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Comment by mbesto | Hacker News Reader

> Let’s say you sell electronics online. Profit margins in those businesses are usually under 5%, which means the 2.5% payment fees consume half the margin. That’s money that could be reinvested in the business, passed back to consumers, or taxed by the government. Of all of those choices, handing 2.5% to banks to move bits around the Internet is the worst possible choice.

In other words, better wealth distribution? This is precisely what libertarians are fighting for, no?

Playing the devil's advocate here - couldn't this argument be turned around to say something like "That’s money that could be reinvested in banks which hire the best people to find the best and most efficient use of capital."? (as opposed to consumers or small business owners who can't)

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Payment fees typically go to Visa or MasterCard, I thought. And considering the financials of those companies, operating the existing payment networks must be costly- both companies are growing & profitable, but not nearly as much as you might expect if the payment networks were zero-cost to operate.

Ya, agreed. I think this statement sticks out the most: Of all of those choices, handing 2.5% to banks to move bits around the Internet is the worst possible choice.

Regardless of whether its a bank or a credit card processing company, why is it the "worst possible choice" to give it to them? Who are we to judge who gets $1 when we are the ones who chose to spend the $1 in the first place?

Currently our choice is to pay the fee to the banks for convenience they provide. If it's possible to provide the same convenience without the banks and with much lower fees, is that not an improvement?

Does bitcoin actually provide those lower fees?

Hold on, I know you are about to say "yes of course!". But what about the cost of mining? Mining is not analogous to transaction fees, but it is a cost of bitcoin.

Plus indirect fees due to the exchange rate volatility.

The fee isn't just a "convenience" fee. A significant proportion of the 2.5% overhead is fraud insurance.

The issuing bank and (often the) consumer also collect some of the payment fee.

I guess credit unions that offer Visa or Mastercard on their checking cards are also funding some of their operations this way (indirectly benefiting their customers).

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