If the credit card companies take a dollar from every transaction, then the store raises prices by 80 cents to keep margins the same (because some people pay by cash). Your 80 cents in cash goes to the store, and subsidizes 4 other customers purchases (who would otherwise be paying the full extra dollar).

Note that this complaining over fees is a privileged position, we are trying to slash visas margin, but if it didn't exist we would be BEGGING someone to come and run it this smoothly.

Businesses don't raise prices to "keep margins the same", they raise prices to maximize profit, adding a transaction fee generally has unpredictable effects on price, including possibly lowering your optimum price. I bet this rarely happens in practice, but the theoretical situation is not particularly simple.

> Businesses don't raise prices to "keep margins the same"

It's absolutely common practice. A few luxury businesses can get away with outsized margins, but everyone else in the physical goods business is working at 60-70% gross margins (so MSRP is usually ~3x cost). Grocery stores are outliers with absolutely razor thin margins.

In twenty years in e-commerce, I've never not seen prices updated to keep margins in a narrow band.

The only thing that will happen is if you have multiple competing companies, they affect each other's prices in ways that may make the band wider. You also have the various x.99 prices that companies want to hit (so a grocery store will sell something for $4.99 and not raise the price to $5.17 to keep their margins, but will hold out until they feel they can jump to $5.49 or $5.99 - this right here is the biggest reason for "shrinkflation" - the price wants to move to something that is not a .99 and so they resize it to make it hit one.)

But no company will long run at a loss.

> but if it didn't exist we would be BEGGING someone to come and run it this smoothly

I disagree, if they didn't exist and the need existed it would be fairly easy to get a company going to facilitate payments.

China for one has settled on mobile app payments via QR codes for almost everything these days, credit cards are almost nonexistent.

The US credit card system is build around manually copying down credit information and mailing it in once a month to a processing center.

Other countries have strongly leveraged the ability for instant communication to do many more things.

Money is fungible. Your physical dollar bill can be collected and deposited and make it possible for _another_ dollar to do something else.