Comment by rprend
2 months ago
The merchant would disagree, but the merchant is lying to themselves, haha. The tough lesson i had to learn was people’s stated preferences often don’t match their revealed preferences. I really wanted it to be true so i gave them a ton of benefit of the doubt, but still lukewarm response.
Regulation on interchange worked in Europe. The other option is government mandated support for bank transfer rails. That’s how UPI in India and Pix in Brazil took off- they were mandatory.
The US has FedNow, but it’s push only (not user facing, too high friction for checkout). RfPs are there but still low adoption.
Are you saying if MasterCard offered the merchant a 0.2% fee instead of the 2% fee, with all else equal, the merchant would actually prefer to keep the 2% fee?
To me the situation described sounds a lot like "I thought people cared about cheaper healthcare but when I offered them free clinic visits in Antartica nobody wanted to come. I guess they are just lying to themselves" - completely ignoring the reason for the rejection was the overlooked additional friction which actually raised total losses, not disinterest in lower cost itself. Offer a solution without the additional friction but with the improvement in the metric and I'm convinced you would find they are not lying to themselves about wanting to have more profit. Of course, the hard part here is creating such a solution would be extremely difficult (you'd have to onboard hundreds of millions of active users before you could pitch your solution to businesses, a bit of a paradox) - hence why MasterCard gets away with the rates and competition can not form (rather than confused merchants).