benefit, so I can see paying a small percentage for it, but I don't think that benefit alone justifies the 3-5% of a transaction that credit cards charge now.

Comment by LeBit 2 days ago

As a Canadian , I thought that was the expected de facto way of using credit cards: you pay everything with it so you get rewards (ie money) at the end of the year as a function of how much you used the card during the year. At the end of the month, you pay whatever the outstanding balance is, otherwise you pay high interests.

Comment by rootusrootus 2 days ago

Many of us use it exactly that way, though the rewards (in my personal experience) are immediate as soon as a transaction clears and not yearly. Carrying a revolving balance is a quick way to spiral into bankruptcy because the rates are so high (and the minimum payment is typically 1% of the balance).

Comment by the_af 2 days ago

I thought this was how credit cards were used the world over. It's certainly how I use them. How do Americans use them that differs from this? Color me confused.

(Also: installments. They are often the norm in my country, but I understand they are less common for Americans).

Comment by krzyk 2 days ago

I don't think that works like that in Europe, cash backs are rare and even fewer people use them.

I have credit card only to be able to rent car on vacation. It is not used outside of that. For other payments I use debit card.

Comment by zaphirplane 2 days ago

There are fees thou and i cant imagine they are losing out as a business

Comment by eastbayjake 2 days ago

Debit cards are not subject to surcharging, and any merchant doing so is violating Visa/Mastercard regulations. (And possibly state law in several places -- Colorado where I live caps surcharge at the lesser of 2% or the cost of payment processing.)

Comment by ecommerceguy 2 days ago

Correct, Toast specifically will not allow it under any circumstance.

Debit cards issued by smaller community banks or credit unions are exempt from the cap and carry higher interchange rates (often 1.0%–1.65% + $0.10).

All merchants should either do Surcharging or Cash Discount.

Comment by losvedir 2 days ago

You say "Correct", but Toast works the opposite of the person you're responding to. They charge the same fee regardless if it's a debit or credit card. They charge based on the network, and most debit cards in my experience use the Visa or Mastercard network. Yes, this is contrary to the Visa/MC terms, but I've never seen it enforced.

https://support.toasttab.com/en/article/Are-customers-charge...

Comment by lxgr 2 days ago

It’s not just community banks or credit unions. The cap is $10 billion in assets.

There’s a whole industry of mid-sized banks just below that which are offering their services as sponsor banks to fintechs that want to earn the orders of magnitudes higher interchange rates while still getting debit acceptance/less surcharges and being allowed to offer a debit product.

Comment by cmurf 2 days ago

It’s 2% or actual cost for credit cards.

Under subparagraph f)A seller or lessor shall not impose a surcharge if a customer elects to pay for goods or services by Check, cash, debit card, processing as a debit payment, or gift card.

eCheck is considered a check.

https://colorado.public.law/statutes/crs_5-2-212

Comment by lxgr 2 days ago

What even is an “eCheck”? I keep hearing that word but haven’t found a sane definition. Is it just a weird term for an ACH debit transfer?

Comment by projektfu 2 days ago

Sometimes it is a synonym for ACH, but it could be processed more literally as a check, with a check image and everything, and something like "Pre-Authorized Payment" written on the signature line. Usually they also let you specify the check number, if you wanted to have it follow your own sequence. Amazon Business was doing this with invoice payments up until January of this year.

Comment by 4lx87 2 days ago

Prices reflect the credit card merchant fees, even if there's no separate surcharge. People pay higher prices and anyone who doesn't use a credit card to recoup some in "rewards" is effectively getting taxed.

Comment by rootusrootus 2 days ago

There is some nuance there. Cash is hardly free to process, and I have seen arguments that it is not far from the same overhead as credit card fees. So people who pay in cash are not subsidizing credit card users. Maybe it could be argued that debit card users are, though.

Comment by 4lx87 2 days ago

You get charged higher prices and then have to use a credit card to recoup the loss, so that rent-seeking monopolists can make money. And Americans are also seemingly baffled by the idea of regulating this away, as if other countries doing this don't exist. Credit cards are the USA epitomized.

Comment by lotsofpulp 2 days ago

It was regulated away in the Durbin Amendment of the 2010 Dodd-Frank law:

https://www.congress.gov/crs-product/R41913

https://www.ftc.gov/business-guidance/resources/new-rules-el...

American sellers have had the option to collect however much extra they want from people paying with credit cards, and many do. The government, utilities, mobile network providers, insurance, schools, healthcare, gas stations, home contractors, etc all usually collect at least 2% to 3% more if a buyer wants to pay with a credit card.

I am down to only using my credit cards for retail purchases, restaurants, and travel. Otherwise, the extra cost of paying with credit cards don't make sense and I pay with debit card or electronic money transfer (ACH/Zelle).

Basically, the sellers that continue to collect the same price from credit card users and non credit card users are those who believe that incentivizing credit card usage will result in sufficient people paying sufficiently higher prices such that it offsets the processing costs of the credit card transaction (and the chargeback risk).

Comment by rootusrootus 2 days ago

It is interesting the breadth of experiences in this regard. I pay basically everything on my card, to the tune of 5-6 grand a month, including utilities. The only time I have ever seen a surcharge is for things like contractors doing work at my house. The gas company, electric, the city, all take the card with no extra charge. I rack up a lot of airline miles just from day-to-day use.

Comment by vjvjvjvjghv 2 days ago

None of the utilities for my house take credit card without surcharge.

Comment by titanomachy 2 days ago

Most stripe transactions do use cost-plus pricing. The flat pricing is popular with smaller businesses, but larger companies graduate from it pretty quickly.

Comment by milesskorpen 3 days ago

Also debit cards run by smaller credit unions charge credit-card like fees (and then are used by fintechs to earn fees while making it harder to pass those fees on to end users).

Comment by ianhawes 2 days ago

Hah! Good to know, makes total sense.

Comment by fragmede 2 days ago

why is simplified in quotes? Knowing you'll get $x - 2.9% and 30 cents is simplified compared to having to find out what kind of card was used, what their interchange rate is, What your rate on that is. Debit cards have a low interchange rate, but it's offset by the cards with rates higher than 2.9%. Stripe is taking on a risk that your customers aren't all going to use a chase sapphire reserve and thus cost stripe 4.5% when stripe is only charging 2.9%. If you're large enough, Stripe offers IC+, interchange plus, where you get complexified pricing, if desired.

Comment by DANmode 2 days ago

Fun fact: Visa owns some of Stripe.

Comment by asdfasvea 3 days ago

It boggles my mind that the government has privatized currency to these people.

Crazy-person-but-actually-really practical-idea:

Nationalize one if these networks. Maybe Discover.

The US government should provide us digital currency. The simplest way is to force the current systems to do that. All that rent they collect in terms of transactions fees shouldn't be profit for a private business but fees of the government.

Comment by Qiu_Zhanxuan 2 days ago

No Chance in hell, the US government is even going after Brazil because they've done the right thing. See https://en.wikipedia.org/wiki/Pix_(payment_system)#United_St...

Comment by BatteryMountain 2 days ago

PayShap in South Africa, not sure if it is being attacked yet. I use it a couple of times a week. It's awesome & better than EFT's, enables cheap instant transfer even between banks. It's not a third party private company either, its offered by the reserve bank / bankserv.

I think it is to reduce the amount of cash in circulation, get visible on small transfers and to relieve the EFT clearing houses.

Comment by alightsoul 2 days ago

UPI in India too. Why are they targeting pix specifically? Yappy in Panama and alipay in China but those are privately owned, as the us wants.

Comment by dormento 2 days ago

Taking current political climate into account, Lula is too popular to straight up kidnap like the Venezuelan president, and the American-backed candidate isn't pooling incredibly well.

Comment by alightsoul 2 days ago

So it's the us wanting to control their backyard. UPI is halfway across the globe so it would be harder to mess with Indians

Comment by CGMthrowaway 3 days ago

>It boggles my mind that the government has privatized currency to these people.

That's the banks (lenders), not the payment networks.

>Crazy-person-but-actually-really practical-idea: Nationalize one if these networks. Maybe Discover.

The central planners want to. It's called FedNow.

Comment by ZeWaka 2 days ago

FedNow is the backend behind the "instant" transfers you see between some banks these days.

Comment by pocksuppet 2 days ago

I don't know if you're aware, but there was a whole lot of controversy around Central Bank Digital Currencies a few years ago. Mainly because the government can instantly see every transaction you do and will use it to decide if you're a terrorist or not, and they have a terrorist catching quota. They can also instantly block your account. And if such system is available, the government will phase out cash.

Comment by nsvd2 3 days ago

Yes, let's bring the experience of waiting at the DMV or dealing with the IRS to payment systems. Great idea

Comment by drdeca 2 days ago

My experiences with the DMV have actually been pretty decent. I think a lot of their negative reputation is from how it used to be, but that they have improved substantially since then?

Comment by spauldo 2 days ago

DMV is a state level agency and varies a lot depending on where you are. It's partially privatized here in Oklahoma and mostly painless (you only need the actual DMV for driver's tests, CDL background checks, etc.) but when I lived on the Illinois side of St. Louis I routinely heard of people spending hours in line.

Normally I'm not a huge fan of privatization but the way it's done here works great. The fees are set by the state and the agency gets a percentage, so if an area is underserved someone just opens another one.

Comment by derektank 2 days ago

Naturally, it varies by state. But yes, the Department of Licensing in WA state is also one of the least onerous bureaucracies I interact with

Comment by throwup238 2 days ago

I’ve never had a problem with the IRS or DMV, because unlike Visa or Mastercard they are government agencies with accountability to the people.

Visa and Mastercard are a cancer.

Comment by Aspos 3 days ago

Each of those networks carry a lot, a lot of ancient stuff. Gov is better off building a brand new network from scratch and promote it as a standard for banks to join.

There are plenty of great examples from this century all over the world.

Even Iran has a better payment infra than the US.

Comment by rootusrootus 2 days ago

> Even Iran has a better payment infra than the US.

That is a big claim. What would prevent someone from setting up something equally as good in the US, aside from the network effect and users unwilling to try something new for uncertain gain?

Comment by Aspos 2 days ago

End-users don't have much agency here, network needs banks.

In Iran, they simply don't have much choice, so banks use the only network available to them. It just happens to have been built in this century, so it's not as archaic as Visa.

Here in the US, I guess only regulators could realistically create a new network and have enough power to convince banks to adopt it.

Nothing, of course, stops anyone from creating a new network. But the network effect is THE driving force here, it's not a minor factor.

Comment by Navarr 3 days ago

Discover was JUST purchased by Capital One, so I think they'd hate for it to be nationalized

Comment by pampas 2 days ago

It's not about US consumers but international trade. The US likes taxing the world's B2C activity.

Comment by holgerschurig 2 days ago

If we look at this in a non US-centric view, then many other areas have solved this, partially since decades.

For example, in Germany we used to have a bank card, "EC Karte", it is now called "Girocard".

So, if you are a shop and accept Girocard, you pay 0.2% of the transaction plus a fix 0.05 - 0.10 €.

And in Germany virtually everyone has a Girocard, it's part of getting a bank account. The cards are free to the customers.

So assume you're a small Café with 8000€ per months, 70% via Girocard and 30% via credit cards. Then you'd pay ~ 17€ per month for Girocard, but 95€ if you use "blended sum" - a contract with a payment provider to accept all cards. But you don't have bureaucracy. With you do an extra contract with a credit card only provider it's still 41€ for just the 30% of your monthly business.

That creates the effect that in Germany lots of shops don't accept credit cards. The market speaks.

I know that other countries also have payment methods, e.g. Netherland or China. It's just the US banking system that is decades behind what is possible.

Comment by carlosjobim 2 days ago

Many small business owners are idiots and obsess over tiny sums while being blind to large costs. And they loose far more customers by not accepting payment methods than they save in fees. In your own example it's only €41 per month that they save by turning away who knows how many customers.

Another example is small B&Bs who happily pay 15% or more to third parties like booking.com, but think it's outrageous to pay 2-3% in card fees to accept bookings on their own website.

Comment by braiamp 3 days ago

That's what systems like Pix fixes. It's managed by the state, it's low cost and it's universal... which is why the US is against it so hard.

Comment by qurren 3 days ago

I used to think "I should be nice to merchants" and pay everything in cash.

That was 15 years ago. Now, living costs have gone up, I'm getting taxed to death by not just governments but increasingly more by businesses themselves ("benefits fees", "installation fee", "convenience fee", guilt-tip screens, sneaky price increases, etc.) so now I feel no guilt in playing the system to get at least some of my money back. Now I just churn 1-2 credit cards a year to pay my taxes and get some of it back in the massive sign up bonuses, which more than cover the transaction costs, fees, and then get me another few thousand back.

If merchants across the world make a deal with me to charge exactly the listed/advertised number exactly, no more, no less, then I'll pay in cash again.

Deal? No? Okay, you continue paying your merchant fees and I'll continue reaping the credit card bonuses to the maximum possible.

Comment by johannes1234321 3 days ago

> I used to think "I should be nice to merchants" and pay everything in cash.

That is only "nicer" as it allows to evade taxes. (Which some may consider nice)

But cost for cash is comparable to card payment if looked at seriously

* You need working time to count it

* You need working time to bring to bank (or request pickup, which costs)

* The bank will charge the deposit

* The bank will charge for the change you need

* In the shop the cash has to be protected (safe? Protection against robbery)

* This requires procedures for shift change etc (thus training time and prolonging working time)

* There is a risk of fraud (counterfeit, swap tricks etc.)

* Employees might have sticky fingers

Comment by senbrow 3 days ago

I own a business that does about $10-$15k mo USD in cash and card transactions and most of what you've said here doesn't ring true to me.

Unless you're handling huge amounts of cash, cards are WAY more expensive to deal with IME, especially because the fees scale as a percentage of revenue, so you can't just increase sales and lower your margins.

I bought a cheap cash and coin counter for about $400 on Amazon, which means it takes me about 2m to count whenever I need to balance the register.

For reference, with my POS I pay about $400 per MONTH in card fees (square).

It does take time to bring it to the bank, maybe 5-10m a week for me.

My bank does not charge for deposits or change; this would be insane and I've never encountered this in the US.

Counterfeits aren't generally an issue for small bills in practice; for $20+ we use a 50c testing pen that takes about 2s per transaction.

Sticky fingers are easily caught by balancing the register after each shift which is again about a 2m operation with cash and coin counters.

Overall I would be taking home about $500 more a month if all my customers paid cash, which is a big deal for a low margin business.

Comment by jamesfinlayson 2 days ago

> My bank does not charge for deposits or change; this would be insane and I've never encountered this in the US.

Some smaller banks in Australia do but the big ones all have cash and coin ATMs which are free for account holders.

Comment by brocklobsta 2 days ago

Many businesses, including restaurants, in California are going cashless and it makes my weekly budgeting harder (cash in wallet is my budget).

Comment by senbrow 2 days ago

I know, it sucks. I didn't intend to do cash before I started my business because it seemed like a pain but now that I've figured it out I'm really glad I did.

I love being able to transact without the payment processors knowing anything about my customers, and they appreciate it, too. My cash payers are usually very grateful.

Comment by JetSetIlly 2 days ago

> That is only "nicer" as it allows to evade taxes. (Which some may consider nice)

Card only business can definitely evade tax too and many do.

Comment by kazinator 3 days ago

> If merchants across the world make a deal with me to charge exactly the listed/advertised number exactly, no more, no less, then I'll pay in cash again.

Where are you not getting this? You mean taxes on top of the retail price? You would pay cash, if the merchants colluded with you in evading taxes?

Comment by avianlyric 2 days ago

You could just do what all of Europe does and just include the tax in the listed retail price, rather than only tacking it on at the end.

Comment by kazinator 2 days ago

While that simplifies things for the customer, who knows exactly what they will pay, it's hiding the theft, making it look like it's part of the price charged by the merchant, even though the merchant has to remit that money.

Comment by 3 days ago

Comment by 2 days ago

Comment by pocksuppet 2 days ago

Solution: Be nice to nice merchants and be shitty to merchants you hate.

Comment by zahlman 3 days ago

> If merchants across the world make a deal with me to charge exactly the listed/advertised number exactly, no more, no less, then I'll pay in cash again.

This seems to still be pretty reliable for most things in brick-and-mortar stores, FWIW.

Comment by BatteryMountain 2 days ago

In my country on my specific credit card, I get back about 1.5% of my spend through the card. Over the last five years I've banked for free, but not just that: I get back about 5x to 8x my bank fees alone. That doesn't count all sorts of promo's/discounts through their partners. As an example, my bank has a deal the past year with one of our major pharmacy chains and I get a ton of discounts when I use my card there (they ask at tills if I'm paying with the card), that is on top of normal in-store promos. So the "game" is very much worth it to play in my situation. Funny enough, they charge a flat fee for international transactions and 0% currency conversions, and they use MasterCard, which means free travel insurance. Its an amazing bank. Typically the bank is known to target rural/informal to middle class customers, but they have quite a few wealthier clients which feels like the best kept secret.

Comment by spauldo 2 days ago

In my case, it's literally free money. I travel a lot for work. I pay for everything with my card, and I'm reimbursed by the company. I rack up points, and whenever I travel for pleasure or as an independent contractor, hotels are free. I'd get free airfare like my coworkers do if I didn't avoid flying and drive everywhere.

The system is broken. No one with the power to fix it has any incentive to do so. Might as well get what you can.

Comment by asdff 3 days ago

Another thing to consider is your credit card rewards cash back etc are really trading your privacy for a little rounding error worth of discount in comparison to using cash.

You may also save far more money going cash only. E.g. some local restaurants near me give you like 5% off paying in cash. Gas is generally cheaper cash price vs card price or debit fee. You have a big job with a contractor, tell them you might be interested in paying cash and they might offer you a substantial discount.

Comment by lxgr 2 days ago

Many more restaurants and grocery stores don’t, and then it’s 2-5% of cashback vs. 0% cash discount. Doesn’t sound like a rounding error to me.

There are a lot of good reasons to dislike the market structure and game theory of card payments in the US, but please don’t accuse consumers of being short-sighted or irrational.

The only way to break the cycle of self-reinforcing incentives would be swift regulatory action. Absent that, playing the game is the rational move at the individual level for both merchants and consumers.

Comment by toast0 3 days ago

> Another thing to consider is your credit card rewards cash back etc are really trading your privacy for a little rounding error worth of discount in comparison to using cash.

How much privacy really? If I get mostly $20s from the ATM, and the merchant does daily deposits of most of the $20s they get, why wouldn't banks start scanning and tracking serial numbers (if they don't already), if my purchasing habits are actually valuable?

Comment by puzzledobserver 3 days ago

In a theoretical sense, you are right.

The life of most currency notes is bank to customer to merchant to bank, and the bank could just track serial numbers to figure out your spending habits.

Practically, it would make little sense. The actual life of most currency notes is bank1 to customer to merchant to bank2, and there is a large probability that bank1 and bank2 are different entities. And then, so many more people use the credit card system, and it is so much easier to track people there, that the ROI on tracking people using cash would be low.

I would be very surprised if any bank tried to scan currency note serial numbers.

Comment by c22 2 days ago

Serial number scanning is a common feature of electronic cash counters (also networking!) I'm pretty sure all incoming serial numbers are scanned and checked against a database to find stolen banknotes. I don't know if any banks are tracking outgoing serial numbers, but it would be pretty trivial to implement. I've noticed when I go in and withdraw cash from a human teller that the cash no longer comes from a drawer, but rather is dispensed by an automatic cash handling machine and then handed to me.

Comment by bix6 2 days ago

Is the probability that large for bank1 vs bank2? There’s only a few major banks left. Chase has so many ATMs it’s hard to compete with the access.

Comment by toast0 1 day ago

I live in a city with a population of ~ 25,000, and we have I think 10 bank branches, 1 credit union branch, a different credit union ATM (they closed their branch but left an ATM), and a gas station ATM. We've got Chase, BofA, Wells Fargo, the other 7 are more of local or regional banks.

Comment by ButlerianJihad 3 days ago

https://www.wheresgeorge.com/

> The site was officially launched on December 23, 1998.

Comment by asdff 3 days ago

Make change with your local under the table taco stand

Comment by moduspol 3 days ago

Contractors, but also cosmetic health work. Invisalign, veneers, plastic surgery, etc. Probably most big-ticket items or services that you're not buying from a megacorp.

Sometimes they'll give even more than 5% because they can keep it off their books completely, but in those cases, they want physical cash--not just a check to avoid credit card fees.

Comment by porridgeraisin 2 days ago

In india we use UPI. But people still use cards enough to be in decent enough terms with them for when you want to make a risky purchase and chargeback. In a sense, it's simply insurance. You pay extra 2% everywhere so you can dispute a txn at any point later.

Personally I make very few risky + expensive purchases, so my CC usage is non existent. I am comfortable enough to not really care if a random shady hobby electronics website fleeces me 500rs.

Another use is that sometimes you get CC offers on Amazon: "use $BANK $TIER CC to get extra 7k off" which are useful enough to justify paying extra everywhere else if you do your big shopping though Amazon festival deals. E.g you can get a 55k iphone for 45k.

Comment by sillysaurusx 3 days ago

Agreed. The pool hall nearby has a game of pool for $2. But if you use a credit card the minimum purchase is $6 (three games) due to fees. It works, but I thought it was a gimmick to trap people into playing more pool until I saw your comment here and realized it was from fees.

Comment by timothytavarez 2 days ago

The real shittiness begins when having to deal with them as a business. If you’re classified as high risk, which could be whatever the fuck, you’re deplatformed or need to deal with Byzantine merchants.

Comment by bigbuppo 3 days ago

What's really fun is when you're reselling something like Microsoft 365 and both the credit card companies and the state (through sales tax) make more than you do on each sale.

Comment by quickthrowman 2 days ago

> but it's ridiculous that people have this sense that shopping should somehow fund your vacation.

Some people are dumb and think tax refunds are free money when in reality they’re an interest-free loan to the IRS.

Money is fungible and instantly redeeming rewards for a statement credit is almost always the optimal way to use credit card rewards.

A person who wants to fund a vacation with rewards can simply redeem the rewards for a statement credit while simultaneously transferring that amount of cash to a HYSA or similar.

Comment by JamesSwift 2 days ago

> Money is fungible and instantly redeeming rewards for a statement credit is almost always the optimal way to use credit card rewards.

Uhh I have no credit cards where redeeming for credit is the optimal play. Every single one has 'offers' that give a further multiplier on the dollar amount of the points. Eg redeem $80 of points for a $100 home depot gift card.

Comment by ThunderSizzle 2 days ago

If you use it, that's great. If you don't use the gift card, then cash is obviously better

Comment by mrguyorama 3 days ago

>I wish there was a low fee credit card network that merchants didn't charge a fee for, so I could continue the simplicity of digital payments but opt out of this crazy Visa Infinite rewards accounting boondoggle.

This is called "Regulate the max fees" like Europe did, where they still have functioning credit card networks, including good fraud coverage, but you aren't expected to dance for the credit card company for peanuts of kickback.

Comment by tombert 2 days ago

Agreed.

I will admit that sometimes I do have fun playing the game (certainly a lot more when I was younger), but not often anymore. I feel like I "have" to do it, because there's no such thing as a free lunch, and as such stores price in the fees and so I might as well get it back in the form of traveling, but it is very weird that we just expect credit cards to do that.

Comment by socalgal2 2 days ago

They wouldn't be charged 3-5% if Visa and Mastercard weren't a duopoly. In countries where they aren't there are 10-20 competitors that charge way way less.

Comment by riazrizvi 3 days ago

I don't get this. Use cash like me and a bunch of us if you don't want to play the game. Or a debit card. Otherwise it's just an extra game. Extra games are choice. Choice is good.

Comment by kazinator 3 days ago

I would only use cash in situations where I'm able to obtain a discount compared to using a credit card.

Even then, you have to think twice. If you get scammed of cash, it's gone. If you get scammed in a credit card transaction, there is a fighting chance you can dispute the charge and have it reversed in their face.

You know that credit card feature of providing some insurance coverage on things like vehicle rentals? It may look like small print, but I actually used that. By some amazing fluke, I damaged the bumper of a rental car; the credit card coverage took care of it. I filled out minor paperwork and never heard about the issue.

Speaking of rentals, in many rental situations (even simple power tools at your Home Depot or whatever) you get charged a deposit on the card which comes back when you return the thing. It's just a number in database. With cash, you'd have to fork that up over the counter; very unappealing.

Comment by amenghra 2 days ago

There’s a startup in Switzerland (https://www.pimpay.ch/) trying to offer no per-transaction payments (at the Swiss-level). I wish them good luck but it’s not going to be easy to disrupt the existing players in this field.

This is something governments could fix by running the payments rails.

Comment by JimsonYang 3 days ago

Why do you play the points game?

I felt like if I didnt spend $1 on something that was the equivalent of me spending $50 to get those same credit card points

Comment by toast0 3 days ago

I don't play the points game, I use a cashback card.

I use a cashback card, because most merchants will charge me the same regardless of payment method, and getting a 4% discount (+ time value of money) is the lowest cost to me. If I use some other payment method, the merchant may keep more of the transaction amount, and that's great for them, but it doesn't improve my customer experience. If interchange fees are strictly capped and cashback cards disappear, I wouldn't be upset; but while they're here, I'm incentivized to use them... following economic incentives while doing economic transactions seems like the right thing to do?

Comment by maelito 3 days ago

Well I don't really know what they do, but what I know is that Visa transactions costs are 0,22 € out of a payment of 1 €, Mastercard's is 0,23 €, and the French CB network is 0,17 €.

All of them do the same : ensure I get the money from the customer. Of course it's a larger project to run this in the whole world, but shouldn't it scale to less along with the number of billions of customers instead of the other way round ?

This is an insane amount of money. They killed micro-transactions, they killed the business model of the Web in favor of ads, the only popular way to do microtransactions right now.

Comment by fsuts 2 days ago

USA is currently trying to bully Brazil who introduced their own PIX system.

I think USA has been behind the visa and Mastercard dominance as it gives them nearly every financial transaction globally and their intelligence has that data in realtime.

Not to mention the tax take and ensuring max use of US dollar as reserve currency

Comment by pjc50 2 days ago

> killed the business model of the Web in favor of ads

I don't think there ever was another business model? Nobody has ever got true microtransactions for the web to work.

Even the old days of premium rate telephone numbers and paying for ringtones weren't particularly "micro".

Comment by fransje26 2 days ago

> the French CB network is 0,17 €.

No, that's not right. The CB interchange fees are 0.2% + 0.0011€ network fee.

Therefore for 1€ : 0.002 + 0.0011 = 0.0031€, not 0.23€

So you have 0.2269€ of fees coming out of left field, with someone else making a massive profit.

Comment by fundatus 2 days ago

Seems like you're getting scammed. Sumup for example charges 1,75 % per transaction, no other costs, not even a monthly fee. With a monthly fee the transaction cost drops to just 0.89%.

Comment by thomasahle 3 days ago

They charge you 23%?

I thought in the EU the maximum interchange fee for consumer credit cards is capped at 0.3% of the transaction value.

Comment by maelito 3 days ago

Plus fixed fees.

I don't want to put responsability on anyone, I don't know who takes what in the chain, but I see the fees in practice.

I took the cheapest PSP I could find in Europe... Stripe is way more expensive, taking 25 cents of fixed fee !

Comment by Faaak 2 days ago

Which PSP did you choose finally?

Comment by maelito 2 days ago

https://stancer.com.

Simple Rest API, with Redoc https://docs.stancer.com/api/redoc.html.

Comment by sva_ 2 days ago

Look into sumup.

Comment by fallingbananna 2 days ago

I think they may be confusing what payment terminal providers charge with what VISA/Mastercard does.

Comment by idoubtit 3 days ago

> Visa transactions costs are 0,22 € out of a payment of 1 €, Mastercard's is 0,23 €, and the French CB network is 0,17 €.

Are you sure of these values? Because that's different from what I was told, which was that CB was cheaper for transactions of more than 10 €, because their fees were fixed, not rates like Visa and Mastercard.

From what I've just read (not counting the possible extra tax by the bank of the seller):

CB: 0.20% + 0.00117 € ⇒ 0.00317 € for 1 €, 0.20117 for 100 €

Visa: 0.20% + (0.01% to 0.014%) ⇒ up to 0.00214 € for 1 €, 0.214 € for 100 €

Mastercard: 0.20% + (0.15 to 0.17%)

The 0.20% is for the "interchange" described in the article. So it applies only when the seller and the buyer do not have the same bank. The maximal rate is fixed by the UE, and AFAIK everyone use the max value.

Comment by maelito 3 days ago

> Are you sure of these values?

Yes perfectly sure, just checked. I'm not saying these are visa fees vs CB fees. Lots of actors in the chain. But that's what I'm paying for each card type.

Comment by 3 days ago

Comment by 2 days ago

Comment by techdmn 3 days ago

I remember reading a comment here a while back about merchants being offered a discount on the processing fee if they also transmitted detailed data about the purchase (essentially the data that would be on the receipt). That data could then be resold on to advertisers. Does anyone remember this or have links to more data? (Not having much luck with search, maybe I'm hallucinating the whole thing.)

Comment by hadrien01 3 days ago

Level 2/3 data: https://docs.adyen.com/payment-methods/cards/enhanced-scheme...

It's only available in the US, many countries have lower interchange fees and prohibit sending this data.

Comment by iancarroll 3 days ago

Importantly, there is only an incentive for L2/L3 data on business/corporate cards, which have an inflated interchange rate above personal cards anyway.

This is not a scheme to get enhanced targeting data for personal transactions.

Comment by tylergetsay 2 days ago

I believe most prepaid visa gift cards are being monetized in this way. https://www.walmartgift.com/AcctMgmt/Controls/WalMartGiftCar...

Ive heard of casinos trying to pay out winnings using some kind of prepaid card, where theyd also get info about how people spent their casino winnings. Lots of ways to leverage that data.

Comment by iancarroll 2 days ago

Prepaid cards are great for the vendor because they have breakage (the unspent amount before expiry). I doubt the data is worth much relative to that. If anything, they have much less of a tie to the individual.

Comment by soared 2 days ago

Also available in Canada now!

Comment by mikeweiss 3 days ago

I would love if it was transmitted to the bank for my own use so I can easily remember what I purchased or run budgeting software against it! Obviously wouldn't be excited about it being resold tho.

Comment by ctkhn 3 days ago

It's crazy it is resold but we don't even get it for our own use. Budgeting with credit card statements would instantly become so much more useful with less effort.

Comment by dylan604 3 days ago

Just provide Plaid your login credentials to your card account /s

Comment by mikeweiss 3 days ago

How does that help if the bank doesn't have the data?

Comment by kccqzy 3 days ago

It does, at least in some cases. When I book flights directly from an airline, the bank knows the name of the passenger, the date of the flight, the origin and destination airports, as well as the cabin class. For one bank (Chase), the information is printed on the statements; for another they have a web lookup tool.

Comment by c0_0p_ 2 days ago

Flights are one of the very few cases where this happens automatically though the card providers systems. It's called L2 data, and it's sent a little while after the transaction goes through.

Comment by kccqzy 1 day ago

Yup. I’m actually quite curious how airlines are convinced to send such information to banks whereas other kinds of stores aren’t.

Comment by c0_0p_ 1 day ago

Airlines are just about the only business that have the ability to charge credit cards without real time authorization by the network. This is for things like buying a drink while in flight. I wouldn't be surprised if this was all part of the negotiation.

Comment by 3 days ago

Comment by RobRivera 3 days ago

This would explain why so many damn coffee shops dont deal with cash now - the double as a coffee shop and data reseller

Comment by smelendez 3 days ago

Well, they still pay a fee, it’s just reduced.

They primarily don’t deal with cash because cash is a pain. It needs to be physically taken to a bank and protected from theft by both staff and random robbers with guns, it needs to be counted all the time, and you need to maintain the right denominations to make change.

I have reservations about businesses getting rid of cash, especially if they’re turning away people who don’t have alternative ways to pay, but I certainly understand why they do it.

It’s also always awkward when a coffee shop is like 95% credit, and you try to hand them cash and they look at you like you’re Rip Van Winkle.

Comment by wahern 2 days ago

Also anyone handling cash is supposed to wash their hands before handling food, unless perhaps they're using tongs or something. Ideally an establishment dedicates one person to the register, but with the cost of labor that can be expensive without enough sales volume.

Comment by smelendez 2 days ago

Yes, cash is also physically dirty!

Another advantage of credit cards is you normally don’t have to touch anything customers bring into the store, since they can tap their own cards. You probably still should wear gloves to handle food and take them off or switch them to work the computer.

Comment by Peanuts99 3 days ago

Merchants aren't going cash only to sell your data, they're doing it because it's expensive to handle cash and makes their taxes a whole lot more troublesome too.

Comment by umeshunni 3 days ago

Not to mention the crime risk of cash

Comment by cute_boi 2 days ago

Well, many merchants use cash because they can dodge tax lol.

Comment by foobarian 3 days ago

Huh, I thought accepting legal tender was a federal rule, I guess not. Looks like a salad variety of regulations that vary by state and city.

Comment by Terr_ 3 days ago

> Huh, I thought accepting legal tender was a federal rule, I guess not.

I think the key word is debt when bills state "for all debts, public and private." (And a couple more categories under the law. [0])

At the moment you're asking for the drink, you are not in debt to the coffee shop, they're setting a precondition on an exchange. [1] Now, you might have a case if they let you run up a tab...

[0] https://www.law.cornell.edu/uscode/text/31/5103

[1] Yes, there are a positive number of milliseconds where somebody owes somebody something, but pedantic software intuitions don't always apply to law, and overall that's a good thing.

Comment by vulcan01 3 days ago

Note the wording on dollar bills:

> This note is legal tender for all debts, public and private.

See also USC §5103:

> United States coins and currency [...] are legal tender for all debts, public charges, taxes, and dues.

Thus a private person is only obligated to accept cash as repayment for a debt, not for purchases.

Comment by RobRivera 3 days ago

Well technically, all debts denominated in cash must be able to be settled with cash.

Companies simply get ahead of that law by refusing to provide the service or good.

Works in retail bc at the till they can just say 'no cash no business deal'

Doesn't work in other ventures so easily.

It is along the lines of 'we reserve the right to refuse business to anyone'

Comment by c0_0p_ 2 days ago

I don't think this is the reason, cash will always have no fees. In some senses it can have negative fees if you're not very diligent with your tax reporting *wink wink*.

Not accepting cash is probably more to do with not wanting to deal with it, not needing to trust employees with it, keeping poor people out, and preventing robbery.

Credit card companies and banks know basically squat about your purchase except in certain circumstances (buying gas or flights causes more data to follow, called L2 or L3 data), or if they work with a data enrichment provider. There is a lot of action in this space right now, but the banks are hardly equipped to handle more data even if it became available.

Comment by mikepurvis 3 days ago

I mean, cash is also expensive in its own way. It has to be handled and insured, coins may need to be rolled before being taken to the bank, a register is a mechanical device to power and maintain, petty theft by employees is a concern.

It's not really that hard to see why a business charging $5-20 per transaction from people who all have phones and credit cards anyway might choose not to accept cash.

Comment by why-el 3 days ago

> a register is a mechanical device to power and maintain,

surely a million times less expensive than a subscription to a POS....this is not a strong argument.

Comment by nemomarx 3 days ago

if you cut out all the other details they mentioned I guess. how much do you think taking the cash to the bank weekly costs?

Comment by carlosjobim 3 days ago

Nothing, because the owner is rejoicing every step of the way.

I'd say employee theft is the only reason a coffee shop would be "no-cash", and fear of robbery in a few places.

Comment by mikepurvis 1 day ago

Transporting and handling cash is absolutely not free, and unlike joe sixpack taking out $20k in a stack of benjamins that one time to buy a motorcycle with cash, it's much worse when

a. a lot of it is coins, so it's heavy and bulky, and

b. it becomes a regular thing that everyone on the street observes you doing over and over

Comment by warkdarrior 2 days ago

You think the owner is taking the cash to the bank?? Unless they are an one-person operation, they likely have an employee do it (among their other duties).

Comment by carlosjobim 2 days ago

The employee will of course rejoice on the owner's behalf when walking to the bank.

Comment by soared 2 days ago

Coffee shops don’t qualify for l2/l3

Comment by massagedpelican 3 days ago

the main purpose of that data is for fraud detection, anything downstream (i.e. selling it to advertisers) is just the cherry on top. Merchants are always financially incentivized both implicitly and explicitly to do anything that would reduce fraud and increase the rate of successful authorizations.

Comment by supertrope 3 days ago

Level 3 data.

Comment by alwaysmrno 2 days ago

Visa and Mastercard are legacy companies providing a service that is outdated in the modern world. China generally doesn't use Credit cards because when they "Modernized" there was new technology and infrastructure so you didn't need a nosey middel-man to handle the transaction. Instead they use apps. Scandinavia is hopefully moving away from these card-providers soon. They have the bankaxept system that works flawlessly in their area and have started introducing Apps for payments and microtransactions. For some reason some of the apps require a debit-card, but i hope they will drop that requirement soon.

I just hope these leeches on society will sone go bankrupt.

Comment by ThunderSizzle 2 days ago

What happens if you don't have a phone that supports the App, or if you forgot your phone or lost it (aka stolen)?

How are you allowed to function if the App is missing?

Comment by alwaysmrno 2 days ago

"What if there's no electricity!!!" "What if there's no roads!!!"

What if's can be used to kill a conversation or discussion because they are impossible to argue. "If there's no Electricity i'll just use my diesel generator to power the store. WhAt if YoU ForgoTT to FueL IT?!". There is no discussion to be had because one side is not interested in it.

What you should be asking is What is plausible. IS it plausible that you buy a phone that doesn't support the app? No, there's two OS's for mobile phones. They will have an app you can pay with.

IS it plausible you forgot your phone or it got stolen? Yes. But you are just as likely to have your wallet stolen. So its not really applicable.

"How are you allowed to function if the app is missing?" Is an illogical question. The apps already exists in several countries and works flawlessly.

Comment by ThunderSizzle 2 days ago

Strawman, but you raise a good point. Credit card terminals can still work in certain disaster situations more reliably than trying to get everyone to not lose their phones and keeping them charged and wasting precious energy on a transaction.

A credit card doesn't require electricity, and even the classical process of carbon copying can work without power or internet to the pos (though that has its own problems - but we're talking "disasters")

Regardless, a person not having a smart phone should not be grounds of exclusion from society. It's too vulnerable of a device for it to be a single point of failure. It already is too critical of a device even for those that have one, that losing it is already a very big burden. Even just switching to a new phone via the migration process on Android can still be a burden.

Comment by pjc50 2 days ago

You also can't make a card purchase if your card is stolen ..

Comment by kevincox 2 days ago

No, but my credit card has no battery, requires no cell service, is waterprrof and quite durable.

I see the advantages of the Chinese system but I really found myself missing my card.

- While payer-offline payments were possible most merchants didn't want to (and some seemed unable to) so payments in places with bad cell service were painful.

- It was a lot more steps to open the app and enter scanning mode or display your code than to just tap a card or phone.

- It was always unclear if you were scanning or being scanned, leading to friction for every payment (generally larger brands scan you and you scan for smaller merchants).

Honestly for in-person card payments are just nicer.

For online WeChat was better, but no different than Apple Pay or Google Pay except for course that it is standardized by the government.

Comment by ThunderSizzle 2 days ago

I have backup cards. If one gets stolen, I can switch to a backup card instantly.

If my phone is lost, then apparently I need to buy another one with the...phone I don't have? A single point of failure is horrible design.

Comment by not-kinsale-joe 2 days ago

Pay in cash?

Comment by perlgeek 2 days ago

Just came back from a vacation in Denmark and Norway, paid with debit card everywhere.

Heck, paying with card is the default, if you do pay cash, the cashier sometimes has to cancel the card payment before accepting the cash.

Comment by trymas 1 day ago

In Sweden I saw Swish app QR codes everywhere. In every store, cafe, museums and even for donations (e.g. volunteers maintaining trails, independent museums, etc).

I had no issue paying with a card everywhere, but it was interesting to see those QR codes everywhere.

Though after spending 15min trying to set it up - I eventually made a conclusion that it’s impossible for non Swede (or someone without Swedish bank account and/or mobile phone number). Could be wrong, but did not delve more.

Had to skip couple donations - as they only accepted Swish app.

Comment by ketzu 2 days ago

> so you didn't need a nosey middel-man to handle the transaction

Aren't the apps just other middlemen that know even more about their users?

Comment by citizenpaul 2 days ago

Credit cards are the OG of rent seeking for the 21'st century. They recognized upfront that no one would pay their ridiculous middleman fees so they backdoor-ed the fee with the merchants and had them pass it on in price. Its on of the most insidious extraction engines ever made, Jesus would definitely flip their tables lol.

Now they do all kinds of accounting tricks to pretend that they have thin profit margins because they split up every part of the business into hundreds of 1-3% chunks of the profit. To sidestep regulation that already barely exists.

Comment by tflinton 2 days ago

Networks like visa and Mastercard don’t seem evil. If you’ve ever had to dispute a charge and got your money back easily or relied on the fact that even if their computers are down they’ll still take the risk and allow you to take money out of your account you’d find the fees they charge pretty minimal. Now the issuer bank… that’s where most of the fee and why most banks now have reward cards because the issuing bank can ask for whatever additional fees on top of what visa/mastercard does.

Comment by citizenpaul 1 day ago

How does every form of evil have some sort of apologist on the internet. I was near certian that even before AI there were very active automated or low paid workers astroturfing for companies anytime malfeasance is brought to light. In the age of LLM's I now know for a fact that its happening. I guess I found one.

OPERATING MARGIN (FY 2024 / 2025)

Payment Networks: Visa Inc. (V) 67.2%

Mastercard (MA) 57.8%

Major Card Issuer Banks:

JPMorgan Chase 33.5%

Capital One (COF) 24.1%

Bank of America (BAC)26.8%

Comment by TheGoodBarn 3 days ago

If anyone is interested in this topic from a historical standpoint, the Acquired episode on Visa is phenomenal: https://www.acquired.fm/episodes/visa

Comment by utopiah 2 days ago

Damn, nearly 4hrs long, better be phenomenal. Thanks for the link!

Comment by anthomtb 2 days ago

That’s the usual length of Acquired podcasts. Those guys go deep. It’s one of my favorites.

Comment by 1a527dd5 2 days ago

There used to be an account on Twitter that was heavily involved in this industry. Every now and then I'd glean some slightly useful information from their posts. My favourite one being "the name verification isn't a thing - you can enter anything". So I've been doing that ever since and it's _always_ passed.

Comment by potato-peeler 2 days ago

That’s because there are more than 200 other parameters used for risk analysis during authentication. Worked in payments industry. Some banks don’t place high priority to name but some do.

Comment by chao- 2 days ago

At least in the US, and as of a few years ago (when last I tested), address verification can also be a bit flaky. Zipcode/postalcode is solid, but street address matches don't reliably account for the various ways people can colloquially write them. It's not awful, just not good. We should re-test it some time, but as of a few years ago, street address checks were not a major improvement in fraud prevention compared to just Zipcode and CVV checks.

Comment by mainde 2 days ago

Address verification only ever checks the numbers in the address, nothing else. You can pretty much skip all the words that don't spell numbers and it should be the same iirc.

Comment by gatestone 2 days ago

I find this interesting as a technology, as a business process, and above all as a system for managing trust on a global scale across different jurisdictions. In a sense, the credit card system accomplishes something that even the UN, international law, Interpol and military mights cannot do: it enables individuals to enter into trustworthy global agreements with minimal effort and risk, and at very low transaction costs.

Comment by carlosjobim 2 days ago

It's simply incredible, when you look at it soberly - just as so many other things. But unfortunately many people have their minds in a spiritual prison and only know how to complain, without having any kind of perspective on the world.

Comment by refurb 2 days ago

The error that people make when criticizing card fees on merchants is that customers pay the cost. That’s not necessarily true.

There are benefits for merchants to accepting credit cards. More impulse buys, buying more per transaction. An owner may choose to absorb the merchant fee because the increase in sales (even at the lower profit per unit) means higher profits overall.

Comment by maelito 3 days ago

Related : GNU Taler.

You can apply to a fund to implement this system.

https://nlnet.nl/taler/

Comment by wuming2 2 days ago

Has the characteristics to implement the digital Euro. Plus guarantees anonymity of buyers. And should be extremely cheap to operate. But is not under bank’s control.

Comment by subset 1 day ago

In Australia, the Reserve Bank is finally [banning surcharges](https://www.rba.gov.au/payments-and-infrastructure/review-of...) from October 1st. We also have the EFTPOS network, but the payment rails change depending on the card payment method.

Over the years, the "hidden fees" were accumulating, and card surcharges could hit 1-2.5%. Now, _most_ places don't have any fees (with some food places charging weekend surcharges and some egregious places adding unsolicited tips).

Comment by cmoski 1 day ago

Maybe not for taxis unfortunately. That is determined by the states. They used to charge 10% card fee!

Comment by 1970-01-01 3 days ago

>The merchant pays 2.5%

The best way to pay for poor services already rendered and move on with life is to simply pay via card. Didn't like that haircut? Terrible food at the restaurant? Hold onto your cash and slip them the card.

Comment by dietr1ch 3 days ago

Some businesses pass you the credit card fees if they offer other payment methods. You'll even hear about a discount around VAT/2 if you pay with cash sometimes.

I think that hiding the CC fees into the price that you pay with all payment methods should be illegal.

Comment by AnAfrican 2 days ago

>You'll even hear about a discount around VAT/2 if you pay with cash sometimes.

That's because they do VAT (and Corporate tax) fraud.

Comment by greyw 2 days ago

Yeah because they commit tax fraud. I wont help businesses commit fraud.

Comment by _zoltan_ 2 days ago

I almost never pay cash.

Comment by tonymet 3 days ago

Jokes on you. Merchants prefer credit cards because there is less loss than cash. 2.5% is nothing compared to 5-10% loss at the register. Plus easier and more accurate accounting.

Comment by 1970-01-01 3 days ago

If you're expecting 10% loss at the register and have terrible service, that's a 1-2 punch for bankruptcy.

Comment by seri4l 3 days ago

>5-10% loss at the register

Where did you get this number from?

Comment by foobarian 3 days ago

Clankers found me one study [1] that suggests total handling costs may actually be this bad, but are highly business dependent e.g. restaurants are worse than grocery stores

[1] https://www.ihlservices.com/product/the-cost-of-cash-handlin...

Comment by zahlman 3 days ago

I'm just seeing what looks like an attempt to sell me a PDF.

What actually is the source of such costs? The cashier still has to be paid even if the customer is using a card. Presumably there isn't anywhere near that much theft from registers, or people messing up giving change?

Comment by supertrope 3 days ago

Employee theft. Store manager theft. Robberies. Counterfeits. The extra time spent at each cash transaction and re-counting at the end of the day. Going to the bank, or paying an armored car service. Banks charge merchants a percentage of each cash deposit. Buying safes and pointing cameras down at each register.

Comment by porridgeraisin 2 days ago

This. My extended familys shop really benefitted from moving away from cash. Now the only source of cash is people who are paying from their black money stashes.

Comment by tonymet 2 days ago

Great examples all around !

Comment by consumer451 3 days ago

Clank deeper, please. You gave us content marketing from the electronic payment industry:

"Does IHL Group have any connections to merchant providers?"

> IHL Group sells market intelligence, vendor directories, and lead generation data to the electronic payment industry.

Comment by supertrope 3 days ago

Definitely a conflict of interest.

Cash handling costs is a real issue though. Not counting under-reporting income, credit cards cost the most at US intercharge levels of 1-3%. Then the all-in cost of cash handling. The lowest cost method is debit.

Comment by consumer451 3 days ago

The lowest cost is in the EU in this regard. Anti-rent-seeking regulations ain't so bad for everyone, save the rent-seekers.

BTW, I used to handle around $7M/year in credit card transaction in the USA, and if you got actual hand-written partial numbers on a signed contract, then we could avoid nearly 100% of charge backs, as we always delivered on our end. I think in 14 years, we had around 10 charge back attempts, and our merchant provider loved us. The only time I ever magically lost a charge back was to a Visa executive for ~$10k, and our merchant provider just shrugged. Whatayagonnado?

Comment by Onavo 3 days ago

ACH is still the best

https://gocardless.com/

Comment by dylan604 3 days ago

Great, so it is immediately deducted from my account and swiftly deposited into the recipient's account in 3-5 business days.

Comment by Onavo 2 days ago

For B2B transactions that's actually decent. And any disputes can be sorted out in court.

Comment by anjel 3 days ago

While cc banks are in these times starting to side more with vendors on charge disputes, its still far more recourse than bank drafts offer you in a transactional dispute

Comment by massagedpelican 3 days ago

20% more expensive than stripe, no?

Comment by Onavo 2 days ago

Cheaper actually, a lot less fees. Stripe is usually death by a thousand cuts.

Comment by aand16 3 days ago

90% of cash I give to restaurants goes in the pocket, not the register.

Bad service = card always.

Comment by nonethewiser 3 days ago

Are you saying servers keep 90% of what you pay? Tip and otherwise? What country? How do you know? How could a business possibly operate in this reality?

Comment by dmoy 2 days ago

Not necessarily servers, just not into the register as a tracked transaction.

Tax fraud, essentially.

E.g. you go to the Minnesota State Fair, merchants may offer to not charge sales tax if you pay cash. It is shockingly brazen sometimes.

> How could a business possibly operate in this reality?

Extremely lax enforcement on the part of the specific US state's department of revenue

Comment by asdff 3 days ago

If your employees are stealing you should probably nip that in the bud...

Comment by supertrope 3 days ago

Cash allows for many more opportunities for diversion.

Comment by asdff 2 days ago

You know they count the till against the reciepts right? And frequently have cameras over the register drawer pointed at the employee? And send people to jail who try to do this?

Comment by supertrope 2 days ago

My point is you cannot entirely eliminate insider theft just suppress it. Cash payments are a lot "leakier."

Comment by asdff 2 days ago

Not my problem as the customer.

Comment by ThunderSizzle 2 days ago

No, but it shows up in the bill just like everything else.

Cost of doing business

Comment by vavooom 2 days ago

I like the vibe and overall writing style of this blog! Keep up the short little segments. Charcoal Grill and Doing Things Ten Times are my favorites:

* https://tautology.town/2026/02/14/learning-charcoal-grilling...

* https://tautology.town/2026/04/03/ten-times.html

Comment by bob1029 3 days ago

VisaNet & friends make the modern consumer world go round. The fees they extract are a drop in the bucket compared to the economic activity that they enable with their networks. Many businesses simply couldn't exist without something approximating this.

https://investor.visa.com/news/news-details/2016/Visa-Commis...

Comment by rednb 3 days ago

You are literally linking to a page published by Visa's Investors Relations Department.

The problem is that like all cartels, they hold progress back. Things could be even more efficient than the current state of affairs. For example we could have open standards with thousands of local players, much faster settlement times etc...

There are also aspects such as the fact that due to this concentration of power, the whole world is subject to US sanctions, such that a EU citizen sanctioned by the US is effectively cut off from civilization.

Comment by bob1029 3 days ago

I like how providing an incredibly efficient payment network is framed as holding progress back.

I'd frame it as making the standards for competition very high.

I don't see people getting super ideological about their inability to create monocrystaline turbine blades or 2nm semiconductors in their garages. Why payment networks? Because computers? The overall network is way more complicated than a specific technological system or clever open standards document.

These networks would be usurped if someone could actually come up with a better system. The economy insists upon it constantly.

Comment by kiririn7 2 days ago

“It works extremely well” doesn’t establish “its prices and restrictions are justified”. much better, less parasitic systems are possible, look at brazil and PIX. "These networks would be usurped if someone could actually come up with a better system" the problem is the network effects with payments is so strong that this is wrong. to explain it simply, Network effects and customer lock-in mean the best system doesn’t automatically win.

Comment by rednb 3 days ago

I 100% agree that their business is operated extremely well and delivers lots of value.

I am just saying that in my opinion, society would be even better off if this industry wasn't controlled by a cartel and i pointed 2 examples of how.

One difference between this and turbines, is that payment networks are sitting at the heart of the economy of countless countries. Turbines have a very different risk profile, much more modest and localized.

Russia was for example cut off from high-tech maintenance contracts but has been able to deal with it by manufacturing their own replacement part + there are maintenance cycles and spare parts so any disruption in service is not immediate unlike payments.

Comment by tjpnz 2 days ago

It should be said that being on a US sanctions list doesn't appear to carry the same weight it once did. A Japanese citizen was added to one this month and her bank was able to effectively ignore it, not sure about options where credit cards are concerned, but there are local alternatives which don't rely on US payment networks.

Comment by 9cb14c1ec0 3 days ago

Yes. As a merchant it's pretty cool that the money just shows up and I don't have to chase down as much bad debt. The processing costs easily pay for themselves.

Comment by kiririn7 2 days ago

unfortunately those processing costs actually dont need to exist.(or atleast should be 10x smaller)

Comment by 9cb14c1ec0 2 days ago

A lot of people would be really mad if their card rewards disappeared.

Comment by ks2048 3 days ago

It seems Visa revenue is $40B/year. You shouldn't compare that to the amount of economic activity they enable - you should compare it to how much it could cost to run a system like theirs.

Comment by pennomi 3 days ago

The problem is not that the tech is bad, it’s that the industry is a cartel with no viable way to disrupt the established players.

Comment by klabb3 2 days ago

> VisaNet & friends make the modern consumer world go round.

I mean, as opposed to what? You could apply this to any infrastructure cartel like with AT&T in the 90s or Comcast or 100s of historical examples. The alternative to a bridge troll is not ”no bridge”.

Comment by bob1029 2 days ago

The alternative to a bridge troll is "no bridge" if the bridge troll is the only party who has the capability to construct it in the first place.

Comment by foltik 2 days ago

Which is obviously not the case in this context?

Comment by 2 days ago

Comment by amaccuish 3 days ago

Well, in Germany the "girocard", the local card network, is the most popular form of payment. So I guess, citation needed?

Comment by cemoktra 2 days ago

Accurate summary. Had been working on issuing side for almost 5 years. Some of the issuing providers offer really good APIs, some of them are really bad. But overall the card networks are easier to implement than parsing banking data directly

Comment by 3pm 3 days ago

> The issuing bank keeps 2%

Is this why the best cash back credit cards give 2%?

Comment by will_occam 2 days ago

Yes that intuition is correct, though the reality is much more complicated. The actual share to the bank is roughly proportional to the risk of the transaction/ tied to the type of credit card

https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...

Comment by dmoy 3 days ago

US Bank for a brief period opened up a 4% card, but then closed it so quick that obviously the numbers didn't work out there.

2% seems to be a local maximum of cashback cards. There's a lot of 2% cards, and only a handful above that.

Makes sense?

Comment by nonethewiser 3 days ago

In the US. Not in Europe because interchange fees for consumer cards are capped at 0.3%

Comment by fallingbananna 2 days ago

I've seen cards with 1% chargeback in the EU though. How does that work?

And it wasn't just a temporary marketing promotion. I've used such a card for many years.

(It was issues by a big bank that had almost no presence in my country... so maybe they were eating the cost just to build up a bigger presence and potentially enter the country?)

Comment by w3ll_w3ll_w3ll 2 days ago

Yes usually it's promotional.

Comment by pverheggen 3 days ago

2% is just an example figure, the actual rate varies

Comment by tonymet 3 days ago

Don’t forget arbitrage, which is the withholding of transferred funds for 7 days while the capital remains in visa’s accounts for “investing” / speculation.

It’s like if you gave your buddy $100 to give to his room mate, and he decides to wait a week and gamble it on Kalshi

Comment by throw1234567891 3 days ago

You better don't look into how banks make money on your savings.

Comment by erfgh 3 days ago

You better don't look into how banks created your savings by creating loans that were used to invest into companies and thus pay salaries.

Comment by throw1234567891 2 days ago

I looked. I know. It's not me who is surprised.

Comment by nonethewiser 3 days ago

>It’s like if you gave your buddy $100 to give to his room mate, and he decides to wait a week and gamble it on Kalshi

Or treasuries.

Its actually a minor part of rheir business.

And frankly who cares given that its a sustainable system. I pay on credit and then someone else pays. I dont give a shit of they are betting on how many times Al Roker says Trump on New Years Eve.

Comment by tonymet 2 days ago

The merchants , who need that cash flow

Comment by mococa 3 days ago

In brazil we have pix with 0 fees.

Comment by missedthecue 2 days ago

Between individuals it is free. For commercial transactions, there is a fee between 0.22% and 0.33% per transaction, which is actually ~2x the fee of the Visa network (0.13%)! Visa is extremely efficient at moving money anywhere in the world.

Credit and debit card transactions have higher fees because unlike Pix, there is chargeback risk, and the the merchant and acquiring banks party to the transaction are compensated for the risk they assume in those transactions. Pix on the other hand is digital cash. When you spend it, it's gone. Unlike with chargebacks and disputes, there is no reliable mechanism to recover funds for goods not delivered.

Comment by fallingbananna 2 days ago

I could imagine that Pix is still better for merchants if that is the final fee.

With Visa and Mastercard there are usually many additional actors that also take their share and drive the final fee up.

Comment by 6thbit 2 days ago

If AI becomes a true commodity do you think OpenRouter/Stripe will evolve into this type of network that visa/mastercard represent today?

Comment by mhw11 2 days ago

I used to use credit cards to save money, but they ended up making me spend more

Comment by collabs 3 days ago

In my opinion, the only solution is everyone (individuals as well as corporations) gets a direct account with the federal reserve as long as you can associate a taxpayer identification with the account. Using it is voluntary but it is free of cost, paid for by taxes, and moving money to and from accounts is free of cost. Depositors would get the same overnight interest rate that banks do, and this interest is added every day. I think if we could make this happen, the chokehold of Mastercard and Visa can be greatly diminished. The disintermediation of commercial banks, the loss of credit card perks, and the added cost of customer service should be an acceptable cost of removing the parasites visa and master card from our economy.

most importantly, this opens up a lot of money that the federal reserve can hold directly, something that will become more and more important as bond yields go sky high.

Comment by Bratmon 3 days ago

How are chargebacks resolved in this situation?

This is an important question- most of the costs of a credit card providers come from dealing with fraud and chargebacks. That's partially because, under US law, credit card companies have to eat fraudulent charges if they can't get the person or company that did the fraud to do so. (Funnily enough, this is one of two places where protections for average people in the US are significantly better than protections for average people in Europe).

But credit card companies can keep their costs low by making a business decision not to renew the accounts of frequent chargeback-ers or chargeback-ees (even if they never officially found those individuals at fault). If the government had to make a payment system for everyone and take on all responsibility for all fraud, that would create an incentive with massive second-order effects.

Comment by mopsi 3 days ago

You resolve it the same way you handle in-store cash purchases of products that turn out to be faulty.

There is no reason why fraud and contract violation must be handled by unelected and unaccountable payment processor, when the government has already set up a consumer protection system for disputes related to cash payments. The payment processor is best left as a dumb pipe that does what parties and (in case of disputes) courts tell it to do.

Comment by Bratmon 3 days ago

So, wait. Are you saying each transaction has to be individually approved by the account holder?

Because that would break the subscription-based billing model for a lot of businesses.

Comment by boomlinde 2 days ago

Here, this is standardized, and if a local subscription service provider wants to pull money from my account I explicitly grant them permission to do that, which I can revoke at a later point.

Comment by carlosjobim 3 days ago

You have to consider the interest of the involved parties rather than the efficiency of a system.

Making a purchase is (still) voluntary for the customer.

For everyday purchases at physical stores, cards are convenient. You just swipe and maybe put your PIN. But other digital payment methods or cash can be just as convenient. You're never going to chargeback a coffee, a sandwich, or your groceries.

But for distance purchases such as online shopping, hotel bookings, flight reservations and such, trust is the most important factor, not convenience. Cards have fraud protection. Other payment systems do not. These "unelected and unaccountable" people can actually help you if you've been the victim of wire fraud. Much faster and much less of a hassle than going through the courts. And if they don't help you, you haven't in any way, shape or form abstained from your right to justice through a court of law.

If customers can have that security and ease of mind, then they are much more likely to make a distance purchase. Which means that the vendor can sell their product. If the customer can't have that ease of mind, then the vendor will not make a sale.

So vendors who want to make sales will gladly accept cards. Anybody foolish enough to try to sell without making it easy for the customer to pay in their preferred way will go out of business.

Another point worth mentioning is that cards work instantly across pretty much all currencies in the world. You can go from anywhere to anywhere and pay with your card and currency exchange is done automatically. And in the past 10 years, cards have given very good exchange rates.

Comment by warkdarrior 2 days ago

> Cards have fraud protection.

This is only in US and it is needed in US, because US has very limited consumer rights regulation. EU has much stronger consumer rights (mandatory 14-day return windows for any reason, easy cancellation for subscriptions, mandatory 2-year warranties).

So the things that the (private) credit-card companies protect you from in US (via chargeback support and fraud detection) are things that laws protect you from in EU.

Comment by carlosjobim 2 days ago

What you're writing is not true. The fraud protection is world wide, not US only.

The chargeback fraud protection of Visa and MasterCard is on top of every and any other consumer protections. It is not instead of other consumer protections.

This is extremely important, because if you as a customer are the victim of fraud, getting your money back from Visa or MasterCard is much faster and more convenient than making a police report, going to the courts, etc. And it is a very strong deterrent against fraudulent behaviour by vendors. If they keep defrauding people, they get kicked out of the card network.

Failing to get your money back through Visa or Mastercard, does not mean that you have waived any of your other legal consumer rights. If that method doesn't work, you can continue through the police and courts.

Comment by toomuchtodo 3 days ago

Customers can pay the credit card fee to get their chargeback insurance, if they choose, while others who can pay with cheaper instant payment rails can opt out. This is trivial with merchants able to surcharge credit card payments, as many merchants are starting to do (US mobile phone companies, US internet providers, Meta ad purchases, restaurants, etc).

Comment by SkiFire13 2 days ago

> credit card providers

The article did an awesome job explaining what are the parties involved and you choose to use a generic term instead.

> dealing with fraud and chargebacks

A lot of that is offloaded to the merchant, which instead has to pay them on top of what they already pay to the issuer bank.

Comment by Hikikomori 2 days ago

We manage it in Europe.

Comment by diegocg 3 days ago

So the article shows how visa and mastercard are, by far, not the ones taking the largest fee, and the solution is to get rid of them?

Where are you going to do the transactions in your scheme? Because credit card transactions are not the same as sending money from one bank account to another. There are settlements, disputes, chargebacks, etc.

How is the central bank going to offer the same variety of products described in the article? I.e..

> Interchange fees vary dramatically based on the kind of card, category of spend, and even the metadata attached to a transaction. The network’s goal is to set fees that incentivize desired behaviors on their network, including using more secure payment methods (lowering interchange fees for merchants), or for companies to do more business spending (higher interchange fees on commercial credit cards).

Your scheme sounds like all these crypto guys who think they can replace credit cards with bitcoin transactions, as if they were the same thing

Comment by toomuchtodo 3 days ago

Central bank instant payment system. The US has FedNow, and has had it for almost 3 years. It costs a few pennies to move up to $10M per XML message.

Brazil's Pix costs ~$10M/year to run: https://whatispix.com/

This is much cheaper than the entire credit card ecosystem skimming ~3% off of the economy. Efficiency!

FedNow Is Live - https://news.ycombinator.com/item?id=36801491 - July 2023 (1022 comments)

Walmart is currently trialing it to save $3B-$7B a year in interchange fees. No crypto, just XML messages through a mainframe at the Federal Reserve with a 20 second SLA.

> “It surprised me,” Henry said of adoption of Walmart’s first iteration of pay-by-bank, which is available online but hasn’t been marketed to customers. “It’s certainly surpassed our expectations of the amount of customers that have registered and actually use the payment type.”

> Walmart’s upgraded pay-by-bank offering will be rolled out in 2025. The transactions will occur over bank technology provider Fiserv’s NOW Network, which integrates with The Clearing House’s Real Time Payments network and the Federal Reserve’s FedNow. Until now, large retailers hesitated to launch real time payment options because many banks were not connected to an instant settlement system, meaning their customers would not be able to use the product. NOW Network aims to connect to as many banks as possible to reach 100% of deposit accounts by combining its own network with RTP and FedNow.

Walmart Plans Instant Bank Payments, Cutting Out Card Networks - https://news.ycombinator.com/item?id=41593450 - September 2024 (3 comments)

https://news.ycombinator.com/item?id=49433164 (citations)

(as of this comment, there are 100+ instant payment systems live across the world; we should assume that all countries will eventually have an instant payment system, or integrate with someone else's)

https://www.pymnts.com/wp-content/uploads/2026/09/PYMNTS-Int... [pdf] (September 2026 revision)

Comment by SpicyLemonZest 3 days ago

> Walmart is currently trialing it to save $3B-$7B a year in interchange fees. No crypto, just XML messages through a mainframe at the Federal Reserve with a 20 second SLA.

Please tell your user that this SLA is much too high for many purposes. A cafe or such would lose a ton of money if every transaction took 20 seconds longer to conduct.

Comment by toomuchtodo 3 days ago

Works fine based on the evidence. It’s a maximum SLA, not every transaction. The economics are too compelling to ignore. Fast enough.

Comment by pocksuppet 2 days ago

It's the worst case before they get penalized. I've had worse times with Mastercard and Visa. It's really not a big deal if one in a thousand payments, you sit by the card reader for 30 seconds before it says "please try again".

Comment by lxgr 2 days ago

FedNow is a payments rail, which is a long shot away from being a full retail payments scheme. The latter needs a disputes story, customer knowledge, merchant acceptance…

Take SEPA Instant, for example. It’s great for many things, but effectively nobody pays using it in stores or even online.

Comment by toomuchtodo 2 days ago

https://news.ycombinator.com/item?id=49632470

Comment by lxgr 2 days ago

That’s a list of news articles (notably none about SEPA Instant, the closest analogy to FedNow!), not a response to my point.

It actually supports my point: FedNow could be SEPA Instant (if it were to be widely supported and available to retail bank customers), but it’s definitely not UPI, Pix, Wero etc.

Comment by toomuchtodo 2 days ago

> Take SEPA Instant, for example. It’s great for many things, but effectively nobody pays using it in stores or even online.

My link mentions how Wero, replacement for US credit card rails in Europe, is being built on top of SEPA Instant. An adoption tracker is included, to show uptake progress. ~35% of tracked banks in scope in Europe for Wero have adopted it, as of this comment. They are actively building to get off of US credit card rail infrastructure.

In the US, similarly, it will take time to move off credit card rails, but we’ll get there. As mentioned, Walmart is already running live trials for pay by bank. I agree it is not fully operationalized yet, but it will be eventually. The most important primitive already exists (FedNow rails). Everything else is app experience and consumer training (for payment requests and transfers).

I see the pattern between the EU and US credit card -> instant payment transformation journeys, but maybe you don’t. Pix and UPI have shown how easy it is.

(Almost every deposit institution in the US currently has access to FedNow, per the Federal Reserve’s latest participant report, and through those deposit institutions and service providers, their customers)

Comment by lxgr 2 days ago

I can definitely see that it would look like that – if stakeholders wanted to. On that, I’m not convinced at all, for these reasons:

Banks earn money on card payments and pay (or potentially even lose, due to fraud liability) money on ACH and FedNow. The card networks compete with each other exclusively on the issuer side for structural reasons (a merchant generally has to accept whatever the cardholder pulls out of their wallet or risks losing the purchase) and can for this discussion be considered aligned with the banks.

Cardholders get (often opaquely valued, sometimes even gambling adjacent) points and perceive credit cards as having better dispute rights for them, so they also prefer them over anything else, including cash and bank transfers, and any legal action against cards will face immediate popular backlash. (I can hear the "mile optimization" influencers screaming bloody murder just thinking about it.)

Merchants are the only stakeholder heavily lobbying congress for literally anything cheaper, but so far it hasn't made a real dent, despite decades of trying. I think the Durbin amendment can be considered a failure, all things considered; not many stores offer discounts on debit cards or surcharges on credit cards specifically, and those that do seem to often just make a completely disproportionate money grab of 4% or more, vastly beyond their actual costs. Besides that, the "small issuer exemption" ends up benefiting large fintech players at least as much as the actual local and community banks it was intended to serve.

Comment by lxgr 2 days ago

> So the article shows how visa and mastercard are, by far, not the ones taking the largest fee

But they set the interchange rates and disallow (or at least have until recently, in the US) merchants to discriminate against cards based on rate or type via their “honor all cards” rules.

They are absolutely propping up and benefiting from the high fees.

Comment by pocksuppet 2 days ago

Visa and Mastercard are the ones setting the rules. They are the ones who decided that the fee can't be added on to the purchase price. If your credit card added 1% to every transaction from your perspective, but the competing bank's card only added 0.3%, you would have competition pressure.

Comment by mlefer 3 days ago

A few years ago congress had a nice solution via a market mechanisms, have sufficiently large banks be required to have their cards support at least 2 card networks, via which the merchant may at at swipe time decide which network to run against. Unfortunately like any good idea, it died in congress.

Comment by carlosjobim 3 days ago

Travel and tourism is about 9% of the world economy, and by some measures considered the largest economic sector in the world. Visa and Mastercard will continue to be dominant.

Comment by collabs 2 days ago

And that's ok. We need an option, it doesn't need to be the only option.

Comment by eMpHaSe 1 day ago

My favorite fee is the "VISA Network Defense Fee". Fits into today's world situation...

Comment by ale 3 days ago

Aside from the technical aspect I strongly encourage everyone to also read about VISA’s founder Dee Hock, still a very underrated figure in leadership and finance.

Comment by cute_boi 2 days ago

And, there are middleman like apply pay which takes 0.15%.....

These things are getting out of hand.

Comment by w3ll_w3ll_w3ll 2 days ago

The Set rules and handle disputes chapter is really interesting.

Comment by kburman 3 days ago

[deleted]

Comment by nosioptar 3 days ago

The answer to that is to "donate" to about 270 congress critters. Buying 5 motorhomes for supreme court members could work too.

Comment by 9cb14c1ec0 3 days ago

> The answer to that is to "donate" to about 270 congress critters.

Not too far off. You gotta ask why such a lucrative business has a near monopoly, and the answer is not that potential competitors don't notice their profit margin.

Comment by kriskrunch 2 days ago

How much do interchange fees increase prices in the US?

Comment by 2 days ago

Comment by hungryhobbit 3 days ago

They tax our entire economy at X rate, while maintaining their infrastructure only requires Y cost ... and X is significantly higher than Y.

From the actual article:

> The payment processor keeps 0.35% ($0.35), then pays 2% ($2.00) to the cardholder’s issuing bank and 0.15% ($0.15) to Visa. The 2% is the interchange fee, commonly known as interchange. The 0.15% is the network assessment fee. 8

In other words, they get 0.35% of every transaction ... and it does not require anything close to that to maintain their network.

Comment by gloryjulio 3 days ago

> and it does not require anything close to that to maintain their network.

If it's so easy to disrupt visa/mastercard payment network, they wouldn't be able to charge this much. Payment is a highly competitive business. We witnessed so many payment companies went under or were bought out, but these two stay for years and are still profitable.

The truth is their moat is considered very durable and hard to build. A global n banks to n banks payment network is not as simple as how people thought.

Comment by cassiogo 3 days ago

> If it's so easy to disrupt visa/mastercard payment network, they wouldn't be able to charge this much

If they have the US government behind them its much easier

https://thepaypers.com/payments/expert-views/pix-hits-a-wall...

Comment by coredog64 3 days ago

Same as it ever was: https://news.ycombinator.com/item?id=9224

Comment by Aspos 3 days ago

If someone owned all the highways, building an alternative would be difficult as well.

Comment by warkdarrior 2 days ago

Why hasn't Alipay completely replaced Visa and Mastercard in US? Everyone has a smartphone to scan a QR code.

Comment by Aspos 2 days ago

I struggle to understand how is this relevant. Alipay is closer to paypal than to VISA/MC

Comment by notpushkin 2 days ago

Alipay the wallet app is closer to PayPal. But they also have Alipay+ which connects a lot of different wallets and banks: https://www.alipayplus.com/mobile-payment-provider-list/

Comment by 8note 2 days ago

have you not seen what happened to tiktok?

Comment by carlosjobim 3 days ago

Visa and Mastercard do not own the internet cables or the wavelengths. Anybody is free to compete, and that's why they have many competitors. It is very common for businesses to accept a variety of unrelated payment methods. There is no monopoly here.

Comment by superxpro12 3 days ago

middlemanning is the most american of business ventures

Comment by einpoklum 3 days ago

I thought that title belonged to bombing campaigns and coups by shady guerilla groups.

Comment by 3 days ago

Comment by UltraSane 3 days ago

Credit card companies are mostly parasitic middle men but I have a credit card that I use for most payments and pay off the balance every month and effectively get 2% cashback with no interest costs.

Comment by losteric 3 days ago

The actual rates charged to merchants are variable, and typically higher for rewards/cashback cards. Basically, other people are subsidizing cards with higher benefits/cash back (of course as people shift, the merchant raises prices to compensate for the higher average fee, or just charge an additional Z% higher than your cash back)

Comment by warkdarrior 2 days ago

> other people are subsidizing cards with higher benefits/cash back

Ripping off other people is the American way.

Comment by tialaramex 3 days ago

That 0.35% feels more reasonable in 1976 or even maybe 2001 than it does today because technology changed so much. But maybe I'm wrong about that

If you're an American that 2% is a much bigger problem for your society. That's a direct funnel from the poor to the wealthy, it's not as a obvious a problem as "Trump gave the ultra-rich a tax cut" but it might structurally be more significant.

Comment by tonymet 3 days ago

Goods (and services) are priced at what the customer is willing to pay. In this case, the alternative is cash or cheques, both have much higher loss rates. That’s why vendors are eager to take visa over cash.

Comment by hgomersall 3 days ago

No, the alternatives are any number of other solutions that are not given a look-in to the very lucrative duopoly. The network effects are prohibitive for upstarts.

Comment by tonymet 2 days ago

Can you give an example ?

Comment by 2 days ago

Comment by montenegrohugo 3 days ago

Some light self-promotion but also longer term thoughts:

A large part of the promise of crypto and stablecoins was to displace Visa and Mastercard rent-seeking. This didn't seem to happen. Most modern neobanks, our own included (https://peanut.me), actually seem to EMBRACE Visa and Mastercard. Almost all offer an actual Fiat card within their app, instead of boldly saying "No, pay with crypto, the future of money!"

This is somewhat disappointing in the short term, but longterm i believe it offers a clear transitory path to full decentralized money adoption. Already today we're seeing a growth in direct peer to peer payments in peanut, and merchants slowly starting to adopt it as well. I imagine the same is happening across the industry. In a competitive economy, the better currency (read: crypto, stablecoins) wins and eventually absorbs adoption.

my 2 cents

Comment by topranks 2 days ago

Crypto is in no way better money.

It’s slow and expensive and doesn’t scale.

The real answer is an alternative that relies on a centralised provider - or set of them - who use traditional databases and the like, but do things in a modern efficient way and don’t charge the same fees as the current card providers do.

Comment by montenegrohugo 2 days ago

> It’s slow and expensive and doesn’t scale.

This is 2020 speak. In 2026, crypto scales and its extremely cheap. it costs less than a hundredth of a cent to do a transfer today.

Comment by GJim 2 days ago

> In 2026, crypto scales and its extremely cheap.

And is helping fry the planet.

No thanks.

Comment by montenegrohugo 2 days ago

No? Proof of Stake is extremely energy efficient and wastes way less resources than whtv resources hordes of burocrat central bankers consume.

Comment by dfish 2 days ago

[dead]

Comment by gwbas1c 3 days ago

The problem is that bitcoin (and similar) are so computationally intense to run, that the transaction cost is much higher than Visa's.

Furthermore, a currency needs a government (or similar kind of body) to manage its stability, by printing (and buying) money. Otherwise, we'll see wide fluctuations in value like what happens with Bitcoin.

Comment by montenegrohugo 2 days ago

Bitcoin is not suited for payments. Bitcoiners use lightning.

But to be clear, all payment innovations in crypto happen on EVMs and L2s. And in 2026, stuff is extremely scaleable and computationally cheap.

Comment by dfish 2 days ago

Bitcoin and similar are computationally intensive to run because of a thing called decentralization. Visa and Mastercard don't need consensus to perform payments, but they for sure don't have a single server running, I am sure they have more servers than bitcoin nodes, without counting on stripe, paypal, ... and other payment providers IN THE WORLD :)

There is something called lightning, which is p2p payments through bitcoin!

> Furthermore, a currency needs a government (or similar kind of body) to manage its stability, by printing (and buying) money. Otherwise, we'll see wide fluctuations in value like what happens with Bitcoin.

call the economists! a currency needs a government! But only from 1971 onwards, before that people didn't have currencies! Oh, you don't want to use the US dollar? the best currency ever!? I guess we'll have to bomb your country and neighboring ones to change your mind.

> to manage its stability

aka lose 2-4% of purchasing power per year. Thank you central bank! you saved us!

> Otherwise, we'll see wide fluctuations in value like what happens with Bitcoin

Oh no! The horror! A currency that can also go up!!! I guess we need a central bank for oil! to keep the price of oil stable! And food too!

Comment by simonmales 3 days ago

True on the main chain of Bitcoin. Bitcoin payments on the lightning network are not computationally intense.

Comment by topranks 2 days ago

Hahaha haven’t heard that one in a long time. Cracked me up.

Comment by dfish 2 days ago

guy who doesn't know what peer-to-peer technology is, laughs at man who does!

please stop using the internet! it might be slow and expensive to run! it requires insanely big cell towers and submarine cables! it won't scale!!11!! kind of guy

Comment by shevy-java 3 days ago

Europeans really need to stop handing their money over to Trump-Visa and Trump-Card here. Canadians learned that lesson already. Why do european politicians not learn anything? Leyen even signed a surrender treaty where european taxpayers lose money that goes into the USA. I say stop it with the proxy-control from Washington.

Comment by FabCH 3 days ago

Europeans have alternative payment networks already. For example, CH has Twint.

They are actively being unified into a cross-border payment network.

Of all the things to complain, this is the one where they are actually doing something…

Comment by toomuchtodo 3 days ago

Digital euro clears key hurdle as EU seeks to break free from U.S. credit cards - https://news.ycombinator.com/item?id=48647444 - June 2026 (376 comments)

European Parliament committee backs digital euro - https://news.ycombinator.com/item?id=48645468 - June 2026 (2 comments)

Gov.uk has replaced Stripe with Dutch provider Adyen - https://news.ycombinator.com/item?id=48415217 - June 2026 (235 comments)

Goodbye Visa and Mastercard: 130M Europeans switching to sovereign payment - https://news.ycombinator.com/item?id=48207004 - May 2026 (777 comments)

Wero – Digital payment wallet, made in Europe - https://news.ycombinator.com/item?id=47038965 - February 2026 (132 comments)

Europe's Banks Launch Wero Payments to Dislodge Visa, Mastercard - https://news.ycombinator.com/item?id=41666833 - September 2024 (88 comments)

Unofficial Wero Adoption Tracker - https://www.werotracker.eu/

https://en.wikipedia.org/wiki/Wero

https://en.wikipedia.org/wiki/Single_Euro_Payments_Area

Comment by ranguna 3 days ago

As someone from an EU country: the only place where I use visa/MasterCard is at Amazon. Everything else I use my country's payment system, which is now joining with Italy's own and probably more in the coming years.

Comment by toomuchtodo 2 days ago

Amazon Germany is preparing to accept Wero, with full support expected within the next year, unsure if they do in other EU countries.

Amazon Germany to Accept Wero - https://news.ycombinator.com/item?id=49175644 - August 2026 (14 comments)

https://www.mobiflip.de/amazon-deutschland-wero-kommt/ (German)

Comment by hacker_88 2 days ago

Now try security of bitcoin

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Comment by dzonga 3 days ago

in short they're TRUST networks.

which is also why crypto bros get confused.

Comment by halilBB 2 days ago

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Comment by Jzuckerman 2 days ago

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Comment by arifitworld 3 days ago

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Comment by aa_is_op 2 days ago

TL,DR: They steal from businesses that take card payments with giant commissions.

You're welcome!

Comment by sanjeevverma1 2 days ago

this article doesn’t do a good job of simplifying. the vast majority of Visa’s revenue comes from one thing called the ISO 8601 / ISO 20022 message, which is the name for a Visa’s authorization. the core service is transmitting this message between an issuer (cardholder bank) and an acquirer (merchant bank). all other revenue streams are basically a microservice on top of this core message transmission service.

Comment by LoganDark 2 days ago

ISO 8601 is just a timestamp format. Surely Visa must be using timestamps internally, but that couldn't possibly be their service.

ISO 20022 looks more like it.