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Comment by nolok | Hacker News Reader

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.

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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.

> (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.

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