When it's free in the EU, then you'll have a point. Until then you're not addressing his argument.

The fee is a bit higher than 0.3% (which only is the regulated interchange – there are a few other costs as well) but the rate was decided upon after evaluating the cost of cash transactions (which aren't actually free – consider insurance against robbery, time spent counting every evening, transport to the bank, bank fees, and similar).

But surely the effective "tax" of moving cash around, losing it, practically unusably small amounts of change etc. is greater than 0.3% for the vast majority of use cases.

In DK, card processing fees must not be passed to the customer.

It's supposed to handle the problem, but we all know that the companies just increase prices to compensate.

In Netherland, you sometimes get an extra 2% charge when paying with credit card. The customer gets the choice: pay the extra costs associated with credit cards, or use a better payment system. Most use something better. Credit cards are mostly for online purchases abroad and for tourists.

I wasn't addressing his argument because I actually agree. I was just pointing out that the 2% is far off in Europe.

OP... I was simplifying.

I don't know the real number for the economy as a whole, but the experience I do have (mostly in the higher risk/cost "card-not-present" scenarios) actual transaction costs are always higher than they seem at first glance.

For example, retailers bear the majority of fraud risk. Add that in, and the cost of anti-fraud.. it adds up. Then there's the consumer side, where users "pay" fees, pay interest rates..

My point is that all these digital payment (including the paper-originally CCs) tend to become bottlenecks and oligopolies. Banks, CCs, gateways.. all tend to centralisation, regulation and low competition. All the ingredients for price inflation.

Why would it be free? Shouldn't you pay for the service?

Not when it is effectively forced as only means of payment.

The idea of having to pay a fee to a series of private companies in order to be permitted to use money is absurd.

As long as money creation and handling is delegated to private banks, how can you avoid this?

Dealing with cash isn't free to merchants either. And that cost is passed on to the customer.

Sure, governments that are pushing for a cashless society have ulterior motives. But you can't blame them for capping fees that used to be just spread onto everybody, regardless of the payment method. Now at least they're supposed to be comparable.

Dealing with cash is technically free to merchants.

Banks have gotten more and more greedy, and come up with new and creative ways to charge extravagant fees, and thus charge merchants for cash orders and deposits (even though it is free for private customers).

These fees are however a very different concept, as the bank here is only a storage service. The fees are entirely avoidable by buying a safe, and the fees are not related to money changing hands.

With a credit card, fees are unavoidable and part of the transaction itself, and they're not even going to your bank, meaning that they want a slice of the cake from elsewhere (despite them technically earning money on your stored money through investments).

Why shouldn't it be free? Would you accept an inescapable 0.3% tax on everything you bought?

I pay an inescapable 15% goods and services tax on everything I buy. So yes.

Which was supposed to benefit the "citizens" but it did not it cost me about £20 a month due to lost cash back - all the benefits where taken by big business.

Do you have a source for this? I never heard it before.

18 months on – Impact of the Interchange Fee Regulation on the European Union cards market [1]

[1] https://www.europeanpaymentscouncil.eu/news-insights/insight...