Bitcoin Forum

Visa, Mastercard increasing fees for processing transactions: WSJ

(Reuters) - Visa Inc and Mastercard Inc, the two biggest U.S. card networks, are preparing to raise certain fees levied on U.S. merchants for processing transactions from this April, the Wall Street Journal reported on Friday, citing people familiar with the matter.

Some of the changes relate to so-called interchange fees, the report said. Interchange fees are what merchants pay to banks when consumers use a credit or a debit card to make a purchase from their store.

Fees that Mastercard and Visa charge financial institutions, such as banks, for processing card payments on behalf of merchants, are also set to go up, the report said.

A Visa spokesperson confirmed that the fee hikes would go into effect in April, 2019, but only for merchant banks, and not merchants.

Merchant banks are financial institutions that maintain accounts for sellers such as Amazon and Costco. JPMorgan, Citigroup and Bank of America are some of the top merchant banks in the country.

However, it is up to merchant banks if they want to pass on the fee hike to sellers, or absorb it themselves. Similarly, it is sellers’ discretion to pass on the hike to consumers or not.

Up to 2.5 percent of prices for goods and services go to cover card fees, the WSJ said.

Card companies have said in the past that their credit and debit cards usually result in more sales for merchants, especially in countries like the United States. They also say that expenses for ramping up anti-fraud/theft security measures, to make payment processing safer, need to be covered.

Mastercard did not respond to Reuters’ request for comment on the story.

Recently, the two companies along with several U.S. banks, had to pay over $6 billion to settle a lawsuit brought by merchants who accused the credit card companies of violating federal antitrust laws by forcing merchants to pay swipe fees and prohibiting them from directing consumers toward other methods of payment.

https://www.reuters.com/article/us-paymentprocessors-fees/visa-mastercard-mull-increasing-fees-for-processing-transactions-wsj-idUSKCN1Q41ME

Here is a hypothetical cashless society scenario for you.

#1  Paper money is eliminated.
#2  Credit card companies and assorted electronic payment processors raise fees and APR's by 2,000%.
#3  If paper money were available, everyone could abandon credit cards and utilize paper money instead but with the cash option dead that is no longer possible.

Question: how do consumers cope with conditions under cashless societies where fees are raised severely the way pharmaceutical drugs in the united states are after a single entity buys up existing stockpiles.

There are interesting and somewhat well worn arguments published all over the internet for potential negatives associated with market consolidation, further centralization of markets leading to monopolization.

I wonder if any cashless supporters have a good response to this?

Sweden’s Riksbank has become the first central bank in the 21st century to take concrete measures to ensure that cash does not disappear as a means of payment from the financial system. To that end, the Riksbank proposes, in a document published on its website, to make it mandatory for all banks and financial institutions to offer cash services.

Here is a hypothetical cashless society scenario for you.

#1  Paper money is eliminated.
#2  Credit card companies and assorted electronic payment processors raise fees and APR's by 2,000%.
#3  If paper money were available, everyone could abandon credit cards and utilize paper money instead but with the cash option dead that is no longer possible.

Question: how do consumers cope with conditions under cashless societies where fees are raised severely the way pharmaceutical drugs in the united states are after a single entity buys up existing stockpiles.

There are interesting and somewhat well worn arguments published all over the internet for potential negatives associated with market consolidation, further centralization of markets leading to monopolization.

I wonder if any cashless supporters have a good response to this?

#1  Paper money is eliminated.
#2  Credit card companies and assorted electronic payment processors raise fees and APR's by 2,000%.

We are now entering the era without fiat/paper money on our pocket. Cards will be the thing we have to keep in pocket and golds in our safes. This is really starting to happen today. We can see that Visa Cards and Master Card, the duopoly is preparing for hike/increase of charges for the next year. That only means that people will try to stop using fiat and use their digital assets instead.

We are now entering the era without fiat/paper money on our pocket. Cards will be the thing we have to keep in pocket and golds in our safes. This is really starting to happen today. We can see that Visa Cards and Master Card, the duopoly is preparing for hike/increase of charges for the next year. That only means that people will try to stop using fiat and use their digital assets instead.

Are you serious? Do you actually believe that FIAT will disappear just like that just because new methods of payment are available? I find it laughable that people actually believe something like this can happen.

It is a fact that people will always prefer FIAT over anything else like gold, Bitcoin etc due to their historical connection with it and it has proven to be far more reliable when compared to any other form of payment system.

Here is a hypothetical cashless society scenario for you.

#1  Paper money is eliminated.
#2  Credit card companies and assorted electronic payment processors raise fees and APR's by 2,000%.
#3  If paper money were available, everyone could abandon credit cards and utilize paper money instead but with the cash option dead that is no longer possible.

Question: how do consumers cope with conditions under cashless societies where fees are raised severely the way pharmaceutical drugs in the united states are after a single entity buys up existing stockpiles.

There are interesting and somewhat well worn arguments published all over the internet for potential negatives associated with market consolidation, further centralization of markets leading to monopolization.

I wonder if any cashless supporters have a good response to this?

Are you serious? Do you actually believe that FIAT will disappear just like that just because new methods of payment are available? I find it laughable that people actually believe something like this can happen.

It is a fact that people will always prefer FIAT over anything else like gold, Bitcoin etc due to their historical connection with it and it has proven to be far more reliable when compared to any other form of payment system.

I think so too. Eventually, I strongly believe that we'll see tokenized fiat, where every token is compatible with PayPal, MasterCard, Vista, etc. In other words, governments haven't pulled out their big guns yet.

In the end, people want something that works as money whenever they want, has a stable unit value, offers convenience, and more importantly, the ability to reverse transactions. People don't know how to take care of their finances. They will always fall for scammers or mess up themselves resulting in loss of funds. If that happens with Bitcoin, your funds are lost for ever, which is a pretty scary thought for people.

However, it is up to merchant banks if they want to pass on the fee hike to sellers, or absorb it themselves. Similarly, it is sellers’ discretion to pass on the hike to consumers or not.

Here is a hypothetical cashless society scenario for you.

#1  Paper money is eliminated.
#2  Credit card companies and assorted electronic payment processors raise fees and APR's by 2,000%.
#3  If paper money were available, everyone could abandon credit cards and utilize paper money instead but with the cash option dead that is no longer possible.

Question: how do consumers cope with conditions under cashless societies where fees are raised severely the way pharmaceutical drugs in the united states are after a single entity buys up existing stockpiles.

There are interesting and somewhat well worn arguments published all over the internet for potential negatives associated with market consolidation, further centralization of markets leading to monopolization.

I wonder if any cashless supporters have a good response to this?

The answer is - a government run and non-profit payment processor!

Just to give you an example, In India, Visa and Mastercard is being used by majority of the banks for their payment processing. These organizations are private ones and seeing their dominance in the Indian financial market, Indian Government has started an initiative called "Rupay". It is a similar payment processor like Visa and Mastercard but strictly run by Indian Government. Now slowly all government banks have started using this payment processors and started issuing Rupay cards to the account holders. It is not not only giving great competition to the Visa and Mastercard, but also offering the similar efficiency within India. Only few private banks are still using Visa and Mastercard but all other banks are now offering the choice to their customers whether they want to get a Visa/Mastercard or a Rupay card. The transaction cost of the Rupay card, is simply a lot cheaper than these two conglomerates trying to control the major market share.

I believe in same outcome, tokenization. What is jp Morgan doing right now? Fiat will disappear, I don`t doubt in that, but what is future bringing for all of us in uncertain.

Now we have decentralized cryptocurrencies. What will stop someone to use anonymous zcash and force him to use some USDT or some other stable coin, government coin, corporation coin? We are entering in specific era, what will happen nobody can say, but war between centralized and decentralized sector is inevitable.

Centralized electronic payment processors such as Visa, Mastercard and co raising their fees is the least of the problems, the big problem would be the loss of financial privacy.

The loss of privacy is only a problem if you cared enough about it before the shift, which doesn't apply to most of the people. If they cared about privacy in general, they wouldn't be so carelessly sharing data on social media.

I even dare to say that people's privacy is already compromised by financial institutions and social media platforms. They know what interests you, what you buy, what you eat, and so forth. What's there to lose for people?

The damage is already done without people knowing, and when they finally do start to care they will realize it's too late already. People will swallow everything that they are subjected to. It has been like that for decades, no reason to expect things to change.

This is exactly why central banks have now changed their minds about cashless societies.

For example Sweden was going cashless (with shops refusing to accept cash). But the Swedish central bank stepped in:

https://wolfstreet.com/2018/10/26/nirp-fades-swedens-central-bank-makes-u-turn-on-cashless-society/

Centralized electronic payment processors such as Visa, Mastercard and co raising their fees is the least of the problems, the big problem would be the loss of financial privacy.

Bitcoin would obviously pump massively at the news of relevant countries going cashless. However the rise of demand for block space would raise Bitcoin fees as well, so second layer solutions must be ready by then to profit from the perfect storm.

Privacy is a big yhing. Paying for anything in cash means the transaction
is untraceable. Cash is on the way out, in my country it is difficult to pay
utilities like, electricity, phone, internet, waste collection, t.v. payment is widely
accepted or preferred by card or through the bank.

I would imagine card transaction fees would rise but not by 2000%, that is
just unsustainable. At the moment with "tap and go" card payments i can
buy a bottle of water for €1 and pay with card and walk away within 20
seconds, high fees for these payments wont work.

There really is no competition, in Europe its either Visa or Mastercard, not
a great start for competition.

It seems is also a cultural thing. Some countries are more prone to not using cash. Apparently most transactions are already over phone already in Sweden, while in other countries like Portugal or Italy cash is still used a lot in everyday shopping.

But nonetheless I claim the necessity for cash will be evident the very moment it's completely unavailable for the general public, even on those countries which on the surface don't care about having financial privacy.

Banning of cash is objectively a super bullish fundamental for Bitcoin.

Cashless society is a nightmare, not only privacy-wise, but also in other ways we can't currently imagine. I personally don't use credit cards, and if there was no way to buy something for cash, I would usually skip it. At the same time, I'm amazed how people around me opt in for credit cards, like it is something very fashionable and technologically advanced. I would like to see some common sense around me, but not seeing it, so I guess, that's the sad future that expects us no matter what country we live in.

The scenario you indicated is not only possible, but very probable. Further centralization and monopolization, not to mention more control over the lives of the individual members of the society. The fees are almost always absorbed by the consumers. I guess the consumers have no choice but to swallow the increased fees, or maybe, if crypto were widely adopted, switch to using crypto.

This is another very strong argument that the cash of the states will always exist. If, for whatever reason, the state abolishes cash, in which I believe very little, then people will again switch to barter relations and the state will only lose from this.

Tokenized fiat is still fiat. It all comes down to who's backing it, and it's still the government with a bag of potatoes and a pair of stinky socks. JPM's 'coin' is just a value transfer tool for their clients for now, but if they have serious plans to have it become an actual currency-like unit that the average joes can use to pay for things, the situation will obviously change.

Cashless society is a nightmare, not only privacy-wise, but also in other ways we can't currently imagine. I personally don't use credit cards, and if there was no way to buy something for cash, I would usually skip it. At the same time, I'm amazed how people around me opt in for credit cards, like it is something very fashionable and technologically advanced. I would like to see some common sense around me, but not seeing it, so I guess, that's the sad future that expects us no matter what country we live in.

The scenario you indicated is not only possible, but very probable. Further centralization and monopolization, not to mention more control over the lives of the individual members of the society. The fees are almost always absorbed by the consumers. I guess the consumers have no choice but to swallow the increased fees, or maybe, if crypto were widely adopted, switch to using crypto.

This is another very strong argument that the cash of the states will always exist. If, for whatever reason, the state abolishes cash, in which I believe very little, then people will again switch to barter relations and the state will only lose from this.
At a time when non-cash forms of payment are only developing, and their number is growing, it is very strange to see an increase in transaction fees for their users. With increasing competition, the cost of such services should fall.
In any case, it will push people to use cryptocurrency.