Yeah, that's kind of the point. Credit cards are mostly supplied by a couple huge companies that aren't interested in improving their rates. It's very rent-seeking, even though there are very feasible alternatives that cost an order of magnitude or two less.
They aren't interested in improving their rates because providing a competitive credit card in the US isn't cheap. You've got cards that provide 2% flat cash back (Citi Double Cash, for example), or cards that provide even higher benefits on rotating or fixed categories. Interchange fees aren't going to drop unless American cardholders are okay with dropping these benefits, and seeing as merchants aren't likely to share the savings I don't see that happening.
The time to lower interchange fees was before reward programs became standard, interest is where card issuers make their money.
Government-sanctioned rent-seekers are not the only kind. The comment by User23 was about payment system rent-seekers in general, with no mention of the government.
The original comment I replied to was about a software as a service company that was a “rent seeker” because it helped businesses manage thier tax liability.
At one small company I worked for, we paid SAAS companies for:
- expense reporting and reimbursement (Concur)
- managing payroll
- Managing retirement benefits
- source control hosting (Github)
- Infrastructure (Microsoft Azure)
- Salesforce (I don’t know what they do)
- Training and Compliance
- Chat (Slack)
- Email, Office software (Microsoft Office 365)
- vending services
Etc.
How are these companies any different than the company that helps businesses manage tax collection? They all saw a business opportunity and my company was glad to pay them so it could focus on its niche.
