Deumlaokeng

Long Visa: Not All Credit Card Companies Are Created Equal

Most credit card companies are created quite equal, especially Visa and Mastercard as they are simply different sides of the same coin, the same monopoly or maybe now a veneer of a duopoly, formerly a single-sided monopoly, the banker's consortium known amongst us merchants as "Merchant Services". One can not go wrong investing in any monopoly that has the power to raise rates at will, not to mention the power to force merchants to buy airline tickets for the consumer. The only downside is a slide in consumer spending which can easily be offset by raising the discount rates they charge the merchants, even though the cost of processing goes down. And that is exactly what they are currently doing, raising rates to offset the spending slowdown. Resistance is futile.

Discover and Amex are not monopolies but mere secondary players. Many merchants are able to survive without accepting those cards. As the VISA/MC duopoly begins to increase rates to offset decreases in consumer spending, as well as to offset financial losses elsewhere, expect to see more merchants stop accepting AMEX as the cost averaging of the transaction fees no longer allows for the far higher AMEX costs. As for Discover, I have never lost a sale over the past 20 years for not accepting that card, they are not really in the game.