Visa, Mastercard, major banks facing new litigation over 'anticompetitive' fees
classaction.org
classaction.org
I would not be surprised if rather than continuing to battling it out with the credit card companies to negotiate for lower fees, more and more retailers adapt to the cashless economy by leaning on ACH in lieu of credit cards, especially in market segments where repeat business is common (basically any retailer that has an existing loyalty program).
To put it another way: Sure, litigation is an option, but even if you win the concessions you want, it will leave the credit card companies entrenched. Pushing more customers to pay via non-credit-card methods has the benefit of more immediate financial impact, less reliance on the legal system, and deterioration of the power that led to the anticompetitive behavior in the first place.
Are ACH returns really that difficult to initiate in the US? I've fortunately never had to do one, but in SEPA land, it's usually a single click in online banking, or at worst a simple message to customer support.
For example the "Earnify" app for all BP, all Amoco, and many ampm stations (it should eventually be all ampm but the rollout is still underway) will let you enter payment information, but you can also tell it to just use Apple Pay. (They don't have an equivalent option on Android).
The Earnify savings are $0.05/gal. You can link an Amazon Prime account and that adds another $0.05/gal and on Fridays another $0.10/gal on top of that for a total of $0.20/gal off. (It also has sometimes given $0.50-$1.00/gal off during Prime Days).
Since (1) ampm is usually the least expensive Top Tier certified gas in an area or the second least expensive (after Costco) and (2) any extra additives and cleaners beyond those required for Top Tier certification do not have enough benefits over the life of the car to justify paying more (according to independent tests) I'm baffled that so many people who complain vociferously about the price of gas are not going to ampm (or Costco) even when there is one near where they do get gas and it is often $0.50+/gal cheaper even without any app discounts.
I don't even use my debit card for anything, it all goes on a credit card because it's a lot easier to fight a fraudulent charge.
> Fraud-related costs are also one of, if not the largest single contributor(s) to payment processing fees.
That's not true. Fraud (counting both prevention and losses) accounts for less than a quarter of issuers' interchange revenue: https://www.federalreserve.gov/paymentsystems/2023-interchan...
I had to on the spot download a mobile app to pay to get my car back from valet parking at a really nice hotel the other day. They only accepted payment via the app which they did not disclose before taking the car. I had to stand there for 10 minutes installing the app and setting it up and I will likely never go back to that hotel (becuase of location, not the app).
No idea what would have happened if I just had an old fashioned flip phone
(I just use cash most places. Works great.)
Feel free to ignore this question but what have you noticed going about life without your head in the screen? It must be a genuinely different view on things and I would like to get your perspective
Connecting my checking account to that? Fuuuuck that.
Typically on the web you need to select your bank, get redirected to your bank's website with a pre-filled transfer you validate, approve 2FA on your phone app, and then the purchase gets confirmed only 1 or 2 business days later when the transfer gets received.
I see small businesses just give you their IBAN too, and you need to manually add it and make a transfer. Not seamless at all.
Asia has it better with more payment networks, union pay and QR code based networks.
However the EU is getting the "digital euro" in a few years as an alternative to VISA/Mastercard which is supposed to have similar dispute resolution mechanisms.
And for other retailers, I would totally not use ACH just for the protections that a credit card provides.
Would he like it if the cashier took his wallet for money as opposed to him giving the money?!
But you don't know who owns or operates a gas station. They've all got big brand names, but what's their business model? Who's actually running the transaction? The gas pumps are practically unattended and, highly regulated by Weights and Measures because of the high potential for vendor fraud already. Gas stations are already notorious locales for card-skimmer danger. So, I would be loath to get into an ACH bank dispute with Sri Singh McSikhface.
I already had massive troubles, some of them Visa-related, with local laundries and dry cleaners. They are vicious, fly-by-night, and dishonest. I would not risk the same shitty experiences with gas stations.
I’m also wondering if you and I have encountered rather different permutations of these “pay-via-loyalty-app” schemes. In the part of the world where I’ve been spending time, the gas purveyors who I notice pushing the apps are the big, brand-name fuel station networks. The same ones who’ve pushed own-brand payment services to fleet managers for a while.
If you’re worried about card skimmers, wouldn’t you prefer to use the method that routes payment directly through Corporate Fuel Parent, rather than trusting the franchisee with any of your financial information?
That's just the way people have paid for gas since they had bank accounts.
Second, it appears that you're deliberately conflating "writing a check" with an ACH authorization. These are definitely not the same animal. Yes, a paper check contains my signature and all data points necessary to establish an ACH transaction. No, setting up ACH in an app is not "writing a check" but its equivalent is "handing over a book of blank, signed checks" to the vendor.
It used to be the case, with pre-pay, that you could hand $25.00 to a cashier and they would authorize the pump for that amount, and you just max it out with however many gallons (or less, and return for your change). But in a credit/debit transaction, the little grubby pump-POS (or human) does a preauth for $$$ and then the pump measures out how much gas you actually pumped, and then the transaction settles overnight for the measured amount. If you are old enough, you may recall an American society with high enough trust to run truly postpaid gas pump transactions. Imagine that.
So that really is a blank check. It doesn't matter when you're not using the grubby physical POS or an app. The gas station owner is the final arbiter of how much gas, and therefore how much you owe. Correct me if I'm wrong, but ACH protocol isn't sophisticated enough to have preauth and settle; the vendor will just say "give me $$$" and the account will transfer it, no questions asked.
The consumer won't have a leg to stand on, because it will be the robo-pump that measured out the gas, and you've already, allegedly, taken that amount of gas and put it in your tank, so if you claim that you only pumped a gallon but the pump asks for 30 gallons worth of money, who's wrong?
So all the risk of vendor fraud still exist there. No, a third-party skimmer won't be effective, but I often wonder how many skimmers were installed with knowledge or tacit approval of the fly-by-night owner/operator.
I do not see how an ACH app transaction makes any gas station more honest or accountable from a consumer perspective. But now I love my boomer father even more for keeping his little fuel logbook in every car he has ever driven. I'd like to see him in a small claims case against Sri Singh McSikhface.
You could just pay cash and get the same price? They’re just offering the cash price if you use the app and set up ach payments?
Or do you mean debit cards?
1. Merchants need to be allowed to add card processing fees on top of any transaction, and it should be possible to do this very easily. If not this, then any receipt should be required to include card processing fees.
2. Merchants should be allowed to pick and choose which cards they accept without penalty.
Those two simple changes would add competitive pressure back into the payment processing market, and quickly cause fees to lower.
The cost of the product should be what's on the label. If that's not enough, raise the price.
> Why not add on an additional fee for every other thing like, fuel surcharge on delivery costs, employee surcharges (I don't live in a place where tipping is expected), or even energy surcharges?
A lot of companies already do this. As long as those fees are mentioned somewhere before purchasing, it's legal here:
https://abc7news.com/post/what-are-surcharges-bill-when-eat-...
California banned all these surprise fees, and then the restaurant industry got their own exemption:
https://calmatters.org/commentary/2024/06/california-restaur...
As long as it's part of the advertised price, im ok with that
What does Europe do here? They at least add tax into the list price which the US can’t seem to do because reasons.
It's common for the price you pay to change when the method of purchase changes. For example, having a product delivered costs the seller more than if you picked it up from the store, so you have to pay a delivery fee.
To me, surcharges should not be allowed. The sticker price the customer sees when they decide to buy ought to be the price. This makes comparisons much easier, and enables more competitive pricing.
If you pay via a medium that does not return some of the margin to you in the form of rewards or a 'cash/debit' rebate, then functionally you're paying an invisible tax.
This means everyone should be using credit, ideally the highest reward options, which themselves have the highest processing fees, which result in higher prices all around. The creation of higher tiers of rewards and super-premium cards just repeats this cycle, whereby normal cardholders and cash/debit users are now subsidizing high-spend premium card users.
Further, large retailers negotiate significantly preferential rates and lower processing fees for their book of business. This means small and medium sized businesses pay significantly more per transaction for processing, meaning they're less competitive and less pricing pressure is placed on large retailers, which again raises prices for you.
There's also the card issuer side of things, but in short if you're not changing your credit cards regularly, companies will depreciate rewards and benefits over time in previous lines to move you into a higher margin segment of their portfolio.
In short, there's already a divergence, and you're already paying for it in multiple ways.
[0] - https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-...
even with your optimal strategy, you're still paying for it: those points might as well be already spent at the network of vendors you've agreed to sell your purchase history to
it says so in their balance sheets :)
Or put another way: the list price must be reasonably achievable, but charging more for "extras" (eg. a more expensive card with benefits) is always permitted.
The best answer is probably a combination of the two: break out the bullshit costs the customer has to pay so that the consumer can see them, but still give them the upfront cost as early in the transaction as possible.
They can* and they do.
*It is capped to the actual processing fee, the card network must be notified, and the fee must be disclosed upfront to the consumer. A couple of states like CT and MA disallow consumer fees.
On most planned larger purchases (like more than $1000), I've seen CC fees recently.
> Merchants should be allowed to pick and choose which cards they accept without penalty.
To be clear for readers, merchants can choose their accepted card networks -- Visa, Mastercard, Amex (or alternatives like PayPal).
Networks requires merchants to accept all of the card within that network (hence the name "network"). Visa has three tiers; Mastercard has four. Something like ~90% of CCs fall in the traditional rewards tier, so there's less card variation than you might think. Though higher tiers tend to spend disproportionately more.
Stripe and the flat x% + $y are of course popular because of the simplicity and predictability of it.
Unfortunately it has become a popular idea to ban the surcharging of these costs by retailers, so it's likely to be outlawed by next year, which is completely asinine. Now we'll be back to a situation where customers who use a cheap payment method will be subsidizing customers who use an expensive payment method.
It’s not free for the business either. Businesses doing cash discounts are quite likely not reporting all of their sales IMHO, so it’s better for them because they can dodge taxes.
And guess who wins there...
Just curious, how is this not painfully obvious and so there's opposition to it? Nobody is expecting this to lower prices, right...
Last week, I visited two unrelated non-profit museums, and when there is free admission I strive to make a freewill donation to show my appreciation and lend support to the mission. I offered the same amount to each location, and the second one, according to my bank statement, has involuntarily charged me for the fees as well. No wonder they greatly prefer tossing cash into the Plexiglas box.
Why the same logic does not apply to cash payments? They have costs too.
> Unfortunately it has become a popular idea to ban the surcharging of these costs by retailers, so it's likely to be outlawed by next year, which is completely asinine.
It's completely sane. Surcharges are now outlawed in Australia (from 1 Oct) and I finally paid for my coffee exactly the same amount that was written in the blackboard. Businesses that do not want to absorb the 0.5% fees are free to stop accepting credit cards or can raise prices (none near me did that so far). That's fine, the most important thing is if coffee is 5.50, you pay 5.50, not some random amount.
I know what has happened in Australia and I hate it for the reasons established above.
“Pick and choose which cards they accept without penalty” won’t do anything in a market where 3-4 card processors and 3-5 banks have a near-monopoly on transactions.
If I sell ice cream and decide I won’t accept Chase credit cards because the fees are too high I’ve just lost 1/4 of my customers or something crazy high like that.
Let’s quit trying to find weird workarounds to keep capitalist failures propped up and use regulatory teeth.
Cap transaction fees at something reasonable like 0.5% and the problem disappears overnight.
Yes, you’ll lose your rewards, and that’s a good thing. Rewards cards are a massive wealth transfer mechanism that shouldn’t be legal.
What there aren't are rampant cash-back rewards for using a particular card. Or easy access to credit cards with usurorious rates. I think missing out on those is a societally good outcome.
Dan why can't I post more comments?
I could make this exact same “price controls” argument about sketchy loan sharks that charge 200% interest.
Perhaps ensuring widespread access to credit cards isn’t actually as important as making sure credit cards are fair? Alternatively, perhaps your theory that credit cards would become inaccessible if transaction price controls were implemented wouldn’t play out? Perhaps we would discover that Visa and Mastercard and Chase Bank and Capital One would be perfectly happy collecting 0.5% of every transaction on the planet plus revolving interest charges?
I will reiterate my overall point: we have tried market-based solutions and the end result is that capital is concentrating itself at the top at alarming speed. Credit cards represent a huge oligopoly business. There is no free market situation where a new credit card company will enter the market. It is no longer possible. To the contrary, the market has only consolidated. E.g., Capital One purchased Discover Card in 2025.
How much longer do we let the market work itself out before we decide we’ve had enough trying the same ineffective strategies?
Isn't the case already?
1. I would like payment processors to have the resources and capacity to adapt to threats and maintain highly resilient infrastructure. This is expensive and requires a lot of ongoing investment.
2. If payment processing was turned into a public service, the complexity of international integration and necessary relationships, standards, etc. would become a public service burden. I'm not sure that I trust my provincial or federal government to handle this adeptly.
3. There is a lot to this that we're probably unaware of.
I'm not trying to protect banks in the slightest, but it's a baby and bathwater situation. I'm not confident in my country's ability to create its own payment processing platform that I would trust to be a reliable, sustainable, value-generating system operated by public servants. I don't mean value-generating in the profiteering sense, but in the "this is worth operating on public funds because, ultimately, it is more than worth what tax payers put into it".
I think some things are an awesome fit for public services, but a lot of places are probably not equipped to take this kind of task on safely and competently. My country is more likely capable of regulating these institutions, not replacing them internally.
We tried to make a COVID-tracking app and spent $59.5 million, and it was an abject failure. How much would we spend on a broken payment processing platform?
You live in Canada, which already has better options than the U.S., though the sittuation is getting better in the U.S.
For example, Interac is free for most people and very easy to use.
Debit payments often cost merchants less than 10 cents per tap. The local gelato place only takes debit or cash; if you don't have either, they're happy to accept an Interac payment, and do so more often than you'd think.
Part of the problem is that the incentives are misaligned. People want their points systems. Merchants want customers, but they also want lower transaction fees. Most customers have debit cards that would be much cheaper for merchants, but choose to use their credit cards, because they want the "rewards."
While the 3% or so that a bank charges might seem low, if you look at this from a low-margin business, that 3% may actually be much higher percentage of their net profit.
Regulation concerning rewards systems could go a long way towards shifting the system to be much less costly for businesses.
There's not much hope of real change here; Canadian banks are very profitable, and are a cornerstone of our economy. It's very unlikely that politicians will do anything to risk that.
I bet most people paying by credit are really using debit cards, but pick "credit" at the register because they don't want to enter a pin. Partly for security, but mostly because credit is faster/easier.
Anything optional that skims off the top cuts into profits extremely quickly.
[1] https://www.indiatoday.in/business/story/npci-rs-500-crore-p...
The app itself was deficient in testing, had security issues, wrongly told thousands of people to quarantine, was not as accessible as it should have been, and was overall very mediocre software. If that's what my federal government can deliver (albeit through contractors and middlemen all the way down), I don't want them anywhere near my finances.
Public adoption was mandatory for a time, so that aspect couldn't have failed.
And of course, the Canada Revenue Agency is clearly able to manage people's taxes and aspects of finances safely and securely, but that has decades of effort and tremendous financial investment behind it. A greenfield effort seems a lot less safe, and I trust the public service much less to execute on that coherently, consistently, and effectively enough to deliver something better than we presently have.
They are draining/milking the cow. At some point, they had significant value in quick information transmission when the internet and smart phones weren't really a thing. But now the only advantage is chargebacks/refunds which coincidentally, the experience there is being made shittier.
Still, not worth the 3-5% premium. Glad many merchants are starting to charge for credit card use and push back.
The underlying issue is not if we can build the network (we can) but getting people to actually use it. For example, if we wanted to repeat the Japanese success of IC cards here, we'd run headfirst into the problem that our public transit networks aren't big enough to be a credible Visa/MC alternative:
- Most public transit systems large enough to issue their own fare cards and readers are also regional monopolies, because there's not enough transit demand to sustain multiple companies with different routes. If I'm in Pittsburgh, all the buses and trolleys are run by PRT. In the Wasatch Front, it's UTA. Those agencies have little interest in becoming banks; they operate the fare cards mainly to keep fare payment easy, and they don't need to coordinate with anyone because everyone already joined into a single large transit agency.
- Metro areas with multiple transit agencies often have political differences that make coordination difficult. For example, in Long Island, NY, Nassau County's NICE bus system had legacy Metrocard fare payment that wasn't upgraded to OMNY until a month or two before Metrocard was completely ripped out and shut down. A rare exception to this would be the San Francisco Bay Area where there is an insane amount of political fragmentation and somehow they all wound up taking Clipper.
- A lot of Americans just never touch trains or buses enough to actually need a transit card.
- A lot of transit agencies are just surrendering to Visa & Mastercard and taking credit cards now anyway, even though transit fares are exactly the kind of microtransaction that is ill-suited for those networks.
Ironically, the best bet for an American-run payment network would actually be to nationalize E-ZPass[0]. In fact, in 2008 Congress passed a bill specifically mandating a unified toll payment system, but nothing came of it because the bill had no actual teeth. The main problem with this idea is that E-ZPass transponders won't fit in your wallet; you'd have to launch a separate form factor for an "E-ZPass Card" and at that point you run into all the same problems I just mentioned with making a unified transit fare system.
[0] E-ZPass is an RFID transponder system for toll payment that is very well-adopted along the east coast.
E-ZPass now has interoperability with the Central United States Interoperability Hub (which reaches as far west as Colorado and as far south as Texas). We're much closer to the point where you can drive anywhere with a single transponder than we were back then. The main thing missing now is California cooperating with anyone else.
I like the idea of my toll road account also being useful for public transit, if nothing else. But it's difficult to imagine toll road operators and public transit operators seeing a big incentive to cooperate in that way. Even though they're both "pay for transit," their intended/typical users are very different (people who can't/won't drive vs. people who not only drive but are privileged enough to pay for less traffic).
Very sure the amount those companies make yearly is worth saving.
> We tried to make a COVID-tracking app and spent $59.5 million, and it was an abject failure.
and then we just…kept letting those people stay in charge of spending our money.
and there’s a story of very expensive incompetency like that every quarter at minimum.
On the contrary, the middlemen in credit card transactions are providing a service whose value add is so obvious that it's basically invisible, because it's become so normal: financial intermediation. The credit card company is basically covering your debts for you until you pay your monthly bill--and shielding you from having to give every merchant you purchase from your bank account information. On the other side of the transaction, the credit card company is guaranteeing payment to the merchant, who now doesn't have to care about trying to assess the financial reliability of every customer. It's become so normal that we don't realize what a huge value add it is, as compared with, for example, trying to convince the grocery store to accept your check, which forces you to hand them your bank account information, and forces them to decide whether they think you (and your bank) are reliable enough that your check isn't rubber.
Consumers shouldn't have to pay a fee to give someone money. Sellers shouldn't have to pay a fee to collect money. Security should be built into the system, not a luxury you're taxed for.
They should not be able to tithe all of society in perpetuity because they set up shop decades ago.
See also: the app store, telecoms, health insurance in the US
As I said, the fee you're paying if you use a credit card is for financial intermediation. That's not just "giving someone money" or "collecting money". There are other things included that have significant costs to provide.
> They provide a valuable service
And that means all your rhetoric about "charging a rake", "tax", "parasitic toll collection", "tithe", etc. is misplaced, because those things all imply that there is no valuable service being provided.
If you want to argue that there are ways to reduce the cost of the valuable service, for example by competition, that's one thing. But that's not the argument you're making.
No, governments do not spend money on producing cash. They make money by printing it. The net value to the government of printing money is positive, not negative. (And in our current financial system, they distribute much of that value to financial institutions and the rich people who own them--which was the original reason the Federal Reserve system was put in place, due to intensive lobbying by the rich people at the time.)
Perhaps the card network provides insurance against bank failures, but they also allow fraudulent chargebacks which I'm certain account for a much greater amount of money than bank failures.
Dan why can't I write any more comments?
The customer can file a chargeback in which case they win almost every time even if they are scamming.
I understand why this makes HN so upset. To the uninitiated nerd brain, these are just pieces of information flowing in and out of some computer system across networks. How expensive could it possibly be to actually send a packet to perform an online authorization with a bank's database? We all know the actual communication is ~free. What you are paying for is the maintenance of that connection, the security around it (e.g., PCI-DSS compliance), the ability to dispute that communication out-of-band, etc.
We could cut the cost of VISA's network in half or better if we could drop the compliance piece. I don't know how that would play out for the consumer segment though. How much economic activity would be curtailed if the average consumer had to start worrying about the security and stability of payment networks? Card skimming is a great example of this. Consumers will avoid certain retailers if they perceive an elevated risk of theft.
In the EU, their rake is capped by law, to an order of magnitude less than what they charge in the US. And it's still profitable. (Otherwise they would have pulled out of the market if they were losing money, obviously.)
The fraud prevention/etc you discuss benefits from economies of scale, but their fixed x% per transaction does not reflect those economies of scale. The free market has broken down here because of the difficulty for new market entrants.
The value they add is much greater than their costs. People who deny this lack a lot of imagination to ponder how inconvenient things could be without credit and debit cards.
But we don't need to imagine: If Visa and Mastercard didn't add more value than they cost, then merchants wouldn't accept them. It is still 100% voluntary for a merchant to decide if they want to accept cards or not. Which is a freedom they should have. These cards aren't legal tender.
Then why are there so many of them? I like travelling and almost every country I go to has its own thing going on, often more than one. I lost count long ago
I doubt the amount credit card companies charge in fees has much to do with the actual costs of running their service and are being inflated just because they can. My guess is that reducing the VISA's costs by letting them ignore security considerations would only mean that consumers get regularly screwed over while VISA continued to raise their fees every year.
The component parts have been up and running for years.
We could also cut the cost to merchants by notably more than half if we dropped credit card rewards.
1) The government now has a full purchase record of every purchase you make
2) There is not a competing infrastructure where you can distribute your transactions across multiple companies to avoid a full profile building up
3) The government now has an incentive to eliminate un-surveilled options like cash and checks.
4) The government is now required to consistently legislate every single "he said, she said" fraud situation. Since it requires publicly available and consistently followed guidelines, this means everyone knows exactly which sorts of fraud work well
5) The government can trivially ban payments to anyone they disapprove of (porn, bitcoin, Iranian refugee charities, anyone who has the wrong opinion on Israel, etc. etc.)
6) The government can also wield all of this as a cudgel to threaten bad actors - do what we want or else we propose you go the Non-Payment List, we reveal your porn receipts, etc..
7) I don't even want to know what this does to the complexity of trying to use a card when traveling internationally
Not much - Canada has debit/credit cards that use debit domestically and Visa or Mastercard internationally. They're the default type of debit card that many people get.
I'm not gonna say it's anywhere near perfect, but that friction significantly changes the average outcomes
That's essentially what a CC company does though, every transaction they're briding the timing gap between the card holder paying the CC company and the CC company paying the business. That's the core value add and cost they're bearing that they charge for.
They have risks from both sides of the transaction; on the one hand scam merchants who might get chargebacks and on the other customers who never pay off their balances (thought I guess that risk is covered by their interest charges mostly).
I recently ordered some snacks from another country and after 3 months the vendor stopped responding while never having sent anything. When I asked for a chargeback, my claim was denied because I didn’t have proof they didn’t send anything! I literally had an email from them that said they are backed up and unable to send stuff.
Where do you live or shop that you are happy to take what is effectively a 3% pay cut for the privilege of having a slightly easier option to get your money back if someone charges you the wrong amount?
Tourism is the world's largest industry.
If I bake cakes to sell them, and have to pay 3% to a network for each purchase, then that 3% is in the price of the cakes.
In Brazil, you'll typically get a "10% discount" when not paying by credit card.
Eg, it's very clearly pushed unto the consumer. I assume some law says they cannot charge more for it, so they got a default price, but always advertise a lower price with a small text "if paid via pix"
Does this idea apply outside of the credit card industry
The middleman business, intermediation, seems to have worked well for the so-called "tech" industry
Replacing low quality intermediaries with superior automated ones at massive scale with all the associated benefits.
This is the story of obsolescence and human history.
The coming end state of which has led to this transformation from the "big data" to AI paradigm.
Now so called "knowledge work" is itself being disintermediated. No need to worry about "bullshit" desk jobs anymore. They will be gone. It turns out a stochastic sentence guesser is superior to the average knowledge worker. This will only improve and become further operationalized, with accompanying safeguards and adversarial checks. At a certain point the value is already gained. The founders have taken their massive exits. Soon it's not so special anymore. In short, intelligence becomes a utility.
The end state of all of this is the same dichotomy our earliest ancestors had already forseen: apocalypse or utopia. In the same way that credit cards were once a cool idea, now they are trite and their continued privatization is merely a private tax on almost all transactions, and as such is rather undesirable. So turn it into a utility. Just like if we all survive the coming wars, the future will be one where compute based intelligence is a public good.
https://www.youtube.com/watch?v=UcoeYU8Ks_s
Tim Wu, The Age of Exxtraction (2025)
https://scholarship.law.columbia.edu/books/402/
https://books.google.com/books/about/The_Age_of_Extraction.h...
There is absolutely not reason that the government should have abdicated its core function and allowed a monopoly effectively have a license to print the dollar bills and rent them out for a cut from ever single economic transaction.
Imagine if the government had suggested that in addition to all the other criminal extortions called taxes, when you use dollar bills to purchase something, you have to pay a 3% dollar-bill-usage surcharge every time a bill changes hands.
But it was obfuscated that this constant drain and fraud was being perpetrated because the whole system became extremely financially lucrative to the very people whose responsibility it would have been to stop the crime; so it has continued since. The mob was in control of the police.
Look at the tension between United States and Brazil on this issue with their nationalized payments system.
The fact is the most important relationship Visa and MasterCard have is the one you left unsaid - their relationship with the United States government.
Yes let’s give the economy to the people that run the DMV.
edit: just seeing now you're complaining about things being offtopic multiple times in this submission, without ever adding anything yourself. perhaps you could be part of the change you wish to see?
You're missing the driver. It's not like Google cares or wants to change the name. They more or less have to given the public/private relationship and who is responsible for what. It's not Google's job to name bodies of water, it's not a credit card company's job to censor. And if you actually look, they aren't making that decision because they want to. They are often acting on behalf of the government.
Payment companies are even more enmeshed with the state. They often do these things to simply comply with what the government tells them to do or to get ahead of government telling them what to do. Like with some of the anti-pornography laws being drafted or passed in certain American states.
The private/public distinction really needs to come under more scrutiny here. The credit card duopoly is very much tied in with state power. This has only accelerated post 9/11 as the Treasury's mandate increasingly shifted to "national security".
Payment processors are censors because the government is. Just like Flock the government can't do certain things so it contracts with a third party. They then have an interest in protecting/promoting that party. Flock is a snoop because the police are snoops. If Flock does it and the government merely pays for it well it's not a violation of your rights. Your rights protect you against the government, not against Flock. It's the same legal backdoor. A payment processor doesn't care what you buy, why would they? They make money so long as you keep transacting. It's the government that cares.
This same dynamic happens all over the American economy because the private/public distinction can get increasingly amorphous. Your credit card is as much government spyware as your phone. But understand - the problem is not the companies, it's the majority of your fellow citizens who either don't care or actually do endorse censorship. Unless you have a solution for that trying to blame credit card companies for the problem unfortunately misses the mark. You might as well suggest Google have the authority to name bodies of water.
- Many banks are not OK with that
- Even if you find one who does, finding an Open Banking provider to be that middleman is a nightmare
Short of working with the financial conduct authority to be your own financial institution, it's makes getting paid a pain if you want to accept adult content (even if you have all the safeguards and comply with all UK law!). I can't see anything but it being indirect pressure to censor, and to push smaller players out of the market - such that it's easier to regulate the industry.
It kind of is.
If the US executive branch published an order renaming every street in America to "America Street", I suspect Google would not update Google Maps to reflect that unless the government compelled them to do so.
Google has made a choice about where they're placing the bar for voluntary action.
They don't have to but they can, but monopolies and oligopolies don't have to and don't play by the same rules and they tend to have a lot of political and soft power. Especially in Google's case, it's not a stick a floating in the river and going wherever the current takes it. Brin and Page are (allegedly) sentient human beings and they still control the majority of the company. Maybe they couldn't pull of exactly what Musk is doing but there is a huge amount of space in between that and doing nothing.
Naturally the “other side” feels the same and returns the favor, so we end up in this death spiral of ignorant people reacting emotionally to complex issues they lack the patience to work through as a society.
Tl:dr there is no shortcut to changing society, any such victories will be short term and costly.
Can you quote the specific part you're referring to?
I think this is a fair request given the 15,000+ word length of the thing. Do you mean a particular abuse of the list contents (e.g. putting someone on it for revenge) or do you mean the overall pressure-campaign to get companies to adopt the list to prove they aren't Badguy Sympathizers?
If "the power to tax is the power to destroy" justifies insulating religion from government financial leverage, then the power to financially deplatform should raise the same concern for speech.
Elaborate with specific examples of how the commentors in question are being "off-topic" and what you would consider topical for this thread, or please cease spamming actual off-topic meta-commentary quips.
I'll refer you to https://news.ycombinator.com/newsguidelines.html
Maybe we hear about it because, it's right in the US' backyard and the biggest country there is Brazil from which pix comes from. All these payment systems threaten visa and Mastercard but pix is the largest in the US' backyard because the country it comes from, Brazil, is the largest there.
And it's also government run, dun dun dun. The us hates anything that is government run. That's why they hate china and communists and socialism so much.
I could see Debit Cards being replaced by direct transfers.
The issue is what happens if who you pay too does not provide the srvice or just runs off with the money.
Under UK Law the customer can deal with the Credit Card issuer and get their money back with a direct payment it is npot always possible.
For debit cards I think the issue will refund if fraudelent but might take a battle. With direct payments the customer has a much harder job.
I had no idea how Costco or Home Depot or Walt Disney worked ...
Yet the acquirers seem to be always absent from these lawsuits.
Network gets swipe fees, and a percentage of the interchange Issuers get majority of interchange, and carrying interest and fees Acquirer gets the markup plus whatever admin/maintenance fees
Here's what I found for a reference: https://cmspi.com/back-to-basics-card-network-models-and-glo... which tracks with my experience.
I'm open to be corrected though.
That 30 cents - is what's often ignored but makes up a disproportionate amount of the fee.
On a $30 transaction, paying 30 cents is equivalent to a 1% fee.
So Stripe on a $30 transaction is effectively 3.9% in fees (on a $30 transaction).
Interchange (which goes to the issuer), would only be approx 1.75% (of the 3.9% fee charged by Stripe).
Trying to understand what you mean by disproportionate here. Are the majority of transactions well under $10?
For good or bad, a lot of studies have confirmed that cards have overwhelmingly increased consumer spending.
I think the far stronger case is that the industry has no actual incentive to fix the underlying fraud that they are charging merchants to fight. They have done a lot of work to institutionalize the problematic infrastructure and make it almost impossible for startups or outsiders to fix.
It’s the anticompetitive actions causing the deadweight loss, not the digital nature of transactions.
There is a lot of psychological awareness created when you have to pull a couple singles vs. a Benjamin out of your wallet vs tap card for all amounts.
I know in practice the merchant is left holding the bag with charge back fraud, but it is a devil's advocate point.
All in all after this change I saw adoption of card payments skyrocket and it's possible to pay virtually everywhere (even in the weirdes most rural places)
What's more, said Bizum is the driving force behind ENP to integrate all those payment systems: https://epicompany.eu/media-insights/european-network-for-pa....
Wero is... tiny.
I've been using Same Day ACH in all my businesses for over a decade and the transaction fees are about $0.30/transaction and the dispute window is 60 days for PPD (personal checking accounts) and 3 days for CCD (commercial check accounts) and you get the money the same day. It beats paying visa/mastercard percentage fees and the 120 day dispute windows where people can literally get their money back four months later for work that was already performed. By using Same Day ACH, we get the money from the customer faster, save potentially millions of dollars in fees, and reduce dispute windows from four months to 3 days (for B2B sales)
So the hope is that new or one of the other brokers step up and hopefully their ethics are better.
Amex does this as well and it’s a mixture of internal opinions of executives, board, major shareholders, as well as the US federal government just telling them (see operation chokepoint for just one variation), as well as chargeback and fraud rates in some industries just validating personally held opinions
If you break up the Visa and Mastercard cartels, does this San Diego pizzeria then have to decide what cards to accept on a bank-by-bank basis?
Broadly, the interlocking restraints set and maintained by the defendants have forced merchants that accept any Visa and Mastercard credit card to accept all such cards, regardless of cost, thereby eliminating any incentive for issuing banks to compete by lowering their fees, the suit says. The lawsuit claims the challenged restraints have also prevented merchants from being able to steer customers to lower-cost payment options—for instance, by surcharging based on a customer’s use of a particular card. These and other restraints have prevented competition among issuing banks and other credit card networks, allowing the financial giants to raise their fees every year “without consequence,” the case alleges.
Fundamentally, I agree with the lawsuit. Logistically, this seems like a bit of a nightmare. No longer will it be "CC purchases will have a 2% extra fee." Instead it will be "If you have a Chase Spark card, the fee will be 4%. If you have a Costco Visa card, it will be...".
If merchant fees are < 1% if I use debit and ~ 4% if I use a rewards card, but merchant rules (set by the networks and enforced by the acquiring banks) say they can't accept amex and surcharge rewards cards but not debit cards, they can't reduce their costs by pushing me towards debit cards or non-rewards cards.
There's some other things they're challenging that could allow for more competition.
Removing the 'No-Bypass Rules' could allow for lower cost clearing if the acquiring bank is the same as the issuing bank and the potential for lower cost clearing when the the acquiring and issuing banks have a clearing relationship outside of the major networks.
Removing the 'No-Competing-Marks Rules' could allow for a card to be Visa + some upstart lower cost network; if the merchant supports it, great, if not, they can still process payment through Visa. I think US law requires ATM cards to be usable through at least two distinct networks, and there's at least some diversity in ATM networks as a result.
The European Union caps consumer card interchange fees at 0.2% for debit cards and 0.3% for credit cards
https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-...
https://en.wikipedia.org/wiki/Durbin_amendment
This is explicitly about credit card fees.
A friend of mine owns a restaurant that is pretty remote so lower business. He told me he doesn't take credit cards because he would be paying them a percentage for everything.
It is kind of like the mafia to a small guy like him.
I think he does do a few phone apps.
A waitress at another cash-only restaurant told me, worse than customers who hear they won't take credit cards are the apple pay folks. "They really get annoyed when they don't get their apple pay"
Franchises don't care. They can raise prices monthly or even dynamic price if they want to.
Kind of sucks for society because lots of the best/greatest restaurants are not franchises.
Depending on which sources you believe, the cost of handling cash can actually exceed credit card merchant fees.
Many cashless businesses, including bars and restaurants, do it specifically because handling cash is expensive if you actually do a full accounting for it.
I get what she's say, but it is kind of a weird comparison, because Apple Pay is more-or-less payment network agnostic. You can pay via credit, debit, or transportation card (and possibly others that I haven't used) on Apple Pay.
In the US you even have Apple Cash which is pretty close to digital cash equivalent... not really workable for a business with the $2k/week limit though.
The reality is that for most businesses, accepting credit cards, with their fees, results in more revenue overall (more customers).
If your business is low volume, cash only makes more sense.
A lot? Not sure about that.
>I think he does do a few phone apps.
Not if he's cash only he's not.
and don't pretend like it's not possible, it's obviously possible: take the system and lower the fee to something proportional to the price of providing the service
if credit card rewards programs have to go to make it economically viable -- awesome, that would be a second win.
I totally agree. I propose the opposite of what this lawsuit is fighting: let's merge Visa and Mastercard. Throw in AmEx while you're at it. Since the concepts of competition, interoperability and standards are too foreign to people and having too many types of payment processors is confusing, we need to have a single payment processor. That way we can grumble at only a single party when they jack up processing fees for editing database rows or straight up debank us. Efficiency!
\s
The negative impact from these fees is probably greater than the lift from AI productivity gains (not investment).
[0] - https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-...
I guess the point being there is probably a better reason for the high fees than the company trying to be anticompetitive, Or perhaps better said as a better reason for being anti competitive than high fees. Monopolistic lock in? Regulatory Capture? The problem is, that this blames the government instead of the company.
> A class action lawsuit alleges Visa, Mastercard and some of America's largest banks have conspired to artificially inflate merchants' credit card transaction fees.
If they didn't conspire together and actually competed then they wouldn't be able to charge such high fees as they would surely try to undercut each other.
Any new competitor could spell the end for them, so making it astronomically difficult to onboard enough people is so far working out for them.
Canada has a debit card network called Interac. Last I checked, the transaction fee was typically a flat $0.10 CAD (~$0.075 USD). There are shops that do debit or cash only, but it's not the norm (typically restaurants and niches with high chargeback risks). I am curious what keeps credit card acceptance high in Canada, despite a very widespread mature card network. I assume part of it is that consumer debt increases spending volume overall, but that can't be the primary reason I feel.
Then, credit card companies take some of their profits and give them back to customers in the form of reward programs.
So we all end up paying more for nothing, but the incentives make it a difficult collective action problem. I don't know why retailers don't take advantage of their right to pass fees through to customers. That would solve the problem. I guess it would make some stupid people angry. And maybe there is some other pressure the credit card companies are using.
Both are true though right? The company needs to be held accountable for price collusion by the government. Government not acting due to lobbying (i.e. bribes).
However, starting up a credit card company from scratch is, extremely capital intensive, extremely bureaucratically heavy, and all the helpful finance players are in bed with or are the institutions you would be upending.
Merchants would probably help, but inevitably would take ownership and steer the ship into their harbor (not consumers). A system where merchants own the payment system would probably be even worse.
This means that the issuer can manipulate the consumer into doing things bad for the business, and the business has no way to respond to the very high fees it is charged.
At that point it is put onto me to prove that the use of the card was authorized (Which is usually practically impossible given the limited info I have about the person and their transaction).
Then at least half of the time I lose and forfeit the full transaction amount in addition to the fees Stripe charged me, having already shipped out a product.
It all gets folded into the cost of doing business, but it infuriates me that I end up on the hook for "unathorized" use of a customer's card. (Scare quotes because usually I suspect it was authorized and they just forgot or got mad about their order)
So it also makes me mad when I hear people say the middlemen earn their cut but handling fraud and security, since they are just passing that cost onto merchants anyway.
You may have missed it, but Australia's banned card surcharges and tightened the interchange fee caps, but it's not really solved the problem. Someone's still paying.
Australia already has fantastic banking infrastructure. PayID lets you instantly transfer money between banks using a phone number or email, generally for free. We've also had eftpos for decades, a domestic debit card network that competes with Visa and Mastercard.
Surely we can make paying a merchant directly from your bank account as easy as tapping a card with proper fraud protection baked in?
I appreciate Visa and Mastercard provide genuine value, but like why should moving my own money attract a commission on the transaction? If I sell something for $10k, why should the payment network earn more than if I'd sold it for $10?
This is essential infrastructure. Governments and banks could fund it without taking a commission on every transaction. It doesn't have to be free to operate, just free at the point of use.
It's 2026, for fuck's sake. Surely there's a better way.
https://oliverbatemandoesthework.substack.com/p/the-work-of-...
"We have a case pending right now in the Ninth Circuit. It was a privacy lawsuit against Google. A journalist, not a trial lawyer, determined that you could turn off tracking in Google Maps and it was not supposed to share your data, and then learned that Google was sharing it anyway, whether you turned it off on your phone or turned it off in the app. State attorneys general came in, fined Google a bunch of money, and forced Google to stop. And simultaneously there is a follow-on class action built on the journalists’ research, and that has settled.
The settlement is that Google creates a fund of sixty-two million dollars. The lawyers get nineteen million and the class gets zero. The rest is a big slush fund for a set of left-wing groups. Nothing requires the recipients to be left-wing other than that being what the attorneys chose to present to the court. They do it partly because some of these organizations are clients of the law firm, some of them have lead partners of the firm sitting on their boards, some of them are the attorneys’ alma maters, and some of them are just left-leaning outfits that are promising to do left-wing things. The class is two hundred million people. Maybe a hundred fifty million of them would not like what is being done in their name with their money.
And the judge decides who gets paid. This judge was very excited about getting to stop being a judge and start being a grant administrator with a big pot of philanthropy. We said, why are these unrelated organizations, which are not even unrelated, they are affiliated with class counsel, getting the class’s money? If the plaintiffs’ lawyers want to support the ACLU, it should come out of their pockets and not the class’s pockets. It is perfectly feasible to distribute that money to the class. Much smaller settlements get distributed to similar class sizes all the time. You can complain that if you divided it evenly among every single class member it would be a tiny amount and not worth paying out, but you do not have to do it that way, and most class actions are not done that way. Most class actions settle for less than a dollar per class member. You create a claims process, let class members sign up if they want the money, and divide it that way."