> As for the retailers who point to lower swipe fees in Europe, Aufseeser counters that they are so low that “credit card companies are finding it tough to make any money at all” there.
Why should it be easy to make money? Ahh, right, because with the regulations they want, they can.
But in general it depends on the place - US has a strong legal difference between fraud on debit and credit cards, but there still is some fraud protection even for debit cards and in (for example) EU the consumer rights for debit cards also includes chargebacks for unauthorised transactions and compensation of losses with stolen/fraudulent credentials above a certain level (100 EUR if I recall correctly); and banks still require a lot of monitoring infrastructure and security people to reduce debit card fraud simply because customer satisfaction requires that the fraudsters don't run rampart.
Of course still room for profit but the above numbers show why merchants are interested in EU fees and security.
These fees do fund all the CC infrastructure (terminals, technology, cards, servers, chargebacks, fraud compensations) and the benefits that card issuers give to cardholders, but there's still a lot of space for profit. There's a strong lock-in as most merchants really, really want to accept cards instead of leaving the system, and little competition (the interchange is unified for all banks), so it's almost like a cartel where the prices go down only when/if forced by regulation.