I'd rather do business with someone like Balanced, who has a larger product vision than "well paypal sucks".
I don't care how thin the margins are, I'd love to have $3B of revenue.
To put that Visa number into perspective, according to various reports Square did $15bn in transaction volume last year. So, if you use the same ratio of transaction volume to revenue (0.16%) that would put Square's revenue at $23.2mln. For what it's worth, that's probably a generous ratio, as companies like Square and Braintree are all use Chase payments tech as their processor, which itself has to pay out to Visa and other processors. So these firms' margins are likely much lower than Visa's.
As either a customer or a partner of one of these companies, I'd prefer doing business with a company that's building a base that doesn't essentially require acquisition if they can't grow to Visa's size.
The merchant account business has higher numbers than Visa processing business.
Balanced's mission is to increase the global economy by enabling new commerce. Our current mechanism to do that is with payments [1].
So we don't actually want to build a processing company, per se, but we're finding that's the best way to accomplish our mission right now.
At some point, it's likely that we'll have to make changes to our mechanism, but until then we feel building the world's first open source payments infrastructure company [2] is a great way to accomplish our goal.
[1] https://www.balancedpayments.com/about [2] http://www.fastcolabs.com/3008944/open-company/why-i-made-my...
Though all I know is the headline rates quoted for most common processors where <2% seems very aggressive. Who gets the other 1.95% of that?
Still, your question, "Who gets the other 1.95% of that?", is valid. My guess: the card issuers themselves, who operate the networks (Visa, MC, Amex, Discover). Throw a little on top for Chase PaymentTech and the like.