There are a ton of merchants that violate the arbitrary credit card “rules” promulgated by the card duopolies.
And, ironically, there is no less arbitrary enforcement of these arbitrary rules by the supposed arbiters themselves.
How did we get here?
Three key archetypes.
First, the merchant.
Every merchant knows more than everyone in the world about everything.
It’s hilarious.
Let us paint the picture.
About three months ago we talked with the CFO of a restaurant chain who was “only paying 3 bps for payments.”
They do < $100M of card volume.
6 locations.
$80 average check.
In fact, the rates they were “paying” were lower than the ISV’s own buy rates (because we know the ISV’s backend processor and helped the ISV with the agreement).
Who’s the CFO?
Some 60-year old lady.
1000% guarantee couldn’t pass an investment banking analyst interview.
Couldn’t pass an entry level finance interview at a software or AI company either.
But somehow got the CFO role because, we’d wager, she was the oldest person in the room when it came time to name someone.
Can count fries better than anyone else so hey, that makes her CFO-caliber, baby!
And of course she wasn’t paying 3 bps.
She had no idea what she was paying.
But don’t worry: she was absolutely certain what her costs were and you couldn’t tell her otherwise.
This is the whole point:
Idiot merchants are out there doing idiot things because they’re idiots.
Second, you have the payments bro.
Payments bro basically invented racketeering, fraudulent inducement, tying, unfair methods of competition, etc..
Payment bro is like the honey badger: doesn’t give two shits about anything.
Now in defense of payment bro the card duopolies are screwing him.
The intent of the surcharge was to offset card costs.
Which happened when surcharge caps were 4%, because business rewards cards and AMEX generally are very expensive – easily into the mid 3% when you look at their interchange rates.
But a few years ago Visa and Mastercard arbitrarily decided to reduce the cap to 3% so they could shit all over the intentions of federal ruling from 2013.
Because duopolies.
Well, at a 3% surcharge limit the payment bro is taking a MASSIVE hit to account profitability.
And honestly, at 3% payment bros can have accounts that aren’t even profitable.
Especially with Visa shitting all over the level 2 and 3 optimizations.
Granted, payments bro was inputting fake data to get the level 2/3 optimizations prior to Visa’s CEDP debacle, but the whole thing is a giant joke anyway.
Visa and Mastercard are forcing merchants into real life Squid Games, where the duopolists invent the most capricious, nonsense game rules and then flippantly (and unpredictably) become enraged over the most asinine matters.
“Okay class, the game is tag and… wait a minute, we don’t like people with mustaches!”
Frankly it resembles fickle, third world dictator insanity.
Go watch the Last King of Scotland and you’ll see the playbook the card brands run.
Payment bro has a hard time toiling under such uncertain conditions.
So the mantra becomes margin over madness.
Payment bro coaxes the merchant to surcharge at 4% to keep his margin.
(Sure, they call it “cash discount” or “dual price” but are doing so in complete dishonesty because they know – or have a duty to know – that this is a violation of the card brand rules).
Lastly, you have the duopoly archetype.
These are the worst of them all.
Merchants are idiots and can’t help themselves. You don’t get mad at a cockroach for eating its own shit because it’s a cockroach.
Payment bros respond in predictable, free market ways. Sure, dubious ethics but you know where they stand on all things payments.
Duopolies are the worst because they’re legally unassailable.
A protected class.
Americans fought a war for independence but inexplicably welcome a group of white hair, pompous queefs dictating what they can and can’t do.
You need to read the following quotes in a pompous British accent to drive it home:
Oooooh, no merchant shall charge their patron a price that we have not aprrrrrrroved. How preposterous.
When you tell the duopolies that a merchant is violating their subjective rules they… do whatever they want.
Maybe they’ll enforce it.
Maybe they won’t.
It’s a f*cking banana republic.
So here’s the solution.
If a consumer is improperly charged they can issue a chargeback and they will win every time.
Just submit the evidence and boom, free good or service.
When a payments provider comes across a merchant in violation of the inconsistent duopoly rules they should first attempt to educate the merchant to be in compliance and take the merchant account.
Of course because the merchant already knows everything, this is a dead end.
Now the payment provider needs to do the following.
Go to Freetard.com.
Select the category of merchant – auto repair services, restaurant, salon – and choose the ZIP code.
Then the positioning goes like this.
Hey consumers, I guarantee you 100% free ____ in ZIP 12345. In exchange for brokering this deal, pay me X% of the value of the service.
This does a few things.
First, it penalizes the merchant for being an idiot.
If you’re too dumb to listen to someone who knows more than you, you deserve to go out of business.
Second, it gives consumers heavily subsidized goods, just like the days of Groupon and daily deals.
Who wouldn’t want a completely free meal at a restaurant?
Groupon was 50% off… depending what the payments professional is willing to accept as their cut, services could be 90% off. Tell us this wouldn’t catch on like crazy.
Third, it does the job that the overlord duopolies are supposed to do by cleaning up the bad actors.
And by the way, we mean “bad” in the sense of the capricious rules streaming out the backside of the duopolies.
Of course this is just a fever dream.
But somebody should build it.
Easily vibe-codeable.
Freetard.com is for sale.
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