PayPal and the credit card industry are taking advantage of consumers

As rising prices have forced consumers all over the world to reduce their spending and find new ways of coping with the increased cost of living, consumers are finding themselves relying on credit cards even more than they already were.

More Americans are unable to pay their credit card bills in full at the end of the month, with 46% of credit cardholders carrying month-to-month debt, up from 39% in 2022. A recent report from the Federal Reserve Bank of New York highlighted how the current 15% year-to-year credit card balance increase represents the largest jump in more than 20 years.

It’s undeniable that ordinary people are facing higher prices across the board, and are increasingly unable to make credit card payments. That’s because payments giants like PayPal are taking advantage of consumers, and we’ve all been letting them get away with it.

As credit card spending in the United States almost entirely benefits Visa and Mastercard, who handle 80% of total transactions, the failure of the competitive model in the credit card industry may be to blame for at least part of the crisis at hand

But that’s not all: With the highest credit card swipe fees of any major economy, American businesses pay up to seven times more in swipe fees than businesses in Europe, and five times more than businesses in China — a cost that gets passed down directly to consumers. In order to avoid shouldering transaction costs, merchants are forced to set higher prices than they would prefer — that’s prices for all consumers, not just those choosing to pay by credit card — which essentially means that anyone paying by cash or debit card is forced to pay a higher price for the convenience of a select few.

It’s true that electronic payments are convenient, and they’ve solved many of the cross-border problems posed by an old cash-only mentality. However, consumers end up paying a lot more for this comfort than they might have been led to believe, and they might not even know it.

In 2023, the tec

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Author: Bernhard Muller

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