osewalrus (osewalrus) wrote,

Link Harvest: How VISA came to dominate debit cards, and what this fortells for the internet


This is a classic example of the way in which two-sided economic market dynamics work to the overall detriment of consumers -- especially where network effects and lock in are present. On the surface, issuing the Visa signature debit card looks like a convenience to consumers, despite the higher fees, because the fees are hidden. Consumers cannot easily compare the difference in signature debit fees v. debit card fees. Worse, the card fee situation is one small component of the overall banking package. A customer who finds the policy at his or her bank has changed (as opposed to the customer opening a new account) must go to considerable effort to locate a bank with a debit card, close the account, and open a new one -- unlikely to happen on the basis of a fee for cards alone. To make switching even less likely, I have no guarantee that the bank I switch to will continue to use pin debit cards rather than signature debit cards.

This is why I strongly resist transforming broadband access service into a two-sided market by allowing providers to offer prioritization to third parties.

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