We’d love to say that this can be solved in civilized, private market manner, but it took 20 years to settle a class action against Visa and Mastercard and the card schemes weren’t even penalized.
This is how you know that the free market system is broken, that there really is no free market, and that the whole thing is an illusion.
No business can reasonably wait 20 years for change.
And no business can wait 20 years for a “penalty” that doesn’t even penalize the guilty parties.
It’s totally absurd.
Visa and Mastercard control so much commerce that they are duopolies.
They arrived at their privileged positions through the authoring and perpetuation of self-serving laws enacted by government bodies and associated cronies.
This is NOT how a free market works.
So because this is clearly not a free market, the only counterbalance is for the world’s biggest monopoly (ie. the US government) to regulate them as utilities.
Would love to avoid regulation obviously, but when everything else is broken, what options are left?
Here’s an example that shows the inconsistency and monopolistic power the card schemes wield.
Cryptocurrency is a growing type of tender.
Crypto went from “annoying cousin” to “potential threat” over COVID – see the below graph which shows that global crypto market cap at nearly $3T. The global economy is pegged at $105T, so there’s a long way to go, but crypto is growing.
Fearful of disruption, Visa and Mastercard made it permissible to buy crypto with their credit and debit networks, in addition to actively investing in a number of crypto solutions that remove the friction in involving the card schemes from your crypto commerce.
Go look at any of the large crypto platforms and you can buy crypto with your card.
The barrier to buying crypto comes from the issuing banks, not the card schemes (although Amex does not currently allow you to buy crypto directly, you can easily buy it through any number of wallets, like Cash App).
No biggie: if you are adamant about buying crypto with your card then you can move banks (though this is getting more challenging thanks to additional government meddling that’s pushing banks into further consolidation, creating a “too-big-to-fail”, nearly-statist banking system).
But check this out.
Crypto is increasingly being used to fund sex trafficking.
The Financial Crimes Enforcement Network (FinCEN) has released an analysis that reports an alleged increase in the use of cryptocurrency in human trafficking cases. According to FinCEN, reports of cryptocurrency linked to these purposes grew from 336 in 2020 to 1,975 in 2021, an increase of almost 500%.
And this is just what’s being caught, so it’s inarguably higher.
The American blockchain analysis firm’s “2024 Crypto Crime Report” found that $24.2 billion of illicit cryptocurrency was transferred in 2023, based on already identified illicit crypto wallets. Chainalysis retroactively updates its yearly crypto figures when new illicit wallets come to light.
Again, this is just what’s being caught.
Before crypto this activity was being funded by this very popular and ubiquitous tender called… cash.
Yet the card schemes never prevented you from using your card for cash advances.
Because someone with a brain probably realized you’re not going to stop bad people from doing bad things simply by making it marginally more inconvenient.
So Visa and Mastercard are cool with you riding their rails to acquire crypto to buy 6-year Ecuadorean girls or send money to ISIS.
But cannabis?
Better not.
That’s obviously way worse than abusing minors and murdering tens of thousands of people because they don’t believe in the same deity.
Combined.
There have been countless attempts – some very creative, actually – to enable card purchases for cannabis.
And these attempts (at least the ones germane to this article) follow the same logic that Visa and Mastercard have applied (i.e. set legal precedent for) in allowing crypto on their networks.
For example, Dutchie enabled cannabis customers to purchase crypto which could then be used to purchase cannabis, and Mastercard shut it down.
Mastercard said Dutchie was layering but news flash: literally anything can be interpreted as layering.
Now, Dutchie could have improved their crypto approach to make it more durable (we’re not going to give them free consulting on a blog), but still:
You can’t have it both ways.
Visa and Mastercard can’t pick winners and losers, or if they do then they need to be aggressively litigated.
Either they have zero responsibility or they are culpable for their decisions.
It’s the same legal turmoil facing the large social networks.
It goes like this:
If someone tells the social networks that they need to police their sites (like take down child pornography, as an example), the social networks contend that they’re just publishing platforms and can’t be responsible for what’s posted. Congress has agreed with the social networks and allows the social networks to fall under Section 230, a ruling that protects social networks from the same kind of exposures that traditional media outlets might face for publishing something that’s incorrect.
But when certain groups – let’s say conservatives – then blast the same social networks for removing their content, the social networks take the opposite f*cking stance and say that they can remove whatever they want with impunity.
Talk about a double standard.
While the title of this article is jarring, it highlights a very real bias that we see the card schemes perpetuating against cannabis.
The cannabis industry likely has compelling grounds for class action litigation with damages stemming from discriminatory business practices resulting in tortious interference.
Where’s the cannabis trade association in this?
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