Absolutely support passing crap like this on to customers.

Otherwise there is no incentive to lower them.

Completely agree and it also punishes people who pay with cash because we all have to indirectly pay for the processing fees of others.

One could also say that the costs of using cash are being passed on to card-paying customers

What's hypothetically supposed to happen is the payment vendors compete with eachother for traffic, and businesses negotiate deals and use the ones that give a good deal.

Whether it's actually working that way in practice, of course, is a valid question.

The problem is network effects. If you accept Visa or Mastercard then you lose business, because many customers have only one or the other. So you need both, which means you can't play them off each other for a better deal and they aren't actually competing with each other.

Combine this with contract terms in many places preventing merchants from passing on fees and it gets even worse, because card networks can gain customers and increase their network size by offering rewards and then use the network effect to raise fees. If the merchant can't charge more to customers whose card network charges them higher fees, the cardholder has the incentive to use the card with the highest rewards (and thus the highest fees), so you get a ratchet of increasing processing fees despite an overall trend of falling underlying processing costs due to automation.

Speaking purely hypothetically, it's easy for a customer to carry both a Visa & MC, so if stores more frequently took only one or the other, customers would respond accordingly. Like they already do with AmEx, or when traveling internationally (where MC has a big leg up).

But that's chicken and egg. Collective action problem. You can't stop accepting one or the other until the large majority of customers carry both, which they won't do while most vendors continue to accept both thereby allowing the cardholder to only need one.

True, although Visa card circulation far eclipses MC, so you could take the gamble that they'll have a Visa. Last I checked, Visa actually had more cards in circulation than all three of the other major brands combined.

Slightly old info, but:

SEC filings for end of 2016 had Visa circulation at 335 million, MC at 200 million, Discover at 51.4 and Amex at 47.5.

https://wallethub.com/edu/market-share-by-credit-card-networ...

Nilson report 2016 card usage by volume has Visa at $1.549 trillion, with Amex at $0.695 trillion, Mastercard at $0.693 trillion.

https://www.valuepenguin.com/largest-credit-card-issuers

Forbes has some charts with market share info.

https://www.forbes.com/sites/greatspeculations/2017/09/07/vi...

The problem is it's not a gamble, it's a percentage. Even if 75% of your customers have a Visa, then 25% of them won't and you risk losing that amount of business by not taking what they do have.

Moreover, that still wouldn't give you competition, because then what incentive does Visa have to give you a good rate if they're the only network you could plausibly attempt exclusivity with? It's like trying to solve a lack of competition by creating a monopoly.

I agree that there isn't much of a way to get lower interchange fees, but many, many businesses overpay at the processor level, where there IS a way to get lower total costs.

>contract terms in many places preventing merchants from passing on fees a

This is not a thing anymore, the card brands allow surcharging. It's prohibited by state law in something like 7 states, but those are rapidly losing court battles about it.

Unless if you're Costco.

https://www.fool.com/investing/2017/06/20/how-did-costcos-cr...

I don't know if its true or not but heard that Costco with this new deal with Visa is only paying a flat 40bps in interchange cost. Now that's a deal!!

Companies should feel free to not accept credit cards, but if they do accept them, it becomes a cost of doing business, and I, as a card user, expect to not be penalized for using one.

Providing parking is also a cost of doing business. I don't see any arguments in favor of merchants charging car-driving customers more than walk-ins.

Conversely, we could regulate and treat card networks as utilities (allowing them to recoup reasonable operations costs) instead of for-profit concerns siphoning unnecessarily off of the flows of capitalism. It works for Europe.

Customers regulating through voting with their wallet isn't going to work with how much power large financial firms wield. I contacted Elizabeth Warren's office (she's on the Senate Banking Committee); if this matters to you, I suggest you do too!

> I contacted Elizabeth Warren's office (she's on the Senate Banking Committee); if this matters to you, I suggest you do too!

Unless you've also got a plan to get a Democratic majority in the Senate, your plan probably needs to extend beyond Warren if you are relying on her role in the Banking Committee (if you are expecting her to win the Presidency in 2020, that's perhaps another story.)

> your plan probably needs to extend beyond Warren if you are relying on her role in the Banking Committee (if you are expecting her to win the Presidency in 2020, that's perhaps another story.)

It does. No need to pollute this thread, email me if you want to chat about it.

I prefer that honestly, i feel like im getting a discount for paying in cash

Before the law changed discounts for cash were pretty common especially at gas stations. In my part of the world (Fla) I don't see them anymore, anywhere.

Cash is pretty expensive too.

AmEx is not widely accepted, because the fees are higher and the cardholders usually also have a Visa or an MC card.

Saying as a merchant ;)

For this reason, I don't understand how Amex keeps attracting customers - you can't count on it being accepted everywhere, so you need to carry a MC/Visa backup card.

I used to tell myself that it was superior customer service, but I once disputed a charge at an overseas hotel and was sure it would be a fast/easy process - I paid for the room through Expedia and the merchant charged me for the room after I checked out. I contacted the merchant and they agreed and said they'd refund the charge. They never did.

I sent all of the information to Amex including the Expedia booking and the email from the merchant saying they'd refund me. It took them 3 weeks to "investigate" the charge and then they came back and determined that the charge was legitimate and I was not due any refund.

I spend an hour on the phone with them and got escalated to a supervisor who said she would re-open the investigation and 20 days later, they decided that I was due a refund and a week later they refunded it.

That's when I realized that there's no reason to have an Amex, so I replaced my Amex Gold Card with a Chase Sapphire card - I had to dispute one charge on the Sapphire and I didn't even have to talk to anyone, just did an online dispute and had my money back in less than a week.

Amex is accepted almost everywhere online, anywhere Square/Revel/Clover is used, any large retailer, and most 2+-dollar-signs-on-Yelp restaurants.

As you said, users should still carry a backup, but most places accept it. As for customer service etc., their platinum cards are where they shine.

I think it's as simple as - twenty years ago, there was no CSP/CSR, Amex was just a different experience. People's views/frame gets ingrained deeply. Younger people go Chase, in my experience.

Amex lowered their fees in 2015 through their Optblue program. They're still a little bit higher than Visa/MC, but much closer than they were. If you're still getting high Amex (3.5% or more) your processor is pocketing the difference between that and the lower costs.

With all the talk about "free markets" and stuff it seems very un-american that the restrictions the credit card companies are imposing are legal. These companies have enormous power and they are allowed to use it.

Those transaction fees were originally prohibited by credit card merchant agreements, but eventually they relented.

> Those transaction fees were originally prohibited by credit card merchant agreements, but eventually they relented.

They were prohibited by federal law until a few years ago. That was repealed, but now they're still prohibited by state law in a number of states. In addition, some merchant agreements still prohibit it, particularly if the merchant accepts American Express.

They shouldn't charge extra but offer discounts. It is bait and switch if they are charging arbitrary fees. Ryan air is notorious is for this practice. Advertise a low-cost flight but after you go through the sales funnel, unless you have Visa Electron. You pay an extra 5%.

Which is at least more favourable to the customer than Easyjet's approach which is to tack a £16 ( $20 ) 'administration fee' onto each booking regardless of how one pays.

I don't have any love for Ryanair but recently booked with them because the ticket cost less than Easyjet's fixed fee.

IMO, If surcharging really takes off, I think it will make Visa and MasterCard more accountable for their rate increase or at least think twice about it. I say this because with surcharging the merchants will pass the rate increases on to the customers and point the finger at Visa/MC. You might see the consumers then going to his or her Congress people both state an federal saying WTF! That's when the shit might hit the fan. That's why Visa and MC fought surcharging in courts they don't want to be held accountable. Stay tuned

It might be to accommodate business diners and really rich people who have those black cards. I've personally never had an Amex except for corporate cards.

It has a bit of popularity for unbanked folks with the Bluebird Card from AmEx / Walmart. Free reloads at Walmart unlike the Walmart MoneyCard (Visa / Mastercard) which has a $3 fee.

American Express also launched a discount prpgram for merchants, to make pricing comparable to Visa/Mastercard. If you have little volume, its easy to qualify.

while its true for amex, i dont think discover fees are any higher than visa/mc.

square lists discover fee 1.56% – 2.3% and visa fee at 1.43% – 2.4%.

of course, fees are negotiable and much less for the physical retail. durbin amendment sets the limit on /debit/ fees at 0.05%+$0.21

It's been a while (~10 years) since I've had to deal with credit processing, but at least back then, discovers terms were pretty abusive for small businesses. In any month where we processed 1 or more discover transactions we had to pay a minimum fee of (iirc) $50. Given how relatively unpopular discover is the risk was just too high.

Wow, sounds like a clearly anti-growth policy. I wonder if they have some expensive accounting in the backend or something.

It's really annoying when trying to buy guns. They tack that 3% fee on there, and then say you can pay for cash or check. Ever bought anything online with a check? It's annoying, doubt anyone does it. Any site that is selling a gun I want that tries to pull that I avoid.