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Comment by Scirra_Tom | Hacker News Reader

"The Payment Card Interchange Fee and Merchant Discount Antitrust Litigation is a United States class-action lawsuit filed in 2005 by merchants and trade associations against Visa, MasterCard, and numerous financial institutions that issue payment cards. The suit was filed due to price fixing and other allegedly anti-competitive trade practices in the credit card industry."

Another area where giving freedom to these businesses ends up screwing the average person. This is why I like the EU, they are strong on consumer rights. The naive would assume these businesses would naturally want to compete on these fees.

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Sometimes the EU can be a bit too strong on consumer rights. For example, while charging excessive "processing fees" for accepting payment by card was a common scam, cards often do cost more to process than various other forms of payment here, and under the EU's latest PSD rules all surcharges for card use have been banned, even those that really did only cover the additional cost of the transaction.

I'd rather they err on the pro-consumer side, to be honest. I doubt those big banks and credit card companies will struggle to fight this and make their case for the appropriate exemptions if their scenarios warrant them.

Banning processing fees is anti-consumer, because it means that consumers who pay by a cheaper method have to subsidize the consumers who pay by the more expensive method (since companies will have to raise the prices for everyone).

Credit card companies won't fight bans on processing fees, because it actually helps them (the extra cost of the credit card is now hidden, and reduced, which means more people will use credit cards).

Additionally, this is a regressive policy, since it's easier to access financial products like credit cards when you're richer.

The blanket policy does have the effects you described, but more _often_ it gets rid of hidden charges or makes it trivial to prosecute them. Americans are apparently so used to these that it doesn't register, but Europe has been pretty effective at ensuring that headline prices must reflect the price you pay so as to be comparable.

Europe wants to ensure that if you say Product X is €10 and your competitor says it's €12 that's not just because you were better at lying than they were, the customers buying from you should pay €2 less for Product X. Transparency is essential to having a working market.

The most common place to see "processing fees" was online where in fact cash isn't an option anyway. A company would offer a product for seemingly less than competitors and then charge a "processing fee" which was really their profit. Committees looking at this stuff found that companies charging processing fees were fiercely resistant to a regulation that made them charge their actual cost, insisting that this couldn't be measured anyway and so the options were:

* Let companies advertise a price and then add processing fees of their choosing. As I said Americans are used to this, but Europeans see it as destroying market transparency.

* Forbid tacking on fees altogether (the option they took) so that prices must end up including the merchant's card processing fees the same way they include customer service call costs, warehousing, taxes or anything else.

* Regulate to try to ensure customers have a real way to avoid any processing fees, likely leading to years of court cases as courts rule out each individual sneaky new trick to make an "optional" processing fee in practice mandatory.

In the end I think the route the US chose ends up being more regressive, but I agree the European option isn't a panacea.

It's not the big businesses I'm worried about. It's all the small ones, who are now obliged to take a hit of potentially 5% or more of a small transaction, because they have neither the power to negotiate the much lower fees that big companies have nor any longer the right to pass on the actual cost to their own customers to incentivize paying by a more cost-effective method.

Out of interest, where in EU are 5%+ rates a thing?

Here in Finland the base card-present rates of traditional merchant card service providers are around 0.3% for debit and 1% for credit, with no per-transaction fees so these apply to even small transactions.

Hmm, or maybe you were talking about card payments over internet? You might have a point there as per-transaction fees are more common there (e.g. Stripe takes €0.25).

Out of interest, where in EU are 5%+ rates a thing?

Hmm, or maybe you were talking about card payments over internet?

Yes, I was. For example, Stripe's current pricing here in the UK is 20p + 1.4% for European cards (so a transaction of around £5 has a 5% fee) or 20p + 2.9% for non-European cards (so a transaction of around £10 has a 5% fee).

Other online card payment services are broadly similar for small businesses paying the standard advertised rates.

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