How do payment processors like MasterCard and Visa compete with each other? Why would I, layperson buying groceries, care?

Question

I ask why would I care because banks invest heavily in making sure customers know on which circuit their cards operate on. However, most places accept both MasterCard and Visa (and potentially others, depending on the country).

In: Economics

Answer 1

As a consumer, you should actually care. I own a restaurant and I take all credit cards. Each separate credit card processor charges different rates. Every year, we have to find the best processing rates. Every year, my prices increase because my fees increase. My fees get passed along to my customers.

Now, imagine if every person who had a Visa and/or Mastercard, called and complained about this processing fees. Imagine if customers demanded that 2.5% never leave their accounts! You are paying these fees because I include them in my prices. If the fees didn’t exist, my prices would be about 3% cheaper immediately.