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It is mind blowing that in 2021 we have a payment system collecting a fairly big percentage of the economy's output.

I don't know for sure, but 2% over revenue could easily be about what the government collects in corporate taxes derived from that revenue.




In this case it's a consequence of Brexit. In European economic area those fees are capped pretty low.


How so? Did leaving EU imply giving up laws already adopted while in the EU?


It did. In this case the EU interchange restriction of 0.3% has been revoked


It dit not. UK can choose which laws to repel.


When the UK left the EU all EU laws previously put into UK law remained in place. Now the UK has left they can repeal those laws as they choose.


that was the point of leaving?


2% sounds high, something under 1% sounds reasonable for unified network providing reasonably secure payment flow. Dealing with lot of cash isn't really free either. It gets quite complicated and less secure if sums were really to increase.


2-3% sounds reasonable to bootstrap taking into account risk, but the question is why hasn't it gotten lower (and processors seem to want it to go higher) as technology has improved? Probably not enough competition and incentive to make improvements and pass on savings.


But that 2% fee is squeezed out from the processors anyways and flows back to consumers.


I think this is not the case. Actually, it's more like they give you some restricted benefits matching something near the fees incurred. And only if you redeem them.

It is also virtually cross subsidy from people paying cash/bank transfer to people paying by credit cards.


The full 2% isn’t squeezed out but a big portion is. When I can sign up for a credit card, charge $5000 then get $800 back, it’s pretty clear the credit card company is using much of that 2% for customer acquisition.

And as per my other comment, the customer isn’t necessarily paying the full 2%. If credit card companies became charities and charged 0% would all prices drop by 2%? Of course not.


online payment transaction costs are huge, and completely unnecessary, and they will keep eating up on the value of the economy because they're a monopoly.

at least all b2b transactions should move out of card payments, and hopefully with crepto or modern digital banks the b2c will follow, but right now too many banks are holding people's money and too many of them are consolidated / act as a cartel.




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