VISA provides a valuable service, and they need to get paid. It's not like Stripe is now just another cog in the machine. Well, this likely secures their future.
Do they? Consider Brazil or the Netherlands, countries where the dominant way to pay for things online is by direct bank transfer. In the case of the Netherlands, iDEAL represents 54% of online transactions and offers instant transfer out of a customer's bank account at virtually zero cost to a merchant.
Compare that to Visa in the US, where you get your payments several business days later at a substantial fee. What valuable service is Visa providing? They're not. I don't believe you'll be able to find a single large merchant in the US who thinks Visa provide anything approaching a valuable service.
> What valuable service is Visa providing? They're not.
They're providing value to consumers. Here are some of the features I love about my credit card:
- Purchase protection; I feel totally confident in buying anything, even from sketchy sites and strange stalls, because if there's a problem Visa immediately reverses it
- Rewards: I have hundreds of thousands of miles from credit card rewards. This represents literally thousands of dollars in value the cards have provided me.
- Concierge: I sometimes have my concierge serve as a VA.
This argument is silly. Value is determined by price and benefit. If VISA were not providing value, then no one would pay for their services. However this is not the case and we can find through unverified online sources that, "VISA creates value for all its stakeholders during the process. Cardholders’ benefit because of convenience, security, and rewards associated with card payments. Merchants benefit from improved sales by offering payment method options to the customers. Banks get new revenue streams through card fees, late payment interests, and transaction fee cuts." [1]
You are living in a dream world. Give me access to Visa / US banking infrastructure and I'm 100% certain I can find ways to bring down costs by at least 99% and probably at the same time make it more secure and consumer friendly.
Take the laissez–faire attitude in government, with a sprinkling of corruption at the highest levels of the financial industry, and you get merchant costs that you have in the US.
Wow, what a claim, right?
Let me ask you this. In what industry in the history of the world's economies can prices (such as those that banks / credit cards charge merchants) remain so stable in a truly competitive environment?
The point I was attempting to make was VISA does provide value. This value is estimated as the price clients pay plus the estimated benefit clients receive. This previous post also mentioned that you would be able to provide the same value VISA does given the same market opportunity (albeit at a lower price). Therefore I believe we are in agreement.
I was not diving into VISA's market power, their ability to price their services, nor other politics.
I guess based on those definitions wouldn't you need to subtract value based on the differential between services provided vs cost of said services if in fact they are being offered at unreasonable price?
Perhaps not on micro-scale, but on macro-scale it's certainly arguable that over priced goods extract value from an economy unnecessarily. In a way perhaps this sort of tactic can have negative overall effect on economy, and thus create negative value.
Otherwise it would seem the word "value" has no real meaning.
It would have to be true that the price VISA is able to charge is in excess of the total customer benefit. But then no one would buy VISA's services because it is not worth the money they would have to pay.
If this were a drawing, total value would be a summation of cost to provide the aervice (C), price to the customer (P) and benefit to the customer (B). Value captured by VISA is P-C and value captured by customer is B-P.
Your response tells me you're somehow missing the point. Sort of reminds me of a funny joke I heard a long time ago. I don't know original source, but I found this joke, in many similar iterations, across many forums online:
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A farmer asks an engineer, a physicist and a mathematician to build the most efficient fence around his flock of sheep.
The engineer builds a square fence around the sheep and says "That's the best I can do".
The physicist builds a circular fence, then says "That's the best I can do".
The mathematician smirks and takes a meter-long length of fence, wraps it around himself and declares triumphantly "I define myself to be outside!"
