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.

These things are getting out of hand.

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

which is also why crypto bros get confused.

You're welcome!

Ripping off other people is the American way.

And is helping fry the planet.

No thanks.

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.

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)

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

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.

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.

> 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.

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'

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.

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.

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.

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.

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

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?

Visa and Mastercard are a cancer.

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.

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

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.

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

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?

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

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.

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

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

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.

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

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)

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.

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.

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.

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

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).

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

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.

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.

Pix, UPI, and a few more

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.

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.

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.

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

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.

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.