Eh, the bitching over credit cards is tiresome. Cash is expensive for businesses too - they have to pay to transport it securely, keep it safe, deal with cashiers' errors, etc. And at the end of the day, cash consumers spend less than payments by electronic means.<p>Now, what <i>should</i> a very efficient electronic system <i>cost</i>? Very little, a few tenths of a percent. But it doesn't, merchants charge the fees that businesses will pay for that convenience, even begrudgingly, because access to the millions of consumers with credit cards is worth it.<p>If Silicon Valley wants to disrupt the business, do it. It is possible to come in and take on an established industry. But so far I'm less than impressed with the payment start-ups that are out there, and imho all they're doing is introducing yet more fragmentation. Sorry, I have no interest in paying with my phone - especially not with Snapchat. My Chase Sapphire card doesn't run out of batteries, and I get lots of cool perks with it.
I don't understand. Isn't there something in the US like `Bancontact' ? In Belgium (and, I believe, Germany, The Netherlands, France, etc.) your bank issues you a `debit' card that could act as a credit card but it's not its first use or purpose. When you pay with it you slide it into a terminal, enter your pin and validates the transaction. The money is then transferred from your bank account to the merchant's one. There's only one intermediate between banks and it's the service provider (whose name escapes me at the moment) and there are 0 fees applied. It's on the merchant and it's not percentage based but transaction based (much less than 5ç I believe but the merchant has to rent the terminal).<p>There are basic insurance for card stealing that covers `some' things and you can buy larger ones if needed.<p>Why is the credit card the default in the US ?
Recent jurisdiction that came into effect in Europe limits transaction fees in Europe to 0.3% of the transaction.<p>The flip side of this for the customers is that the card rewards/kickbacks are decreased as well.
"The founder of Coinbase actually left his job at Airbnb to start a Bitcoin company once he realized that credit card fees ate up nearly half of Airbnb’s profit margins."<p>This is so true, and a weakness in cc wth the rise of marketplaces.<p>I started a side project, a marketplace due to very low margins of suppliers the max we could get in transaction fee including cc processing was 10%.<p>We did not want to add markups on in store price so had to absorb the costs.<p>Take a transaction of $100 , e.g you pay 3% fee/$3. For the merchant it is 3% but for you its actually 30%
The author mixes in interest, interchange, and fees. What he calls "fees" are actually interchange, and it's a relatively small line item in bank's P&L.<p>The main source of business income is interest. And interest is so high because it has to offset losses from card members that stopped paying. Remember that credit cards are unsecured products. Banks typically recover only about 20% of the default amount, the rest is gone.
The thing I hate most about this whole thing is it's reached a critical mass such that if you don't play the game you're just paying the cost.<p>I wish stores would simply charge the credit card fee outright as a line item to dis incentivize usage of the credit card (many gas stations do something similar in charging a cash vs credit price).
A few years ago the regulations in Australia were changed so that the CC companies can't force merchants to cross-subsidise the fees - merchants are allowed to directly pass on the transaction fees as a surcharge if they want.<p>I've certainly chosen to use alternate payment methods to avoid the surcharge when convenient, so this must be putting some competitive pressure on the CC transaction fees.
All these fees yet the merchant gets almost no protection from the Credit Card companies when their product is forged and used.<p>Charge backs can happen up to 6 months later and the last time I had a merchant account the permitted response time for a merchant was just 1 day or the full amount plus penalty was taken.
I'm genuinely curious why the likes of Walmart and/or Amazon, given their sheer size haven't started their own credit card networks, or even charge accounts for their own stores over using the CC networks...