Er merchants will get instantly crushed with first party fraud. As soon as people realize they can acquire a good and then get an instantly approved dispute the day after, game over. Unless thats not what you mean?
As a merchant, credit cards suck.
No matter how you argue, the people who do not abuse the system and are honest to the degree of hurting themselves will always be at a disadvantage versus the people who either refuse to replace an item or just file a chargeback instead of even contacting the merchant.
Or the customer support is so bad that you enjoy filing a chargeback.
"Hello, the tracking site says the item was delivered. It was NOT delivered and I asked the neighbors, it's not here." "Thank you for contacting us, the tracking site says the item was delivered. Have a nice day!"
2.1 Why does the proposed Regulation cap interchange fees at 0.2% and 0.3% for debit and credit card transactions respectively?
The 0.2% and 0.3% caps were proposed by schemes (Visa Europe, MasterCard, Groupement des Cartes Bancaires2) in competition proceedings and appear practical as providing legal certainty while not threatening the viability of these schemes. These levels are based on an estimate of the fee at which a merchant would be indifferent between being paid by card or in cash. The figures have been developed using data from the central banks of Belgium, the Netherlands and Sweden on the cost of payment instruments.
I ask because most lower-margin businesses tend to be brick-and-mortar and service-based, like a restaurant. If a typical restaurant's profit margin is ~3-5%, then going from 3% credit card fees to 0.1% fees could conceivably increase their profits by 60-100%. So, if your margins are <10%, then I understand how transformative lower network fees could be hugely impactful.
For ads: Many ecommerce businesses spend far more than 3% of their gross revenue on acquisition/marketing costs. So, in some ways the 3% credit card fee is closer to a marketing expense that increases conversion rates - and payment network fees are often less than overall facebook/google ad spend. So, if you're spending >3% of your gross revenue on ads, then the high conversion rates of credit cards factor into your advertising acquisition costs.
This. There's so much incentive to encourage shitty consumer behaviour on the CC side and it destroys margins on ecomm.
Those who are interested in learning more should read this article[1] on a cycling ecomm company and their issues with fraud and chargebacks. It's very accurate with what I've experienced.
1 - https://cyclingtips.com/2022/07/interview-silca-on-amazon-e-...
I only have anecdata about this, but every taxi driver (50+) I've ever discussed CC vs. cash (this is in NYC and limited to medallion taxis) has said they prefer cash every single time.
That's mostly because of the 5% CC processing fees on every transaction, as well as delays in receiving their money from CC transactions.
I imagine it's different elsewhere, but not (at least AFAICT) where I live.
Edit: rather, it's easier to not declare cash income, than income from credit cards. Also keep in mind that the taxi company may take a cut of the revenue too.
In NYC medallion cabs, all taxi rides are recorded by the taxi meter in each car. It records the distance and the fare charged, regardless of payment method.
So that's not really the issue.
And $2500 dispute fee for each order deemed against their Acceptable Use Policy.
In addition, visa Mastercard can cut off any business from doing commerce, and often do for political reasons.
A much better system is one with: - extreme low fees (like 0.1%) - consumers can dispute anything within x days and merchants have to issue a refund. No administration. - any merchant with a bank account can use it (or similarly broadly available)