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Comment by namdnay | Hacker News Reader

that's also why we don't get any decent credit cards in europe - there's no money to pay for it

i think the US system is probably better for wealthy people who always use cards and actively play the game (and for the credit card processors of course). Euro system is better for everyone else

ps: is there some sort of contract that stops vendors from adding a "credit card processing fee"? maybe banning those clauses would be the best way to let market forces sort the issue out - once people see that they're paying 3.5% more to use a 2% cashback card, they'll start asking for other options

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Another way of looking at it is that every credit card in EU is better than in the US because the credit card companies are not taking with one hand and giving back less with the other. The money has to come from somewhere.

It’s a great coup of US credit card companies to convince credit card users that they are getting “free money” when it’s the exact same money they paid in transaction fees.

US credit can be indispensable for those taking career risks and those operating small businesses.

In any case, I don't pay transaction fees the merchant does. They're often not allowed to give cash or particular types of cash-in-kind store discounts. This actually just raises the prices for everyone.

The payoff for the merchant is it reduces some of the risk of taking cash money and stabilizes some of their transaction flows through their account. It's all probably worth slightly more than what the EU caps it at, but the solution to improve this discovery is to increase the number of transaction networks, not arbitrarily cut them off at the knees and ensure the market never grows to this point.

It's at least one reason to love bitcoin and other crypto. You don't need permission to conduct a transaction. Which, given the extreme costs of transactions there, was clearly sorely lacking in the current artificially scarce market.

> In any case, I don't pay transaction fees the merchant does.

Unless you're one of those operating small businesses.

> It's at least one reason to love bitcoin and other crypto.

Sure but what happens in case of fraud, or if I need to initiate a dispute ? What are the fees for that transaction ?

> Sure but what happens in case of fraud, or if I need to initiate a dispute ? What are the fees for that transaction ?

Well, yea, exactly. I'm pointing out two systems that are diametrically opposed and nothing in the middle. It highlights the fact the market is broken. This is one consequence of that.

> Unless you're one of those operating small businesses.

Ironically, I never took credit. Cash or Check only. Handling costs don't apply because the chain of custody is just myself.

Here in the EU I don’t think you can go cash only as a business. It’s just not an option.

I’m ignoring checks because those aren’t a thing anymore. Only people in their 70s might still use them.

The EU isn't one homogenous place in terms of local habits and practices.

In at least some countries you can totally get away with being cash only (although less so since the pandemic).

Ok I’m not sure if it’s an EU thing or not then but I think here in Italy, if you run a business, you’re not legally allowed to go cash only.

It’s just not an option. You must accept traceable payments either via cards or direct bank transfer.

To provide another data point, in France you are allowed to refuse credit cards or checks. Cash is the only payment method that you cannot refuse but there are exceptions for that as well.

EU has no credit?

It does, and it's usually free if you pay in full every month, just like in the US.

Given the interchange cap (0.3%) and current interest rates, this interestingly looks like a losing product at a first glance (the cost of capital for an average due date of 6 weeks after the purchase date is higher than 0.3%).

> It’s a great coup of US credit card companies to convince credit card users that they are getting “free money” when it’s the exact same money they paid in transaction fees.

The transaction fees aren't explicitly added to only credit card transactions - they are baked into the price so people who pay cash and debit are also paying a fee. Credit card rewards therefore reallocate money from people who use cash/debit cards to people who use "reward (credit) cards".

> is there some sort of contract that stops vendors from adding a "credit card processing fee"?

In EU it is not allowed to charge the customer any kind of extra fee for using a card. Though obviously it only works well together with the 0.3% cap on the actual fees the vendor pays.

https://europa.eu/youreurope/business/finance-funding/making...

> 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.

The US system is a tax on people paying with cash.

> why we don't get any decent credit cards in europe - there's no money to pay for it

What are Visa and Mastercard's net take rates in the U.S.? (As in, out of that 3.5%, how much do they keep on average and for premium cards?)

It’s a bit more complicated: Even in the US, it’s not Visa and Mastercard taking the entire 3.5%. The largest part of that goes to the issuers, who pay a significant fraction back to the cardholder as rewards.

Depends on the card type, merchant type and transaction type but about 0.14%

> that's also why we don't get any decent credit cards in europe - there's no money to pay for it

I'm totally okay with not paying higher prices so merchants can pay fees that subsidise credit cards benefits for a few.

  ps: is there some sort of contract that stops vendors from adding a "credit card processing fee"?

Yes, and getting rid of that restriction was part of this settlement.

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