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The Almighty Buck Businesses

Visa and Mastercard Agree To $30 Billion Settlement Over Credit Card Fees (cnn.com) 90

Two of the world's largest credit card networks, Visa and Mastercard, as well as the banks that issue cards with them, have agreed to settle a decadeslong antitrust case brought upon by merchants. From a report: The settlement is set to lower swipe fees merchants pay when customers make purchases using their Visa or Mastercard by $30 billion over five years, according to a press release announcing the settlement Tuesday morning. The settlement, which only applies to US merchants, is the result of a lawsuit filed in 2005. However, nothing is considered finalized until it receives approval from the US District Court for the Eastern District of New York. Even then, the case can also be appealed in what could be a lengthy battle.

Typically, swipe fees cost merchants 2% of the total transaction a customer makes -- but can be as much as 4% for some premium rewards cards, according to the National Retail Federation. The settlement would lower those fees by at least 0.04 percentage point for a minimum of three years. Additionally, the settlement would require Visa and Mastercard to maintain the swipe fee rates that existed as of December 31, 2023 for five years.

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Visa and Mastercard Agree To $30 Billion Settlement Over Credit Card Fees

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  • Australia (Score:5, Insightful)

    by fred6666 ( 4718031 ) on Wednesday March 27, 2024 @07:10AM (#64348147)

    Australia nailed it by forcing Visa and Mastercard to reduce fees. Visa and Mastercard threatened to leave Australia. Turns out, 1.5% is more than enough for them to operate and profit, so they didn't leave. Everybody wins, except the credit card oligopoly.
    2-4% is way too high. And the problem is nothing stops the credit card issuer from issuing more and more "premium" credit cards with those 4% fees. They can just re-label current cards as premium and the merchants have to pay more.

    • by stooo ( 2202012 )

      >> " merchants have to pay more."
      Why should merchants accept that ?

      • by Bigbutt ( 65939 )

        We wouldn’t. We don’t accept American Express due to the higher fees (1% more plus a yearly fee to AmEx to use their merchant services) and pretty much everyone has a second card that can be used. Visa and Mastercard don’t make their own cards, they’re made by other banks such as Chase. So Chase would have to make it a “Premium” card. There’d be other banks that would make a “Normal” card. We’d just configure our Merchant Services to Decline Chase

        • Re:Australia (Score:5, Interesting)

          by fred6666 ( 4718031 ) on Wednesday March 27, 2024 @08:02AM (#64348241)

          We’d just configure our Merchant Services to Decline Chase Premium cards

          Pretty sure your contract with the credit card networks prevents you from doing that. When you say you accept Mastercard and Visa, you have to accept all of them, you can't refuse some even if they have higher fees.

          • Re:Australia (Score:5, Informative)

            by Guspaz ( 556486 ) on Wednesday March 27, 2024 @09:26AM (#64348445)

            That's the entire point. They would, but they can't, and this settlement didn't do anything to fix the problem. Or any problem, really. The 0.04% reduction in rates will make literally zero difference to anyone.

            • The 0.04% reduction in rates will make literally zero difference to anyone.

              Your argument is more money to the merchant will mean nothing. There is stupid and there is slashdot stupid.

              • by fwc ( 168330 )

                A 0.04% reduction in fees won't make any meaningful difference to any merchant. If I sell a product for $100, 0.04% equates to 4 cents. On a million dollars it's $400.

                Although it's not *literally* nothing, it is so far down in the noise that the chances of it making any difference is close to zero. Just like the actual fee reduction is close to zero.

                If they had done something substantial like 0.4%. But not a reduction of 0.04%.

              • by Guspaz ( 556486 )

                No, my argument is that the reduction is so tiny that it's meaningless. It's temporarily reducing the rates from, say, 3% to 2.96%. In reality, it should be reducing the fees from 3% to 0.5%.

                • I don't think it's negligible.
                  You would need to actually have a government that allows competition and has stricter regulations for that to happen. Not one that rubber stamps whatever corporations want to do.
        • by Anonymous Coward

          Pretty sure with how you're describing how you believe this works, the closest you've been to dealing with a merchant agreement for processing credit cards is bagging groceries. It doesn't work that way. As a vendor you accept the network, Visa, Mastercard, Discover, American Express, etc. You don't get any control over the "types" of cards and btw, the "types" of cards, don't charge the vendor extra. There is a swipe fee, usually $0.25 just for swiping the card, then the transaction fee which is a perc

        • by cfalcon ( 779563 )

          >We wouldn’t.

          You would, you will, and most importantly, you ARE.

          > We’d just configure our Merchant Services to Decline Chase Premium cards.

          Decline my Chase Visa (which is a premium card), and I'll report you to Visa so fast your fucking head will spin.
          https://usa.visa.com/content/d... [visa.com]
          There's no "product category" that exempts you from having to accept my Visa card and accept others that will allow you to discriminate against premium card users.

          And you can bet this is on purpose- there's a

      • by taustin ( 171655 )

        Because well over half their business is on credit cards (and in some places more like 90%), and the alternative is to give up that business. There is no alternative.

    • by e3m4n ( 947977 )
      I take it that theres no cash back situations in Australia then? To give you 1% through all the overhead of the 4 tiers of clearing, half a percent wont cover it.
      • Presumably it would just kill those cash back and points and all that crap. You are paying for it either way, in the form of the merchants boosting prices to cover fees.

    • Re:Australia (Score:5, Informative)

      by MeNeXT ( 200840 ) on Wednesday March 27, 2024 @08:16AM (#64348267)

      Back in the 1990's it was 1.45%. This was when everything was manual with carbon between each sheet of paper. You had to separate the sheets. Create a batch summary. Place in an envelope. Create a deposit form. Bring to the bank where the teller would manually process this with a card reader.

      1.5% is more than enough for the banks to make a killing.

      • by taustin ( 171655 )

        In the 80s, maybe. By the 90s, nearly all merchants had terminals that did all that electronically, including real time authorization.

        • In the 90s, merchants I personally know did not have real time authorization until the END of the 90s. The devices did a check on valid numbers so you could give them correct numbers that had no account and it would pass. The phone-modem connection didn't make a difference until the late 90s when it was finally verified in real time.

          • by taustin ( 171655 )

            In the 90s, merchants I personally know did not have real time authorization until the END of the 90s.

            And merchants that I worked for had real time authorization in the early 90s.

            Feel free to explain why the monkeys that fly out of your ass are more credible than the monkeys that fly out of mine.

            The plural of anecdote is not data.

            • I only saw small biz people and I had a valid credit card number generator; and the fake cards passed. it had a modem and a dedicated phone line but that didn't matter. I didn't test everybody's I only tried that on my friends. They have middle man companies that do the processing and i doubt they were all the same.

      • If memory serves, back in the 80s and 90s the sheets of carbon paper were attached to each other on one end, and attached to the bundle of copies on the other, but that side was perforated. That way, one quick tug would almost always remove all of the sheets of carbon at the same time rather than forcing you to remove them one by one.
    • by mysidia ( 191772 )

      Turns out, 1.5% is more than enough for them to operate and profit, so they didn't leave

      Makes sense... 1.5% is still absurdly high though. For example 1.5% of a a $1000 transaction gives $15.

      The larger transaction does Not cost Visa or Mastercard any more to process than a $10 transaction; Because they are not technically handling any money, recording and transmitting a set of transaction records..

      The same for payment processors and banks involved in transactions. There ought to be a fee Cap of $0.

      • There's a degree of risk. The banks obviously push this onto the merchants as much as they can, but the cost isn't merely the cost of processing the transaction. I believe that banks are usually liable for fraud when the customer uses the physical card, and merchants are usually liable when the customer is using only the number.
        • by taustin ( 171655 )

          Generally speaking, if the merchant follows the rules (and is PCI compliant), you are correct. In the US, the card holder is only responsible for the first $50 in fraud before the card is reported lost or stolen, and zero after.

          Despite the resistance to putting PINs on credit cards in the US, the fraud rate is pretty low (despite the many billions of dollars lost, the fraud rate is quite low.) Visa and Mastercard, combined, make over $40 billion per year in gross profit, so this is a significant hit to thei

          • by mysidia ( 191772 )

            In the US, the card holder is only responsible for the first $50 in fraud before the card is reported lost or stolen..

            This is true, but also it's $0 in general, and a risk to the bank with MOST forms of payment, not just credit cards.
            That risk comes from providing a person with a bank account - whether it's a Debit account or Credit account doesn't matter.

            For example: In case someone creates a fake check, or your checkbook is lost/stolen, and a thief forges a fake signature.. You are not Liable for the fra

    • For a Canadian perspective, our Canada's federal sales tax is 5%. That revenue constitutes nearly 6% of all federal revenue and as much as people whine about taxes, we all benefit from those tax dollars. The 2-4% charged by Visa and Mastercard is utterly lost.

      So next time the sales tax bothers you, complain to your member of parliament about Visa and Mastercard first. Oh, and bank fees too.

  • 2% as a transaction fee is robbery, especially with today's infrastructure.
    We should get it 0.5%

    • by e3m4n ( 947977 )
      You should hate Amex and their 4.9% then. A lot of merchants will tell you that you can take Amex or Discover and plant it firmly in your ass. Dont forget that now that cash-back is so pervasive, its going to be hard reducing fees. If you are getting 1% back you can bet your asses its 3.5% at the merchant.
      • >> Dont forget that now that cash-back is so pervasive
        That is only in USA.

      • Amex doesn't charge 4.9% for anything. That is BS.I'm betting their corporate purchasing programs don't even charge that.

        Amex has reached parity in fees for some time now, not more than .25% different. You are making this up.
        Now loyalty and rewards , yup, they do get paid somewhere. You be the judge if the cash-back, reward points, whatever, are worth it to you.

      • Amex maxes at 3.5% for swiped currently

    • Re:Robbery. (Score:5, Insightful)

      by Anonymous Coward on Wednesday March 27, 2024 @07:36AM (#64348201)
      And yet, Apple and Google seem perfectly justified in charging a 30% fee on all transactions within their app stores.
      • Apple and Google provide access to wide range of users. It's quite different to providing a simple money transfer service. You can see that clearly in the number of people who flock to those platforms and pay for it willingly despite the latter offering a completely free way of getting your software on their device. Turns out 30% is a number that developers are willing to pay to get the benefits provided.

    • Why is it legal? (Score:5, Interesting)

      by Pollux ( 102520 ) <speter@tedat[ ]et.eg ['a.n' in gap]> on Wednesday March 27, 2024 @07:40AM (#64348209) Journal

      2% as a transaction fee is robbery, especially with today's infrastructure. We should get it 0.5%

      It doesn't take a computer scientist to tell you that the cost of transacting a payment does not depend on the amount of the payment. Whether I pay $1 for a candy bar or $10,000 for a first-class ticket to Singapore, the cost of transacting is practically the same thing, especially in today's electronic age. Even 0.5% would be highway robbery for merchants if the amount went above $500.

      Transaction fees should be a flat fee, or perhaps a percentage if the cost is under x-amount of dollars (maybe 2% up to $100), then a flat fee for anything above that amount. And this fee should be governed by the FTC. And if that fee was passed on as a surcharge to consumers, even better; at least then everyone would be transparent and honest about what it costs to transact a purchase via credit card.

      As long as this fee remains a flat percentage, that means that every time I use a credit card, I'm paying a 2% tax to Mastercard or Visa, because we all know that those merchants pass those costs onto consumers. And to hell with rewards; they're only giving me back a small percentage of what I'm paying them, which only incentivizes me to spend more! It's no different than if I walked into a casino, and the house promised me 2% cash back on everything I spent; the house would just set a new edge where I'd still lose, but I'd lose more, but I'd keep playing longer thinking I was getting more money back.

      Fuck our corporate overlords.

      • Yes, a flat affordable transaction fee is the only thing that makes sense. Especially since it's not the card companies that bear the cost of fraud -- it's the merchants in the form of charge backs, which then gets passed back to the consumer in the form of increased prices. Same for reward cards, etc. We all pay for it so the card companies can get rich.
        • by timeOday ( 582209 ) on Wednesday March 27, 2024 @08:58AM (#64348359)
          It's not true that merchants eat all chargebacks, the card issuers eat about 1/3 of that.

          Look at the section, "Win Rates and the ROI of Fighting Chargebacks" in this document:

          https://midigator.com/chargeba... [midigator.com]

          It says the industry average merchant win rate is 30%.

          The other big loss that varies with charge amount is the risk of the consumer not repaying the loan. That is paid by the bank, not merchants. Of course the bank is also getting paid for that risk by charging interest on balances carried month-to-month, and people with a history of not paying have very high rates.

          I don't want to rush to the banks' defense since they are doing fine for themselves and I wish there were more competition in payments. But it's not true that large purchases cost the banks no more than small ones.

        • Re: Why is it legal? (Score:4, Interesting)

          by rickb928 ( 945187 ) on Wednesday March 27, 2024 @09:05AM (#64348379) Homepage Journal

          Actually, most if not all fraud below around $25 is not even recovered by the card issuer. Not worth the trouble.

          And then there are the fraud cases where customers defraud merchants. You can guess, being a breathing /. reader, that merchant's do not pay for that, except for the cost of defense.

          Even otherwise knowlegable people do not well understand the payment industry. Discount fees may be too much, not enough, or just right, and various reward programs may or may not be worth the costs, but after you add in fraud, deposits, and the work to make sure it is all accurate, it's just not free.

      • Re: (Score:2, Troll)

        by Apotekaren ( 904220 )

        What kind of crap gets upvoted here nowadays?

        You seem to have forgotten all the other things credit cards do. Like giving you a credit. The cost of debt DOES scale by the amount. Or did you expect to have a mortgage with a "flat interest fee" because the cost of transacting loan doesn't scale with the size of the loan?
        Not to mention credit cards have you covered in case of fraud and your card gets hit with transactions. If they're fradulent, they just get cancelled. You're not out of pocket a single dollar.

        • You seem to have forgotten all the other things credit cards do. Like giving you a credit.

          I never asked to get a credit. The only reason I use a credit card (over debit) is to get the rewards.
          So it's not my problem if cost them money to offer. And also when someone forgets to pay, the interest rate is very high (20%) so that should cover their credit fees.

          But that's not to say things can't improve:
          The EU put in place a cap on the fee allowed at 0.3% for CC, 0.2% for debit.

          Wow, that's impressive. I wish my local politicians had the balls to reduce fees, even to 0.5%.

          • It doesn't matter if you didn't want it, but unless you're paying back the credit card company from your bank every night for the day's transaction, you ARE using their credit. And that's what matters.

            My point still stands, the cost of offering credit for purchases which don't really give you much in the way of assets to claim back (like a house or a car) is not free, and fairly risky. It absolutely make sense to scale by the amount, instead of a flat rate. The cost of the transaction of bits is a very smal

            • Well the credit cards company are to blame for not offering more rewards to those who agree to have their money taken directly from their bank account (like debit instead of credit).
              But yes, I don't have a problem with variable (proportional) fees. As long as the fee is low. 2% is way too much.

            • by Junta ( 36770 )

              One could make a fair argument that the grace period for zero interest is the cost of doing business to get at the 20% interest rate.

              I can understand the fraud as a function of transaction amount, but much of the other stuff is a function of any loan, where there's generally a 0% grace period that just doesn't matter much. Ultimately, credit cards are loans with interest. Maybe a lot of people pay them off continuously, but the ones that accrue interest more than make up for that exposure.

        • Having been a credit card merchant, I was charged a flat rate of $0.08 per transaction plus a percentage that varied from about 1.5% or over 2% depending on the type of card. AmEx had the highest transaction rate. @Apotekaren is correct that there's more to a transaction than just providing credit/payment. Fraud is huge and Visa/Mastercard/AmEx cover that. I found it interesting that Visa cares more about fraud than Mastercard does. When I reported an obviously stolen Visa credit card, Visa would canc

        • by Zak3056 ( 69287 )

          You seem to have forgotten all the other things credit cards do. Like giving you a credit The cost of debt DOES scale by the amount. Or did you expect to have a mortgage with a "flat interest fee" because the cost of transacting loan doesn't scale with the size of the loan?

          Given that the subject is fees paid by the merchant this is a ridiculous argument. Why would the amount of credit that the bank chooses to extend to you be something the merchant should pay for?

          • If the merchant doesn't want to accept credit cards, they don't have to. But for some reason, giving people means of spending is quite popular with merchants. It's also a lot safer and cheaper than cash handling, and often more convenient.

            If a credit card enables you to buy something, or even buy something more expensive than originally intended, I'm sure the merchant is happy to accept that.
            Ask your friendly TV seller: Should I buy the $500 TV for cash or the $600 TV with credit. I'm quite certain he'll br

            • by Zak3056 ( 69287 )

              But that's still not my main point, the point is that there's more to the cost of the transaction that just the transaction. Fraud, insurance and more which all scale.

              The above is a reasonable point--there are certainly more costs to the transaction than a simple approve/deny decision, the load on the network, and the eventual settlement. How much those costs scale with the transaction amount is debatable, but they certainly exist.

              On the other hand, your original argument about "all the other things credit cards do" (for the cardholder) remains ridiculous, especially the bit about the amount of credit extended to the customer. The average credit card interest rate right [forbes.com]

              • Yes, there average credit card interest rate is very high. But it only kicks in after the interest-free payment period which can be anything between 30-60 days. That's a "free" loan for the card holder, but the lender is paying interest (at a lower rate of course) from day 1. Someone has to pay for that loan too. And in this case it's merchants.

        • by Pollux ( 102520 ) <speter@tedat[ ]et.eg ['a.n' in gap]> on Wednesday March 27, 2024 @08:53AM (#64348347) Journal

          You seem to have forgotten all the other things credit cards do. Like giving you a credit. The cost of debt DOES scale by the amount. Or did you expect to have a mortgage with a "flat interest fee" because the cost of transacting loan doesn't scale with the size of the loan?

          You seem to have forgotten that Visa and Mastercard assume zero risk if the cardholder defaults on the loan. They only transact the payment. So they should get paid for the transaction, nothing more, nothing less. Banks that issue the credit card assume the risk. And how do they profit from the risk? Interest rates, which do scale with the size of the loan.

          Not to mention credit cards have you covered in case of fraud and your card gets hit with transactions.

          Thank you Truth in Lending Act [wikipedia.org]. What, do you think our corporate overlords want to bear that responsibility? You know as well as I do that they only have to do this because legislation requires it. And a neutral party like the FTC could make sure that the cost of managing that responsibility is included in the transaction fee. We already have another consumer insurance that merchants pay for that protects us, the consumer. It's called the FDIC [wikipedia.org]. Nobody's complaining about it. So why are you complaining about the TILA?

          If we citizens made a huge fuss about it, we absolutely could amend the TILA to cap transaction fees in a manner that is transparent and fair for all parties involved. If we made a huge fuss about it, that is. Until we do, Visa and Mastercard and Amex and Discover will continue to contribute massive campaign donations to Republicans and Democrats [opensecrets.org] to keep the status quo exactly as it is.

          • by Junta ( 36770 )

            He didn't complain about TILA, he simply stated that as a logical reason why swipe fees ultimately should scale with the transaction amount. I'd say that is a fair point for why some percentage basis remains in a transaction fee, since that is a characteristic that works regardless of whether the cardholder ever carries a balance. Now if the 'wrong' party gets the fee and not the party that actually has to pay out in case of fraud or pays for the auditing to mitigate that, ok, but there is an aspect that s

          • Do you think the whole fee goes to Visa/Mastercard and the banks get nothing? Oh ye summer child. The banks use Visa/Mastercard to get their own cut of the pie. The fee still needs to be proportional to the value of the transaction.
            And banks profit from interest rates on credit cards only when you don't pay off the full amount. All credit paid off by the due date is a "free loan" for the card holder, but the bank pays interest from day 1 on that line of credit.

            And no, I don't think they are charities for co

        • by Junta ( 36770 )

          Let me repeat: if you don't use a credit card, you're still paying the same amount!

          But that's part of the whole point of the lawsuit:
          "the settlement gives merchants the ability to impose surcharges on customers, depending on what kind of Visa or Mastercard card they use. Those surcharges would likely hit cardholders who get rewards such as cash back and airline miles, since those can carry higher swipe fees."

          They were forbidden from passing on the surcharge to their customers by their merchant agreements, meaning to cover the surcharge they had to raise prices on everyone. Some small busi

      • It doesn't take a computer scientist to tell you that the cost of transacting a payment does not depend on the amount of the payment. Whether I pay $1 for a candy bar or $10,000 for a first-class ticket to Singapore, the cost of transacting is practically the same thing, especially in today's electronic age. Even 0.5% would be highway robbery for merchants if the amount went above $500.

        Transaction cost is pretty much $0. Whether you do 10 or 1000 transactions in a day, the cost to the network is pretty much the same. Put it another way, if we halved our number of transactions, the cost to Visa and Mastercard wouldn't be halved at all.
        Still, that cost is not 0 and has to be passed to merchants. A percentage or fixed fee per transaction are both good ways to do it. As long as the fees are low enough.

        • Next thing we know, we'll be told running /. costs pretty much 0. It may look that way, but it ain't so.

          • Next thing we know, we'll be told running /. costs pretty much 0. It may look that way, but it ain't so.

            Running ./ is a good example. The fees are pretty much fixed. They increase with traffic. But not that much. Having 10x the traffic might cost only 10% more. It's the same for credit cards. It doesn't matter that much if the number of transactions, or the average transaction price, increase by 10x. The costs are mostly fixed, and the marginal cost of an extra transaction or an extra dollar on one transaction is pretty much 0, yes.

            • by hawk ( 1151 )

              I dunno.

              If the editors at the processors actually read things, costs would scale upwards, unlike /.

            • Let's consider this... A payments issuer handles, say $1.1triilion/year. Maybe $90Bn/month, roughly. Magic, they increase their business 25% in a year. Roughly 1.36trillion/year, maybe $113Bn/month. What would it take to accommodate that increase in volume?

              First, customer service. Fraud, complaints, billing questions, you know. Bear in mind, their active cards increased from almost 122 million to over 133 million, about 11 million new cards, and the customers that come with them. There are service costs.

              • Who says there are 11 million new cards?
                Could be that the same amount of customers are spending more. They could be doing more transactions, or the exact number as before with bigger amounts.
                Maybe they spend more and need less support. There isn't a direct relation between the two.

                There is no relation between the costs involved and the fees charged to merchants either. They are an oligopoly, and charge as much as possible to maximize the profit. If it were a free market, fees would be much lower.

                • The example I gave is 2022 to 2023. They do report cards in force, as most every card issuer does, even when they lose cards. When they gain cards. They're quite proud of it. Volume is another thing that they report. You may not care much about this. You may not even believe them, but they do report it to the SEC and to their investors. That's how the big boys do business. You know, it may or not be Fair, may or not be right, may even not be good. It's just how they do it.

      • by MeNeXT ( 200840 )

        Your comment makes a lot of sense if it was just a transaction fee. Don't get me wrong I hate these fees and believe that they are abusive as they stand and only exist because there is no competition, but that is a whole other argument. The fee includes the interest charge for the 21-52 day grace period that the client has in paying the bill. The sad part is as interest rates dropped from the 20% in the 80's to practically 0% before covid the merchant fees increased.

        • Many people do not realize that part of those fees involve the risk of the card company. Because of this, the rates and fees are actually different by industry.

          For example, at a retail store, you pay for product before you receive the product. If the card is declined, no product is received. (In an ideal situation, of course.)

          But there are industries where you pay after you receive the product or services. A few examples include pay-at-pump gas stations, car rentals and hotels. In these cases, an estimated

      • by taustin ( 171655 )

        You assume - incorrectly - that the cost of processing the transaction is the only cost.

        It is not.

        • by stooo ( 2202012 )

          True. You have to pay all those shareholders and bonus at Amex and co.

          • by taustin ( 171655 )

            You also have expenses in carrying the debt that more and more card holders are running up, and the losses on those who never pay, and the loss to fraud (which is disproportionally larger than the average transaction, because why use a stolen card on a candy bar?), and so on.

            Masturbate as furiously as you need to (but keep the lotion handy!), there are expenses that are proportional to the transaction amount.

  • by rmdingler ( 1955220 ) on Wednesday March 27, 2024 @07:39AM (#64348207) Journal

    Is that the death knell for our higher cash back credit cards, or will powerful CC lobbies seek a work-around?

    I'm no mathlete, but getting 2% back means it is coming from someone's pocket. I've noticed an increased incidence of shops charging customers more to purchase items with credit, but it's not legal everywhere.

    Nerdwallet: This practice is legal in all but four states — Connecticut, Maine, Massachusetts and Oklahoma — additionally, Colorado caps the surcharge fee at 2%. It is also important to note that surcharging is not allowed for debit cards, even when they are run as a credit transaction.

    • Surcharging is allowed for debit cards if your an issuer below the threshold. i.e. a typically smaller bank that issues their own cards. " 235.5 Exemptions." https://www.ecfr.gov/current/t... [ecfr.gov]
    • I have no experience in the industry but I always assumed that people paying the crazy high interest rates on unpaid monthly balances fed the cashback awarding. I don't have stats handy, but believe way too many Americans roll credit card balances and pay way too much interest per month.
  • They think they're getting out of it and back to business as usual.

    In reality, their whole sector will likely be dead within 10 years because enterprise blockchain tech is being rapidly adopted by the global financial system to power next gen FINTECH. No, it won't be Eth and BTC. It will be frictionless, trusted ledgers without liquidity tokens that enable nearly free transactions between participants in a transparent (to the stakeholders) ledger.

    The banks have every reason to go this route because the merc

  • by jarkus4 ( 1627895 ) on Wednesday March 27, 2024 @08:21AM (#64348273)

    This seems like those fees are still remaining extremely high. EU caps fees at 0,2% for debit and 0,3% for credit and both VISA and MasterCard are happy to work here.

  • by bradley13 ( 1118935 ) on Wednesday March 27, 2024 @09:35AM (#64348471) Homepage

    We ran a small business for a long time. Funny, how the fees and rules for MC and Visa always moved in lockstep. Obviously they coordinate with each other. Price fixing. They are effectively a cartel, and individual merchants have zero power to negotiate with them.

    In our case, we were in the alcohol business, which gets classified as "high risk" and incurred higher fees. However, we were in a specialty market where we knew our customers as individuals. In 20 years, we never had a single charge-back. With any reasonable payment services, that would be a basis for negotiation . Since MC/Visa are effectively a monopoly, they have no need to negotiate. No negotiation possible.

    Really, it's a failure of government. Governments are supposed to break up illegal cartels, and prevent the abuse of monopoly power. However, as we saw with the banking crisis in 2008 and its aftermath, governments refuse to take effective action anywhere in the banking sector.

  • Most merchants wouldn't push those savings to the end consumer.

    You and I would still pay the same price and the seller would make a little extra $ on every transaction :|

  • On the other hand the CC companies have huge amounts of fraud they have to cover. I'm sure it is still very profitable but I'd be interested to see how much fraud vs revenue they deal with.

  • "Government, You've been suing us for decades(!). If you drop your cases against us, we'll lower our rates by 0.04% for three years before jacking the prices back up."

    "Okay, it's a deal!" the government replied.

  • by King_TJ ( 85913 ) on Wednesday March 27, 2024 @12:09PM (#64348907) Journal

    "The settlement would lower those fees by at least 0.04 percentage point for a minimum of three years." ?!?

    Will I even really notice a .04 percentage rate cut on the fees, unless I'm buying something really expensive? And this "break" is only for a 3 year period, too?

    Seeing as it's government who pursued this in the courts for so long, that means taxpayers like myself helped pay the legal costs of the whole battle. So I'd say I probably don't really come out ahead at all?

  • ...result of a lawsuit filed in 2005

    The settlement would lower those fees by at least 0.04 percentage point for a minimum of three years.

    So it took nearly 20 years to settle on a 0.04 percent reduction that is only temporary. Sounds legit.

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