Visa and mastercard innovated in an era where payment settlement was notoriously difficult and expensive but they've used their monopolies to entrench themselves in (by negotiating deals with merchants and bribing consumers with points) while the rest of the world moves on towards "layer 2" payment systems that are much cheaper and efficient.
All of them are happy to receive cash or interac (Canadian debit infrastructure) or even e-transfers in some cases (Canadian venmo). But they'll say an extra $1-2 charge if you want to pay by credit card.
Maybe I'm just remembering badly, but I don't remember encountering this twenty years ago; back then the rules were clear that you either didn't accept credit payments, or you did and it was the same price as cash.
Merchant agreements didn't allow surcharges until 2022: https://www.cbc.ca/news/credit-card-surcharge-faq-1.6610356
My memory is in accordance with yours
A sensible business owner increases the base price a little to offset card fees instead of bothering customers with these details and losing sales.
Anyone can pay to anyone instantly free of Charge. Only limit is it's limited to ~ $1000 payment. The QR code can also be dynamically created by POS terminals containing the total bill amount as well, so upon scanning the amount is auto populated in the payment app, you just have to enter the security pin.
And since it's a Govt. Project, its not limited to just one app, there are lots and lots of apps working on the same system. There is even a VISA/Mastercard credit alternative : RuPay that works within the system.
The QR is a URI with the ID, amount and maybe other stuff. It's a client-side implementation.
RuPay sure "works within the system" but is pretty much useless for international payments/subscriptions. Not really a VISA/MasterCard replacement.
(I don't know anything about UPI, but in Indonesia we use a similar system)
Its just a URI.
upi://pay?pa=payeeID&pn=payeeName
I guess Tencent are making their profit from the interest they earn on the money that was transferred into them that just stays in people's Wechat wallets in effectively a parallel currency.
Revolut works similarly. You don’t pay any fees on transfers to other Revolut accounts, but you do for other bank accounts.
Does it? I'd be surprised if it does in the UK at least, as all banks do free transfers to every other bank in the UK via Faster Payments. I thought it was the same in the EU?
> If the card processing cost is 4 percent of the sale price, the fee amounts to $6. That $6 is not 4 percent of the profit; it is 12 percent of the merchant’s margin.
Sure, but merchants are raising prices overall together with all their competitors, or charging more when using a card. Credit cards aren't taking away 12% of merchants' profits that they'd keep otherwise.
Also, credit card fees are not 4%, they're 1.5-3.5% with an average of around 2.3%.
> The merchant may pay little or nothing per transaction, the funds usually arrive immediately and no physical terminal is required.
But what's missing here is fraud protection. It's more like debit cards than credit cards, and debit card transactions are much cheaper in the US too (more like 0.7%).
Now that it's increasingly common for local merchants to implement a credit card surcharge (so non-CC users don't have to pay more), and a large percentage of credit card fees come straight back to the user as rewards (e.g. a 2% cash reward), it's not really clear that payment fees matter all that much in the end. See:
Fed Data Shows Economics of Interchange: 86% of Fees Fund Rewards Programs: https://www.pymnts.com/news/loyalty-and-rewards-news/2025/fe...
Now, would it be nice to not overpay at the first place. Technically we could re-implement the whole thing (instant payout, fraud detection, etc.) like Brazil or India did. It would bring more than $100B back to the US consumers every year, that could be spent elsewhere.
That depends on the market. Suppose you're selling something which has a substitute available for the same price, so the customer will buy whichever one costs less by any amount, but the substitute is in a different market where the payment is in the form of a bank transfer or it's a tax deduction etc., or the substitute is paid for in time rather than money.
Then none of the sellers accepting credit cards can raise the price because otherwise the buyer would go to the substitute.
And all markets are like that to some extent. For some the seller can't raise the price by a cent without losing 100% of their sales. For others, raising the price would "only" cost them 5% of their sales... but that's still 5% of their sales gone, and all the same fixed costs to cover. And, of course, in the cases where the price goes up, now it's the customer eating the fees, which is fairly nefarious when it's being subtly hidden from them.
> Also, credit card fees are not 4%, they're 1.5-3.5% with an average of around 2.3%.
Stripe is 2.9% + $0.30. For a $10 transaction, that's 5.9%. For a $3 transaction it's 12.9% -- of revenue, not profit.
> But what's missing here is fraud protection.
"Fraud protection" is is independent of the fees. You're making the case for that yourself -- if 86% of the fees go to rewards programs then they could be reduced by 86% without affecting "fraud protection", and the rewards programs are a wretched thicket of dark patterns and unpaid interest scams taking advantage of people who are bad at math or too short on time to configure them efficiently, on top of a tax on lower income people who don't qualify for them.
It's also not clear why "fraud protection" should cost anything. The bank has no meaningful way to investigate a low dollar amount he-said she-said and the high dollar amount ones should be going to the actual court system, so why should they have anything more than a set of rules (e.g. which transactions are eligible, how long you have to file a dispute) under which you can make a request to have them flip the bits back in their computer for free?
And they’re much lower than that in the UK and EU. Even the smallest UK retailers can pay as low as 1.6% or 0.8% + £0.02. The big guys who are running billions of £ are paying 0.5% or less.
(These apply to in-person transactions, accepting cards on the internet typically costs more).
I know that the banks are trying to build a payment solution on top of this technology but it's not really getting traction.
I am wondering if there is a way to bootstrap something bottom-up by offering something to merchants that has a clear value prop.
The merchant's system displays this code, you open your online banking app, scan the code, select "SEPA INST" (here's the usability catch!) to make the payment instantaneous, and confirm. Within 10 seconds, the money is transferred to the merchant's account. Either the merchant's bank or a third-party Open Banking API immediately informs the merchant's system (e.g. by push notification or webhook), and a receipt is issued.
Everything is already here, but since this system would be virtually free to use, nobody really has an incentive to push it. It costs money to educate the public, and there is no money to be made. Instead, everyone gets paid handsomely by the card mafia.
- you can send money to companies and individuals alike. It's easier to trick people into fake shop payments, a card payment provider requires at least a bit it verification/registration
- it's really hard to dispute/call back sepa payments. The card companies often step in there afaik
How did Venmo and Cash app get any traction? After all, we already had PayPal. There was already a way to transfer money to your friends.
How did Robinhood get any traction? We already had Etrade and other online brokers.
What many people in Germany want is a payment system that is as anonymous and is as hard to control by some untrusted entitity (both government and banks are very distrusted) as possible and what cash offers. That's basically cash.
Not without reason, in Germany there exists the well-known phrase "Bargeld ist gelebte Freiheit" ("cash is lived freedom").
Any other payment method will not give customers any benefits over those methods. Unless banks are willing to take responsibility for fraud like with card purchases.
We're still orders of magnitude smaller than Visa and Mastercard, but I do believe products like ours (and competition is red hot here, theres so much good choice!) will be good for consumers.
Money should be like a message: free and instant
We're open source btw, happy to show off codebase and review PRs
The only way which has worked for me was actually using g2a with their crypto provider to get a 10$ gift card of rewarble and activate it.
Does your app allow something like this? can I convert any crypto to payment provider which can be accepted from the other side or am I reading it wrong because you do mention PIX, if it can work with PIX, does it work with VISA/Mastercard cards too?
This is a pretty solved problem.
We blocked that card processor, obviously. But the % is very much not constant across e.g. Visa, often every purchase in a day is slightly different, and we can't even tell people what the rate is for their purchase due to a couple layers in between (still figuring out if we can fix that). It's vile, and probably should be illegal to not pass through the cost visibly.
I helped out a friend who owns a deli when he took over from his parents. His dad saw cash as a way to avoid taxation and had some awful payment processor where they paid a high fee and was renting a POTS based terminal - $60/mo to Verizon and $30/mo for the terminal.
Now he keeps one set of books, and raised his average sale by about 10%. Their catering business, which drives profits, are up significantly with online ordering through the POS.
Ditto with a non-profit I was on the board of. Pushing Venmo and Square for donations increased donations by like 30% and reduced shrink at fundraisers. Anyone who claims they can’t afford a 3% fee is going out of business anyway.
See the "raw" rates here: https://www.mastercard.com/content/dam/mccom/us/business/doc...
I guess the question is whether they can distinguish between people who are going to carry a balance but ultimately pay and people who are a true default/bankruptcy risk.