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Forget Google, time to end the Visa-MasterCard duopoly

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Re: Forget Google, time to end the Visa-MasterCard duopoly

#71

Post by newacct583 »

briffle wrote: post #54
crazygringo wrote: post #45

I don't get it -- Amex and Discover are still providing healthy competition, so the "duopoly" the author complains about seems to be largely irrelevant. Competition between cards is thriving and consumers benefit -- witness the miniscule transaction fee the credit card companies keep after paying your rewards back of 2% to 5%, when you pay your bill on time. The article's main point is that such large companies are a…

Imagine if companies charged 2-5% less because they didn't have to fund CC company marketing tools like cashbacks.

Indeed, let's imagine. I'm guessing that the increase in seller revenue and decrease in consumer price would sum to... somewhere between two and five percent.

No one cares about numbers like that. That's way, way below the convenience threshold for a typical consumer. Most of us, me included, would rather pay an extra 3.5% than fiddle with deciding on which card to use.

Which is to say: the market has spoken. We've settled on the duopoly not because it's a trap but because it actually maximizes utility. The uniform convenience of "credit cards just work" has quantifiable economic value. And it turns out to be somewhere around 2-5% of the transaction.

Re: Forget Google, time to end the Visa-MasterCard duopoly

#72

Post by pradn »

crazygringo wrote: post #45

I don't get it -- Amex and Discover are still providing healthy competition, so the "duopoly" the author complains about seems to be largely irrelevant. Competition between cards is thriving and consumers benefit -- witness the miniscule transaction fee the credit card companies keep after paying your rewards back of 2% to 5%, when you pay your bill on time. The article's main point is that such large companies are a…

CC rewards seem like a indirect regressive tax. Wealthier consumers who can afford to pay on time and have better credit ratings are subsidized by poor consumers who actually use the "credit" part of "credit card".

Re: Forget Google, time to end the Visa-MasterCard duopoly

#73

Post by crazygringo »

briffle wrote: post #54
crazygringo wrote: post #45

I don't get it -- Amex and Discover are still providing healthy competition, so the "duopoly" the author complains about seems to be largely irrelevant. Competition between cards is thriving and consumers benefit -- witness the miniscule transaction fee the credit card companies keep after paying your rewards back of 2% to 5%, when you pay your bill on time. The article's main point is that such large companies are a…

Imagine if companies charged 2-5% less because they didn't have to fund CC company marketing tools like cashbacks.

That is common. My grocery store, my bodega, my doctor's office, my dentist -- they all offer a 5% discount for paying in cash.

Obviously not everyone does it, but it's certainly not uncommon.

On the other hand, there are also a lot of costs associated with handling cash. The expense of tracking bills and coins and going to the bank every day is not insignificant. So it's pretty easy to argue that there's no reason for cash discounts either, because handling cash can actually be more expensive than handling cards, particularly when you're doing it for only 5 or 10 percent of customers.

Re: Forget Google, time to end the Visa-MasterCard duopoly

#74

Post by Karupan »

wolco wrote: post #68
julienb_sea wrote: post #50

There is literally direct competition with Amex. Sure not everywhere takes amex but the majority do, and you can speak with your dollars (and still hold Visa / MC in case amex fails you). Consumers derive huge benefit from the safety, consistency and reliability of the networks Visa and MasterCard have built out, and yes the consolidation is a certain price to pay for that. These companies invest billions into anti-f…

American Express is not the answer. Let's not replace bad for worse.

I use my Amex regularly. Can you explain how it’s worse?

Re: Forget Google, time to end the Visa-MasterCard duopoly

#75

Post by seph-reed »

vore wrote: post #39
seph-reed wrote: post #24

Earlier quoted context omitted.

"Both" is word that will not make the Newspeak cut.

Calm down. Evoking HN's favorite specter of 1984 about payment processors is a bit much, don't you think?

I was feeling quite calm.

I'm not talking about payment processors so much as the degree to which people feel "either" when they could feel "both."

Divisiveness is quite rampant, and I think the language we use (or don't use) has an effect.

ie "Forget Google" -> why not both?

Re: Forget Google, time to end the Visa-MasterCard duopoly

#76

Post by anamexis »

biaachmonkie wrote: post #59
crazygringo wrote: post #45

I don't get it -- Amex and Discover are still providing healthy competition, so the "duopoly" the author complains about seems to be largely irrelevant. Competition between cards is thriving and consumers benefit -- witness the miniscule transaction fee the credit card companies keep after paying your rewards back of 2% to 5%, when you pay your bill on time. The article's main point is that such large companies are a…

But since the retailers can't offer discounts for cash transactions, people who pay with cash are being over charged and subsidizing those fees.

Retailers can offer discounts for cash transactions, per the Durbin Amendment to the Dodd-Frank bill of 2010.

https://en.wikipedia.org/wiki/Durbin_amendment

Re: Forget Google, time to end the Visa-MasterCard duopoly

#77

Post by cpsempek »

pradn wrote: post #72
crazygringo wrote: post #45

I don't get it -- Amex and Discover are still providing healthy competition, so the "duopoly" the author complains about seems to be largely irrelevant. Competition between cards is thriving and consumers benefit -- witness the miniscule transaction fee the credit card companies keep after paying your rewards back of 2% to 5%, when you pay your bill on time. The article's main point is that such large companies are a…

CC rewards seem like a indirect regressive tax. Wealthier consumers who can afford to pay on time and have better credit ratings are subsidized by poor consumers who actually use the "credit" part of "credit card".

I'm ignorant to CC companies' financials. But I would have thought their revenues are driven by transaction fees, which end up ultimately getting passed down to the buyer through higher prices. Would be interested to learn more though about CC economics. It would indeed be sad if CC rewards operated like a regressive tax, as you say.

Re: Forget Google, time to end the Visa-MasterCard duopoly

#79

Post by deadbunny »

briffle wrote: post #54
crazygringo wrote: post #45

I don't get it -- Amex and Discover are still providing healthy competition, so the "duopoly" the author complains about seems to be largely irrelevant. Competition between cards is thriving and consumers benefit -- witness the miniscule transaction fee the credit card companies keep after paying your rewards back of 2% to 5%, when you pay your bill on time. The article's main point is that such large companies are a…

Imagine if companies charged 2-5% less because they didn't have to fund CC company marketing tools like cashbacks.

So, Europe?

Re: Forget Google, time to end the Visa-MasterCard duopoly

#80

Post by alt_f4 »

pradn wrote: post #72
crazygringo wrote: post #45

I don't get it -- Amex and Discover are still providing healthy competition, so the "duopoly" the author complains about seems to be largely irrelevant. Competition between cards is thriving and consumers benefit -- witness the miniscule transaction fee the credit card companies keep after paying your rewards back of 2% to 5%, when you pay your bill on time. The article's main point is that such large companies are a…

CC rewards seem like a indirect regressive tax. Wealthier consumers who can afford to pay on time and have better credit ratings are subsidized by poor consumers who actually use the "credit" part of "credit card".

It's not though. No one is forcing you or anyone else to sign up for credit cards - it's a choice, unlike taxation.
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