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Nobody is denying it costs money, the problem is it's not proportional to the value they add, nor their costs.

In the EU, their rake is capped by law, to an order of magnitude less than what they charge in the US. And it's still profitable. (Otherwise they would have pulled out of the market if they were losing money, obviously.)

The fraud prevention/etc you discuss benefits from economies of scale, but their fixed x% per transaction does not reflect those economies of scale. The free market has broken down here because of the difficulty for new market entrants.

> Nobody is denying it costs money, the problem is it's not proportional to the value they add, nor their costs.

The value they add is much greater than their costs. People who deny this lack a lot of imagination to ponder how inconvenient things could be without credit and debit cards.

But we don't need to imagine: If Visa and Mastercard didn't add more value than they cost, then merchants wouldn't accept them. It is still 100% voluntary for a merchant to decide if they want to accept cards or not. Which is a freedom they should have. These cards aren't legal tender.

If merchants didn't accept them, they would go out of business. How is that not obvious? Technically there a choice. In reality, you have no choice, and no recourse, and you can't outcompete these companies either. The idea that you can just decide to block CC payments and survive is fantasy. You're essentially signing a death warrant for your business. That's not any meaningful form of "freedom."

> If Visa and Mastercard didn't add more value than they cost, then merchants wouldn't accept them.

https://en.wikipedia.org/wiki/Just-world_fallacy

You are seriously arguing that because businesses have to give customers what they want that these businesses are oppressed? I'm not going to bite, because there is a very clear difference between doing something because somebody else is forcing you to, and doing something out of choice and free will because it benefits you.

You are trying to pervert words and the concept of freedom in a quite uncanny way - for nobody's benefit. Most people and business owners aren't living within a mental prison where they oblige themselves to min-max everything in life and make all decisions according to a fantasy of rationality. Many of them refuse to accept CC payments, even if it might be in their best interest to.

> "Many of them refuse to accept CC payments"

No they don't. We're not talking about lemonade stands here.

Business owners don't have a choice. They must use CC processors or else lose their business. That's the point.

You're shoehorning a philosophical definition of freewill into a context where it doesn't apply.

Given that consumers and businesses have "freewill" or "freedom" to make any financial decision, then by your logic there are no bounds a company can possibly transgress.

Why do you think we have anti-trust laws, or consumer protection laws, or the FDA, or have litigated against monopolies in the past, or have the host of many other things which protects consumers from being taken advantaged of?

How do countries like India and Brazil do it then if it's so hard and challenging that it couldn't possibly be a public service?

What india and brazil have is more equivalent to Zelle in the US, not visa/mastercard. There's no viable chargeback, no international interoperability and no fraud protections.

Chargebacks and fraud protection are largely needed in the credit/debit card system because you go around handing people the key to your safe to merchants and ask them to take whatever they want. And pinky promise not to share the key with anyone else.

Once you have sane system like pix or upi, there is far less need for chargebacks and frauds.

Fraud protection in this case doesn't mean protection against having your card copied, it means protection when you've made a purchase and didn't receive the product you were promised.

Which payment method would you prefer to use for an online purchase: One where you have no chance of getting your money back if it turned out to be a scam, or one where you have protection against this?

UPI has a government controlled chargeback mechanisms [1]. Why would any system of payment not have a chargeback mechanism if someone stole from you? You can even chargeback cash by going through the legal system. Obviously, the better system for online transactions is an escrow system.

In any case, my politics demands not depending on the bureaucracy of a big corporation for legal redress.

[1] https://www.stashfin.com/blogs/dispute-upi-transaction-guide

That's great, and something which all other payment systems should also adapt. As it stands now, no payment method offers any fraud protection mechanism except for Visa and Mastercard - and also UPI as you mention. Not even old school bank transfers have fraud protections.

> Why would any system of payment not have a chargeback mechanism if someone stole from you?

I couldn't agree more.

I only notice one problematic thing there in your link: Wrong recipient. And it says you cannot get your money back without the cooperation of the recipient. With card payments you never risk paying to the wrong recipient by typing a number wrong or such.

> I only notice one problematic thing there in your link: Wrong recipient.

There is a trade-off. Many systems do offer the ability to get your money back without the cooperation of the recipient. But those systems are also filled with the scam, where you send someone money, then convince them to send the money back manually, and finally reverse the original transaction.

You can counter this by more policing of these types of scams, but usually the amounts in each individual case are small, so police have very little incentive to do anything about it.

> Payment networks are not an easy thing to build or maintain

Then why are there so many of them? I like travelling and almost every country I go to has its own thing going on, often more than one. I lost count long ago

Because they are profitable.

Vipps Mobilepay in the Nordic region already has 13 million users and is a founding member of a European network that will soon cover 13 countries.

The component parts have been up and running for years.

See https://www.youtube.com/watch?v=XsxmVW7CxmA

> We could cut the cost of VISA's network in half or better if we could drop the compliance piece. I don't know how that would play out for the consumer segment though.

I doubt the amount credit card companies charge in fees has much to do with the actual costs of running their service and are being inflated just because they can. My guess is that reducing the VISA's costs by letting them ignore security considerations would only mean that consumers get regularly screwed over while VISA continued to raise their fees every year.

If the fee is covering all the investments required to make it convenient, we're socializing the risk taken by customers who buy from sketchy merchants or lose their card. That insurance system is a net positive for consumers, but they don't know they are paying for it.

> We could cut the cost of VISA's network in half or better if we could drop the compliance piece.

We could also cut the cost to merchants by notably more than half if we dropped credit card rewards.