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Wouldn't then all the fraud risks move to those businesses which take consumer credit cards and exchange them for bitcoins. So why would the aggregate fraud cost in the system be any lower ?

Also, I seriously doubt that 2.5% fee is all cost. Visa/Mastercard, etc. are massively profitable - they have plenty of room to cut those fees

Visa processed ~4.2T of payments last year (page 32) and earned ~5B of net income on ~11.7B of revenue (page 29). By my calculations that is ~0.1% off the top of the transaction net of costs to do business. Not much.

All from the most recent 10K: http://investor.visa.com/phoenix.zhtml?c=215693&p=irol-SECTe...

I thought the credit card fees were mostly to cover the escrow-like service they provide, in which you can challenge a merchant who fails to keep their end of the bargain but insists on billing you anyway?

> It's an efficient market as it is.

That's a little naive.