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Comment by paulpan | Hacker News Reader

Agreed, though the same could be argued for credit card payment processors like Visa and Mastercard taking a 2-2.5% cut of every transaction.

Shouldn't they also just be regulated to only accept a fixed amount instead? I'm genuinely curious why this example isn't brought up more often and is just assumed to be the norm.

The irony in this % discussion is that Apple tried to use the same rationale against Qualcomm in their radio modem feud - Qualcomm wanted to charge a % on device price for using their radio modems whereas Apple pushed for a fixed amount. I'm sure AWS would love to bill % of revenue but perhaps due to competition, they can't do that.

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Credit card fees are already regulated the EU, i.e. card interchange fees are capped at 0.3%.

https://en.wikipedia.org/wiki/Interchange_fee#European_Union

As to why it's not a fixed payment: I'm not sure if some of their costs/liabilities would scale with the size of the transactions?

Vast oversimplification: it's because of chargebacks and fraud. It works kind of like an insurance, someone needs to take the loss at some point and fixed amount doesn't work for that (or would massively hike the fees for cheap sales).

That's why when EU capped the fee "so low" we also massively pushed for 3D secure deployment, so those lower fees would still easily cover it.

> (or would massively hike the fees for cheap sales)

I've come to the viewpoint that this would be a good thing. I think we've moved too far in the direction of never paying for anything with cash.

And why would that be?

Paying for things using a payment card creates records associated with you and requires the permission of third parties.

I understand why you don't want to use credit cards too often, but you wrote "we've moved too far [...]". Why do you care whether other people use credit cards?

My bank or creditors don't need to know where I'm shopping or what I'm buying, and they certainly don't need to be selling that information to the highest bidders.

Most of North Europe is quite cashless, and it's perceived an improvement.

Interesting. But aren't the banks responsible for handling chargebacks and fraud, not the credit card processing companies?

My (albeit limited) understanding is that Visa and Mastercard ensure that the debit/credit transactions are securely and quickly occur, but if there are post-transaction issues like fraud or chargeback, then the credit card-issuing bank handles/resolves those issues.

Conversely there's probably a subset of transactions that don't need this sort of "insurance", such as buying groceries. Currently the merchant still has to pay the 2%+ fee in the U.S. but would be nice to have the option for a customer to waive the "insurance" part and benefit from a 2% savings. It's akin to many merchants offering a lower "cash-only" rate.

> My (albeit limited) understanding is that Visa and Mastercard ensure that the debit/credit transactions are securely and quickly occur,

Now in the EU, if online transactions are over a certain amount or flag up as suspicious, we must use 2FA. So I have to stick my card in my card reader and generate an OTP. Works quite well tbh. My other bank sends me a push notification where I approve the payment.

The services credit card companies provide was just pushed a layer deeper to the issuing banks. The EU didn’t magically make the costs of running a payment system disappear, it’s just sleight of hand. They also pushed costs onto consumers in the form of assumed risk consumers take on when making a purchase (thus all the 2fa etc to reduce this burden).

Oh and it goes without saying that rewards programs disappeared entirely (I am not opposed to outlawing “rewards” programs)

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