[mrep]

Having 4 main companies (mastercard, visa, discover, and american express) doesn't make you a monopoly or cartel.

Obviously, they do have more market power than purely competitive environments but they do compete a lot on rewards which cut into the profitability of those interchange rates. I cannot find any source to measure the interchange fees - rewards profitability but I did find one that shows most of their profits don't come from those but instead interest rates [0] and I'd bet they don't make so much after the rewards (I get minimum 1% cash back on my cards and sometimes up to 5%).

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

[projektfu]

Rewards are entirely paid for by higher interchange rates. If a card is paying a 1% reward of some sort, it is also costing the merchant at least 1% more than non-reward cards at the interchange level. A lot of this is hidden by services like Stripe and Square that have flat fees for merchants (which are higher than any interchange fee) and also by processing ISOs that hide the interchange rates in their own synthetic flat fees. Nevertheless, the interchange rates are easily googled and differ somewhat based on merchant industry and size (market power again). Convenience stores successfully banded together and negotiated a lower rate for their industry. National-scale grocery chains also pay less. Again, not an example of a competitive market. The most effective means to cap rates has been legislation (e.g. the Durbin amendment and efforts in the EU.) because of the cartel-like behavior of the market participants to keep prices high and compete on "features".