Indeed, and also that whoever wrote the article, didn't actually investigate the reason why they decided to raise the prices at the same time (besides "the fees help cover costs related to fraud prevention and innovation" but not saying why both of them need it at the same time), and questioning if there is collusion going on as that would actually be malicious use of their market position as a duopoly, and would make for a much more interesting article.
I always forget Mastercard and Visa are two separate companies, as when people talk about them, they are always said together like it's a hyphenated name Mastercard-Visa. Mastercard and Visa are always accepted either one is accepted. Discover and AmEx are totally different, and stores can accept one without the other.
It's clear that Mastercard-Visa is by design meant to be the other's alibi for not being declared a Monopoly.
> Mastercard and Visa are always accepted either one is accepted
Not the case.
Visa credit cards ($V) can be used at 44 million merchant locations in more than 200 countries and territories.
Mastercard credit cards ($MA) are accepted at 37 million merchant locations in more than 210 countries and territories.
So they're different, which doesn't matter at all except if you're stuck somewhere!
Odds are both are accepted, but it's worth checking a destination country or area within a country before traveling with just one or the other.
It might surprise that even in popular countries, V/MA might not be the most widely accepted. It's only recently that CB didn't beat both in France, though for a while CB+V was more common on a door than CB+MA, but now a CB logo usually includes both V and MA.
* About duopoly: Visa has less than a 50 percent share, MasterCard has less than 40 percent, Discover has 18 percent, and American Express has 15 percent. V and MA acting as if 90% share is most likely "conscious parallelism".
My one conclusion of international travel is don't expect credit cards to be accepted and just consider it a bonus if they are. As far as AmEx, might as well leave home without it.
> As far as AmEx, might as well leave home without it.
Is referring to how American Express is not accepted in lots of parts in the world barely at all. Doesn't matter what the fee is if you cannot use the card in the first place.
I don't know why people are surprised by this. All of these cards that offer rewards have to be paid for some how. The rewards system has always seemed like a loss leader type of situation to attract new customers. I guess it finally caught up to them
> * About duopoly: Visa has less than a 50 percent share, MasterCard has less than 40 percent, Discover has 18 percent, and American Express has 15 percent. V and MA acting as if 90% share is most likely "conscious parallelism".
I think this differs wildly between countries. I know that Discover/American Express wouldn't have close to 30% of the market share in Europe, it's only some shops that do accept those, although it's becoming more popular. In the countries I've been to in South America, things have been more or less similar.
Also, I think that link of yours (although I cannot read it fully) is about the percentage of transactions, rather than number of merchants that accept it. So it's basically more about the card holders than the merchants accepting one vs the other.
While in Japan, I noticed that in a few instances I could use Mastercard but not Visa. Specifically, I could use Apple Pay with a Mastercard to add money to my Suica card but not use a Visa.
I figured it was some bug or my Visa blocking me, but a friend mentioned it to me. He had bumped into the same problem and somehow deduced that it was (likely) due to not working with Visa.
Costco switched who they partner with close to a decade ago. Pre-2015, they were American Express only. Now they are apparently Visa only in the US, while here in Canada they are Mastercard only
Costco is a weird one. They accept both for payment , but can only refund back to Visa. Source : Me, As I have personally experienced this at Costco in California. Maybe it's just this specific store/region
What fraud prevention and innovation? They don't investigate anything. My card has been stolen or skimmed 3 times in 2 years. They just write it off and send me a new one. How many billions a year are these two companies foisting on us instead of actually fixing the fraud or prosecuting it?
Card number theft and physical card skimming are two types of fraud that should have been technologically obsolete at least a decade ago. The fact that these things still happen is entirely due to decisions made by the payment card industry.
I may be wrong, but from what I understand they are not directly responsible for covering the fraud. That burden is sent downstream to banks and merchants. If they had been held responsible we would probably have a lower rate of frauds. They don't even enforce 3D secure for all countries.
Bitcoin? Fair, I am a proponent of the tech, but there should be an institutional, government backed (by a non-corrupt government, not our current one) with processes in place to handle problems.
I lose my keys, I lose my coins. I can't go to the local BTC bank branch and I also don't have FDIC insurance on my cold wallet.
Same reason that competitors' gas stations across the street from each other have the same prices. They can simply see each others' prices posted on the street signs and match them. Likewise with Apple Music being $9.99 to match Spotify's $9.99. Now they've both increased to $10.99/month.
No secret agreements in hidden emails or conspiracies required. Just match the visible pricing your competitors have. The loophole is competitors can't hide prices because consumers need to know what the prices are to pay them.
Tacit collusion is legal only if they are no plus factors:
> Courts have held that no violation of the antitrust laws occurs where firms independently raise or lower prices, but that a violation can be shown when plus factors occur, such as firms being motivated to collude and taking actions against their own economic self-interests.
It is not as clear-cut you are making it seem and collusion even when tacit is highly anti-competitive.
But that isn’t competition. If it were competition, then apple raising their price because of greed would be a boon to Spotify, because now Spotify can say “we’re cheaper than apple, be our customer!” Whether or not this meets the legal definition today isn’t relevant, when discussing potential legislation. This is suspect behavior, unless some underlying factor changed that affects the companies, this is 100% anti-competitive behavior.
I take it that you don't mind when your flight is canceled and you need to hassle the airline just to get voucher, and not even a refund. Or you enjoy over-paying for bad cell service, bc your only choice is Verizon and maybe T mobile. Or you don't mind when your wifi goes down at 8PM, bc spectrum is the only provider that services your home.
That looks like a US version of Faster Payments* (UK) or SWIFT (Eurozone) that enables instant wire transfers between bank accounts. I doubt very much it is suitable as an alternative to credit/debit cards for retail payments. For one thing, there's zero fraud protection, it's the electronic equivalent to paying for something with a cashier's check. For another, it's a pretty laborious process - you have to sign in to your online banking, enter the recipient's bank account details and the correct transaction reference, probably do some kind of 2FA.
For a third thing, while in the UK banks generally don't charge anything for transfers, the Bank of England charges a few pennies (£0.07 last I heard) per transaction. If people were routinely making several of those payments every day the way they do with cards, I'm sure banks would start charging fees.
* By the way, Faster Payments went live in the UK in 2008, but it still took a couple of years for all consumer banks to adopt it.
Britain used to have Paym, which would have made the process simple — except the banks never promoted it for business use, and barely promoted it for individual use.
In Denmark we have MobilePay, and similar systems exist in several other countries. I rarely use it in-person in businesses if I can pay with a card instead, but since McDonald's and Burger King both accept it I think it's popular with teenagers. I most often use it at very tiny shops and bars, who accept either MobilePay or cash.
The other comment about a small $5 transfer reminds me I recently paid 10kr ($1.50) for a cloakroom fee using MobilePay.
It varies depending on how much the business has spent integrating the system, but essentially you scan a QR code and swipe to transfer the money.
The lack of fraud protection isn't a big deal, as it's replacing smaller cash purchases.
(I also use it transferring money between friends, and sometimes when ordering online as it's a smoother process than paying by card.)
In Poland a lot of stores accept BLIK payments now which are instant online payments from your account. You open your banking app on your phone, it shows you the BLIK code, you give that to the merchant who types it on their terminal, then within couple seconds you get a popup on your phone saying "Merchant X is requesting payment of Y PLN, do you agree?" if you press yes then the payment is sent instantly to them, both sides get a confirmation.
It's also fantastic for payments over the phone because you no longer have to give anyone your card number/expiration/cvv(how this is still acceptable practice in UK is literally beyond me), the code is single use only and you see who you're paying and how much.
Sure, but vast majority of day to day transactions that people make do not need this kind of protection - I don't need the ability to reverse my payment when buying groceries at Lidl or paying for petrol. When buying a laptop or a phone, I would use a normal card exactly because it offers certain protections - but most day to day transactions are absolutely fine with what is an equivalent of a direct bank transfer.
In the UK you can still do things that way, but that's more common for paying bills etc, although it's a little less laborious than that.
For more casual usage, you can just use your mobile bank app to generate a payment request for a given amount, pass it to the other person (can do via QR code or link), it opens up in their own bank app, they click approve (or deny). It works pretty well between a variety of different banks, well I've not experienced it fail yet...
(There was also a payment system for a while that went via mobile telephone number, but it didn't get great uptake and was decommissioned after a few years).
> I doubt very much it is suitable as an alternative to credit/debit cards for retail payments. For one thing, there's zero fraud protection, it's the electronic equivalent to paying for something with a cashier's check. For another, it's a pretty laborious process - you have to sign in to your online banking, enter the recipient's bank account details and the correct transaction reference, probably do some kind of 2FA.
It's already solved, just point your app to the QR code generated by the same terminal you use for CC.
No, it is also intended for purchases in the future. Shakedown is deposit to deposit accounts, alias support is coming soon (phone & email identifiers).
Walmart specifically submitted public comments on the topic in support of FedNow due to its payments capabilities. You don't need your bank to support it, using a financial services provider like ACI Global or Jack Henry & Associates is sufficient.
That’s what’s happened in Brazil with the PIX system. Same thing in Portugal with MBway. Starts as bank transfers then becomes the de facto way to transfer money.
I use the ACH all the time. I can't do it directly, but that's just an artifact that isn't of much significance to me, given that various financial services company give me access to use it as I need to.
It's ACH access without being ACH. I can trivially transfer cash to my kid's accounts at other banks, and to/from my 3rd party savings accounts, all via ACH.
Likewise, PayPal and Wise (formerly Transferwise) provide it in the opposite direction: I can pull via ACH directly from my bank account.
It's pure laziness. One should have raised prices first and then a week or month later, the other should have followed. At least pretend you are competing with each other. Look at coke and pepsi. One has a sale this week. And then next week the other has a sale. They alternate.
In a society that doesn't allow monopolies, I guess we are destined to get cooperating duopolies.
V and MC need to be careful here. My natural gas utility has decided to turn off auto pay using credit cards completely.
V and MC should be happy to collect their 3-5% and leave it alone, but keep on kicking the bear and acceptance and usage is going to go down.
They are going to kill the golden goose. If they were smart (and they aren't), they'd work to lower fees and make sure that utility providers can continue to accept cards at a lower fee structure. We are at peak credit card usage and with any increase that's only going to drop.
Agreed. More and more companies are allowing ACH and passing (some of) the savings to the customer. I worked in this industry and it is really hard to get users to be comfortable with linking a bank account, but the incentive for the company is pretty huge. Any company that can bribe the user to make the switch should. Especially for recurring payments.
Problem with ACH is you have to cancel your bank account to stop withdrawals. There are horror stories of people getting fired and being unable to stop ACH withdrawals (I'd rather my rent bounce this month than not be able to eat, etc) and ending up hosed. With a card you can just cancel the card number. It's best to use your bank's bill pay (push) instead of any external automated billing (pull).
Luckily, you can still manually pay each month using a credit card. With two data breaches already in 2023, I'm not trusting T-Mobile with my bank account information.
Especially as the barriers to entry for competitors are much lower with QR code/mobile payments taking off in many countries (UPI, tikkie, swish, mobilpay, paypay etc etc)
A lot of stores are starting to make clients pay them (and do not communicate most of the time, so check your receipts). This plus the forced tips and fees in restaurants. It is probably time to force any seller to show the real price not the tax and fee free one.
I'm fine if there is a cash discount (some places do that and that's much more respectful of the cliets as they usually advertise for it).
I’m sorry, why should sellers be fined for cash discounts? Owning a credit card is not a legal right, it’s a privately owned transaction processing network. If my daughter sells lemonade on the street corner and asks that you tip her with the credit card fees that she got charged to take your mode of payment she is at fault?
From the context, I suspect they meant “And then it is fine if they offer a cash discount” (but you have to give the full price for non-cash customers as the default).
> If my daughter sells lemonade on the street corner and asks that you tip her with the credit card fees that she got charged to take your mode of payment she is at fault?
Depends on the location. In the EU, it would be illegal to charge someone more for using a credit or debit card:
> You're not allowed to charge your customers extra for using a credit or debit card. This applies to all card purchases (in shops and online) made throughout the EU.
I believe only Mass and one other state have laws preventing extra charges for credit cards, and they are only targeted at larger companies. At least in MA, if you are a smaller company using a 3rd party payment processor/POS (like Toast), you are allowed to push the credit card fee they charge you onto the consumer.
California used to have a law like that, but had a loophole: you had to charge card users no more than the advertised price, but you could offer a cash discount and charge cash users less. It also used to be part of the standard terms for merchant agreements.
Now the standard seems to be that a fee for credit is clearly posted and for gas stations, cash and credit prices are posted in equal prominance.
Debit cards are usually less expensive to accept, and I don't think I've seen a posted fee to use them since around the turn of the century (I seem to recall fee notices in the 90s, but I haven't seen one recently)
I thought it was in the merchant's agreement with the credit card processor: When you sign up to accept Credit Card X, your agreement with them is that you cannot charge a different price for cash vs credit.
It was, but as Mastercard says[1], "Pursuant to a settlement of the U.S. merchant class litigation, Mastercard modified certain rules and business practices to permit U.S. merchants to apply an extra checkout fee, also known as a surcharge, to customers who pay with Mastercard-branded credit cards."
The thing is, this is the political exchange for fee caps. It wouldn't be worth even introducing a surcharge... the CC fees are capped at 0.3%. I'd guess the cost for handling physical cash are higher.
hmm, that interesting. I just paid €0.25 transaction costs for using paypal, same with my bank or with creditcards. But cash on delivery would be free.. The transaction costs are charged to the customer quite often. I wonder if that is actually illegal now. Not sure if I wanna go after Takeaway for maybe 25€ in transaction costs over the years, but still
It may not be a legal right, but we're dangerously close to it being a practical necessity. Many places have gone completely cashless, including some public run entities like parking meters, etc..
I'll just leave this here in case anyone finds it useful. This system only works if you participate in it. When you think surely the government will do something about this, be the person to get that ball rolling, it doesn't happen by magic.
I have hopes with FedNow but need to be a bank to avail its facilities. which is not super hard but will need a bunch of capital. at least it can corner all the micro payment & debit purchase market with low overhead. Kinda like India's RuPay mechanism. that will end up butchering the CC companies cash cows though. When enough data flows through the system someone can creates a pseudo-credit score by looking at income-expense flow and use it to extend credit cutting out these ancient leeches.
I think the killer is that you would be forced to interface with consumer's banks, who wouldn't be particularly interested in helping your effort to undermine credit cards.
Or you could extend credit, but then you need to charge fees to cover interest of loaning out that money. Never mind the massive capital reserves to cover it. And now you're really just another credit card company.
This article is pretty light on details. What exactly are the new fees? In what situations do they apply? Is there some specific reason why Visa & Mastercard are doing this at almost the same time (beyond regular greed)?
“We are publicly traded companies and are failing to meet growth demands, and so are raising prices, because as we all know, not infinitely growing means you’re a failure of a company”
Knowing about the corporate history of these mega-corporations is helpful to understand their ubiquity today. Mastercard came out of Bank of America's innovative "Master Charge" business. Visa was formed from a consortium of many banks. Kinda parallel to how Venmo is owned by one financial firm while Zelle is owned by a consortium (perhaps one day each spins out to become the next gen MA nad V). To this day, Visa stock has a 96% institutional ownership, far higher than the avg megacap. Mastercard has over 75% inst ownership. The structural importance of these companies today goes back to their respective origins in the banks themselves.
>The changes could result in merchants paying an additional $502 million annually in fees
Considering the global reach of the two processing networks...that seems small enough to be a rounding error. Hardly surprising considering the costs of everything seem to be on the rise.
Actually just a specific fee is capped in EU, the interchange fee.
"Interchange is a small fee typically paid by acquirers (retailer’s bank) to issuers (cardholder's bank), to recognise the value delivered to retailers, governments and consumers by accepting electronic payments."
The interchange fee does not go to Visa or Mastercard, do I think they are free to increase any other fee (if they are not colluding in a cartel ;)
BTW This is the reason that in EU credit cards gives no rewards or very small ones. Rewards are, for the most part, coming out of the interchange fee.
Until 2013, merchants mostly weren't allowed to charge an added fee for credit cards. It's taken time for businesses to adapt to this change, term processing agreements to come up for renewal, etc.
Right now fees are variable and are not determined until the time of payment; costs change for each transaction based on a few variables such as which network is used, the bank issuer, the swipe method used.
The article is light on details about how much the fees will change and how often similar fee changes occur. Visa and Mastercard previously announced a fee increase in 2020 [1] that was delayed due to the pandemic and eventually implemented in April 2022 [2].
In the US, Square terminals present QR codes for CashApp payments. They could more heavily lean into making a competitor to visa/mc. Would be nice if Apple Pay allowed non-visa/mc payments too.
> Would be nice if Apple Pay allowed non-visa/mc payments too.
It does, a number of domestic NFC payment schemes like EFTPOS (in Canada) or Interac (in Australia) are supported. Or eMoney cards in Japan like Nanoco or Waon. It's just Visa and Mastercard have a complete stranglehold on the US market, there's no domestic competitor.
You can also use Apple cash at Apple pay stations. I'm not sure if that can be reloaded from a bank acct or not, but I get it trickled in with points from their card and when friends pay me. I don't know what that gets charged as to the retailer though. One of the places I go still charges a credit card fee to use it.
Apple Cash is currently on the Visa Debit network for most users.
(You can check for yourself, open up the Apple Wallet app, select your Apple Cash card, use the Ellipsis […] menu to go to Card Details and it will show your card number and network among the details.)
Ah, good to know. That would explain why it wouldn't work in some places abroad. Machine probably couldn't process visa debit without inserting a card.
When I first started using it was on Discover and I learned some of the businesses around me that wouldn't take Discover. For no particular reason so far that was my first and only experience with Discover.
> Card fees and their effect on businesses have caught the attention of some in Congress.
> Lawmakers recently reintroduced legislation in both the House and Senate that would give merchants the ability to process many Visa and Mastercard credit cards over alternate networks. A similar rule already exists for debit cards.
> The bill could potentially lower the fees that merchants have to pay. The House and Senate bills have each been referred to a committee.
Yea please let me pay $30 in fees for a $10 purchase instead of $0.27. Afterward I can sit in the waiting area for 45 minutes while they wait for my transaction to be finalized.
People were so distracted by the circus that is 'crypto' that they failed to notice as the original opensource cypherpunk money has been steadily coming of age. Lightning does what these people want. The volatility spooks people but only if you have a high time preference. Best savings account on the planet + open and efficient payment network.
No, it doesn't. Transaction processors are paid by the proceeds from mining. That only lasts until the bitcoin cap is reached. Then they will start charging to process the blockchain.
Transaction processors are paid by the proceeds from mining
The miner that wins the block gets the sum of the transaction fees and the block reward. Once all Bitcoin has been dispersed and the subsidy is done, miners only get transactions fees.
The nice thing about having mega corps like Apple, Facebook, and Amazon is that they're big enough (and well liked enough by consumers) to work around some monopolies. Google and Apple have dipped their toes in this direction, but could take it further if rates become too onerous.
