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Comment by guywithahat | Hacker News Reader

It's not a government problem, it's a competition problem. Fundamentally 1-3% is actually a very competitive rate for organizing the easy transfer of money and handling fraud. Merchants would rather the cost be free, and banks may want a larger slice of the pie, but until someone comes up with a better way of paying money for both sides this is the best we have. If government got involved all that could happen is fees would increase and then we'd miss out on future efficiency improvements and savings.

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> Fundamentally 1-3% is actually a very competitive rate for organizing the easy transfer of money and handling fraud

This is a very US-centric take. In the UK, EU and Australia, interchange rates are capped at more like 0.2/0.3%.

That actually proves the point, because a market left to itself arrives at 2-3%, and it only goes lower if the government is dictating a rate.

What you are missing is that a market left to itself is not necessarily competitive when monopolies/duopolies form.

Proves what point? GP was saying the government would only increase fees.

A duopoly is not "a market"

There are distortions in that "market" because credit cards aren't just for payment acceptance and fraud handling (which are narrow functions).

In the U.S., many credit cards bundle short term credit, rewards, travel benefits, insurance etc. This bundling is why merchants can pay up to 2-3% in fees.

The payment clearance and settlement parts are much cheaper. That's why many countries are able to build domestic payment rails (e.g. Pix in Brazil) that process transactions at low cost.

A 2% cash back card cancels this out, resulting in comparable interchange rates. In some cases, you can effectively make money by spending money.

> then we'd miss out on future efficiency improvements and savings.

Which I'm hoping will find its way back to our wallets but which I doubt will happen

The USPS is overwhelmingly the most efficient and inexpensive way to ship things. Try sending a letter cross country with UPS - it costs $15. USPS costs $0.50.

Government doesn't always mean worse.

The USPS lost $9B last year. If our government considered The USPS a real public good, they would pick up the bill and give them more budget. Instead, The USPS had to get in bed with Amazon to keep the lights on and start delivering on Sundays.

It was $2.7 if you remove the forced retirement obligations that private companies don't have to do, which is only about 3% shortfall. And a large part of that was also due to private competition taking more of the market - in part because the USPS isn't as competitive as it could be, again because of costs incurred outside its control.

Certain individuals, such as Susan Collins and Tom Davis, who were the largest names behind the 2006 law to force this on the USPS, were clearly doing it in an attempt to make the USPS fail/become less competitive. PACs affiliated with FedEx, UPS, etc gave more than $192,000 to Collins’s campaign / PAC from 2000 to 2004. FedEx’s PAC has given Collins more donations than any other congressional candidate in that PAC's history.

There is a huge chain of evidence suggesting members of congress don't want the USPS to succeed due to self interest.

Do private companies not have these “forced retirement obligations “ because they don’t offer fixed benefit pensions?

I am out of my depth here. $2.7 is not nothing, but $9B is still on the books, no? No ifs and buts about it, unless our government does the right thing. Just eat the cost and prop them up, treat your federal employees right. It's really bizarre that the government expects them to turn a profit.

Tangent, having lived in 5 states, the USPS workers have always been nice and courteous, even when there are lines out the door during the tax season. And in general, like DMV or other licensing agencies.

0% because it’s a service that’s so obviously should be provided by the government is better.

Having been a customer of a government run postal bank, I'm going to hard disagree.

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