Visa/MC were originally made by the banks. Ultimately if apple wants to succeed they will have to work with the banks to get it working.

I was thinking the same thing too. I don't understand why someone else hasn't come up with a better product to get around the Visa/Mastercard network.

Network effects.

There are probably hundreds of thousands of credit card terminals installed in the US. The delta of potential improvement is small enough that there isn’t a huge motivation to change anything.

Debit cards use the same networks (well, sort of, see https://www.helcim.com/us/pin-debit/ ) and charge much less (using a debit card with PIN from a large bank, $0.22 plus 0.05%)

https://paylinedata.com/blog/regulated-debit-vs-unregulated-...

There are "better" payment networks, but they're regional, and run either by governments or nonprofit organizations. There doesn't seem to be much will in the US for banks to cooperate to form a nonprofit in order to undercut Visa/MC.

Money. It takes a lot of money to go to all the banks and convince them to switch credit and debit cards. Before that you have to convince the merchants to accept a new card network. That takes even more money.

This cost is why we saw some retailers attempt to make their own wallets. A wallet app is a bit easier to integrate for the merchants than a new card network. The downside is that consumers don’t care about wallet apps. We want our credit card rewards!

Presumably, a properly-implemented retailer wallet app would produce some economic surplus, which could be shared with consumers in order to convince them to participate?

Restaurants like Starbucks do exactly this. You pre-buy Starbucks credit that you later use to pay for coffee.

Starbucks benefits because they only incur transaction fees for every (say) $25 pre-paid block, instead of for every $3 coffee. Swipe fees decrease as a percentage of revenue.

They reward consumers via their loyalty program.

> Starbucks benefits because they only incur transaction fees for every (say) $25 pre-paid block, instead of for every $3 coffee. Swipe fees decrease as a percentage of revenue.

They also incur benefits because money in hand and earning returns today for goods and services that will (maybe) be provided in the future is better than money received only at the point of sale.

That makes sense, thank you.

I think cryptocurrencies were an attempt at this but apparently it's actually quite hard to make a resilient network that also has robust features and convenience

Plenty of vendors take PayPal.

AMEX/Discover can't even take over Visa/MC...

AMEX has historically had much higher fees than Visa or MasterCard. Depending on your age, you may remember a time when AMEX was not accepted everywhere. The fees are why.

There are still a decent number of places that don't accept AMEX. I ran into this at a shop in a high-end shopping center recently.