Visa, Mastercard Prepare to Raise Credit-Card Fees
wsj.com
wsj.com
It's clear that Mastercard-Visa is by design meant to be the other's alibi for not being declared a Monopoly.
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.
https://histoire.bnpparibas/en/the-carte-bleue-a-french-succ...
Also, this is a good synthesis of the duopoly* problem, perhaps less of an issue (aka lower rates) in EU likely thanks to the nationals like CB:
https://seekingalpha.com/article/4536466-visa-and-mastercard...
* 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".
https://en.wikipedia.org/wiki/Tacit_collusion#Conscious_para...
See the duopoly example at the end of the article suggesting a multi-round (long term) Nash equilibrium for parallelism.
> 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 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.
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.
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.
Visa and Mastercard both raising fees at the same time is extremely suspect.
Competitors making similar price adjustments based on seeing each other's public statements and strategy is legal: https://en.wikipedia.org/wiki/Tacit_collusion
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.
Same "legalized tacit collusion" situation happens when one leading law firm announces salary increases and other law firms immediately match it: https://www.reuters.com/legal/legalindustry/large-law-firms-...
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.
> 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.
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.
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.)
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.
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).
It's already solved, just point your app to the QR code generated by the same terminal you use for CC.
It's used virtually everywhere in Thailand for small retail payments
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.
Last call at the interchange trough.
https://www.paymentsdive.com/news/walmart-kroger-eye-instant...
The same thing will presumably happen for FedNow.
Likewise, PayPal and Wise (formerly Transferwise) provide it in the opposite direction: I can pull via ACH directly from my bank account.
In a society that doesn't allow monopolies, I guess we are destined to get cooperating duopolies.
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.
edit: clarify my last sentence
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.
https://europa.eu/youreurope/business/finance-funding/making...
Guessing there are no such laws in the US? Or maybe nowhere else? Not sure.
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)
[1] https://www.mastercard.us/en-us/business/overview/support/me...
I wonder if the newly opened FedNow service could work as a viable back end for enormous amounts of micropayments
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.
Credit unions might be, however.
That is what a smart business would do, respond to foreseeable pressure.
https://www.moneris.com/en/support/additional-resources/paym...
Premium card fees up from 1.8% to 1.85% and super-premium up from 1.97% to 1.98%.
Bloomberg claims that Mastercard is introducing a pre-authorization fee:
However, you can see in the Moneris page that Mastercard actually introduced that pre-auth fee back in Nov 2019, and it is 0.05% or $0.01.
So, seems to be pretty much a clickbait nothing-burger.
“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”
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.
"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.
https://www.mastercard.com/europe/en/regulatory/european-int...
I have been running into a lot of fee recovery by small businesses here in Ohio. The state parks definitely recover all fees from card payments.
Debit or credit card.
"Looking for a better deal? Hah! You can oligopple down our balls!"
I expect the increase to be variable, too.
2023:'public-dns'
It’s more likely op is using pihole or something like that.
[1]: https://www.wsj.com/articles/another-challenge-for-small-bus...
[2]: https://www.wsj.com/articles/visa-mastercard-prepare-to-rais...
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 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.)
> 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.
Of course it's not solving the exact same problem (e.g. fraud protection), but it does seem like a basis for payment services which can.
Proof of Work is the innovation that solves the distributed consensus problem. It’s a feature not a bug.
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