[weberc2]

Why does it bottom out in these credit card companies? Is it just prohibitively hard to set up a competitor because you need some critical mass of banks to sign on? Or because people want to pay with credit card and cc companies will prohibit transactions to a fledgling competitor?

[samfisher83]

Ultimately the ones who issue the credit are the banks. Banks have a lot of rules to follow set by the government. They are the ones who created visa and mc. PayPal, stripe all these other services ultimately rely on them. You can do BTC, but there is risk there to with trasaction costs and changing exchange rate.

These banks want to reduce thier risks as much as possible. CC laws in America provide a lot of protection for the consumer.

[sonnyblarney]

It's not about 'rules' and not even so much mitigating risk - it's just basic cartel/oligarchy practices.

They do it because they think it's good for them, and/or they can.

It sometimes only takes one person, doing what they think is right, for whatever reason, for a lot of this stuff to happen.

Edit: we like to think that large systems are intelligent. Sometimes they are, if there are thoughtful rules and processes. More often than not - there aren't. CEOs lean on M&A teams to buy companies for a lot of money on a hunch. Because they 'liked' someone, or something, even when the research shows otherwise. When situations are politicized especially outside the scope of clear operational guidelines ... it can just be 'one person'.

Example: the CEO or someone else could send a half-sentence email 'do this' (i.e. shut down a customer) and it will get done. Maybe there was process, maybe not. Maybe it's politics, risk aversion. Maybe it's not corporate risk aversion but individual risk aversion, i.e. a VP not wanting to create a fuss. Maybe there's an outside body putting pressure on Visa/MC and someone inside doesn't want to put up a fuss. Maybe it's favours for favours. Maybe it's avoiding the ire of the Feds. Maybe there's a specious court order that Visa/MC thinks is spurious, but they don't want to bother arguing it. Maybe a a key customer or two are complaining. Maybe the PR lead is putting up a scare, indicating that there's going to be some major press about it soon and they need to get ahead of this. Maybe the VP Legal is protecting themselves. Or is being risk averse.

Even when it's complicated, it's often not complicated in a nice, rational way.

In my experience with large organization, it's really the reduction of personalities, self-interest, risk avoidance, sycophantism, 'following orders' etc.. There's rarely an overall coherent, thoughtful dynamic to these kinds of things.

But maybe there is a clear story here ...