[knuththetruth]

>It reminds me in some ways of net neutrality: yes, fast lanes and slow lanes have real downsides. But there's vast capex required to build the infrastructure we need. How should that be paid for?

Defending credit card fees by criticizing net-neutrality. I guess at least he’s being interviewed in the right subreddit...

[objclxt]

> These steep fees also fund (a) vast extension of consumer credit, (b) massive card distribution programs, and (c) the downsides of a generally frictionless payment method (occasional fraud losses), all of which together yields higher spending for merchants.

This is a bit disingenuous. He makes it sound like these fees are the primary income for card companies, but that's not the case. Interchange and merchant fees represent a minority of revenue for card companies[1] - about 26%. The bulk of actual revenue comes from cash advances, fees charged to the customer (both annual and penalty fees), interest on balances, and ancillary products like insurance.

Here's the rub: if the US regulated credit card fees like they do debit cards (via the Durbin amendment) Visa would still be profitable - they happily operate and makes money in countries where credit card fees are capped by law, like Australia. They wouldn't be as profitable, sure. Neither would Stripe.

[1]: https://www.fool.com/credit-cards/2017/04/13/this-is-how-cre...

[pktgen]

> They wouldn't be as profitable, sure. Neither would Stripe.

It shouldn't even affect Stripe all that much. The CC fees are just a pass-through expense for them; their product is the infrastructure value-add, which AFAIK nobody is suggesting needs to be price-regulated.

One of the reasons the Federal Reserve was created was to eliminate rent-seeking by banks in check clearing. (The previous system was that banks would clear checks directly among each other, leading to abuses where banks would charge exorbitant fees to other banks.) I'd argue credit/debit cards are just as important today as checks were in 1913. A functioning economy requires a functioning payment system.

[vruiz]

I had to read that several times and I still can't understand his argument. Perhaps the phrasing didn't come out as he intended.

[ikeboy]

He is defending allowing companies with significant capex to collect rents, with the justification that if the rents were not allowed then the capex would not be expended.

[skybrian]

I'm not sure he's taking that strong a position? It's more like he's saying that if we lowered fees, there might be unwanted side effects, so something might need to be done about that.