Comment by zamadatix

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).