Originally Posted by
cbn42
Discover is weaker because it has less market share and therefore less leverage. If they tried to exert their power like Visa is doing with Kroger, then Kroger could dump them without any problem, because practically everyone has another card.
Discover needs to up their card offerings then so more consumers will be attracted to them.
Visa and Mastercard effectively act as a duopoly and set the rates. Discover and Amex basically have to accept them, unless they can provide an extra service to justify a higher rate, which Amex may have been able to do in the past but likely cannot anymore.
That's not Visa and Mastercard's problem that AMEX is mismanaged and Discover can't provide other offerings... There's still competition, however - it's just AMX/Disc have different target markets.
There are still plenty of free checking accounts if anyone wants one. Big banks make it easy to avoid the monthly fee by having direct deposit or a minimum balance, and credit unions often have accounts that are completely free.
It's the principal behind it... When government gets involved, prices go up. Prices went up after Durbin was passed. It doesn't matter if it's "easy" to waive the fees, the fact is the minimums are higher and direct deposits are required now. Most credit unions offer an inferior service when it comes to technology, web interfaces, and other features, so many would rather use a bank like Chase.
By my quick back-of-the-envelope calculations, Amazon, Target and Walmart account for about 20% of the retail business in the US. In contrast, the three largest banks (Chase, Bank of America and Wells Fargo) account for 32% of the nation's bank deposits.
Need sources. Amazon has swallowed retail businesses and Walmart has leverage to force lower prices on their everyday products.
The solution would be for the government to tell Visa/MC/Disc/AMEX to split so there's eight competitors rather than four --- I'd rather see that than forced price controls through regulation.