Comment by fallingknife
2 years ago
Yeah that's kind of how the system operates in the US. The CC duopoly fleeces merchants and gives out a share of the monopoly profits as rewards to consumers to make any antitrust action against them politically unpopular. It's a shakedown, and yes, getting rid of it would be bad for consumers, at least in the beginning. But it should be done anyway.
I agree except for the part about monopoly. There are in fact competing card networks.
The bitter pill to swallow is that consumer preferences played a role in evolving this system. Card networks are managing a two sided market, and that means offering value to both the merchant and the consumer. Reward programs are examples of consumer value. If Visa decided to kill its “signature” interchange tier, those customers would move to MasterCard.