An interesting factoid, but of course you don't think that Microsoft made that investment in their then-failing competitor because they expected a good return. Right?
The liability is usually with the card issuer (bank), unless the merchant fails to meet liability shift requirements - like processes a card via the manually entered numbers or magstripe, rather than the chip in the card if the terminal supports it.
This the way card networks have encouraged migration to systems that support tokens and cryptograms to limit fraud.
For card-not-present transactions (i.e., all online credit card transactions) the liability is the merchant's. There is no recourse for a merchant who is a victim of a stolen card, the money is simply removed from their account.
You can pontificate that its one rogue complainant or you can check the data because its right there and shows race, age and gender of the complainant. The very first page of data shows one sergeant with 25 complaints composed of atleast 11 complainants over 5 years.
The vast majority of that fee that merchants pay goes to the bank, not Visa or Mastercard. And a vast majority of what the bank gets in that fee goes back out to the card owner in the form of rewards. You see merchant fees of 1-2% because that is pretty close to typical rewards paid out on credit cards.
Merchants certainly "notice" and take any opportunity to use an alternative to the card networks. They only accept it because they must to avoid losing a purchase. They would rather customers pay in almost any other form due to interchange costs.
When talking to big merchants about any new payment product, the first question you will hear is often "so, how does this lower my interchange cost?"
That might be true, but it isn't as obviously true as you would think. Credit cards payments are not subject to being stolen or lost. Once you have the approval the money will reach your account.
Of course there are other frauds you are vulnerable to. Which is why it isn't clear what is really best
There are plenty of other payment methods than cash that have guards against being lost/stolen or the other problems with handling cash, but also dont have the high cost of interchange that funds credit card rewards.
Merchants take credit cards to avoid losing a purchase. Cards have such a high volume that consumers expect it and some small portion will skip a purchase if its not an option. But merchants would much prefer you pay with a store card, debit card or one of many other payment methods that dont have the same (2-3%) cost that credit cards do.
That hidden cost is subsidized by the other customers charged the same price but that pay cash, or via debit card rather than credit card, or even with a credit card with lower rewards than yours.
As a merchant that accepts credit cards, I can say that the vast majority of the money comes in via credit cards themselves, and costs 3% in fees. It absolutely comes out of the customer's pocket at the end of the day.
Okay, when you originally you wrote you were effectively paying 2–3% in fees on every transaction for this privilege [the buffer between your actual money and the merchant, quoting the post you were replying to], I took it to implicitly mean every credit card transaction.
If what you really meant is that the cost of the credit card transaction is implicitly in the price everyone is being charged, then sure, I see your point -- except that I think it actually strengthens the original poster's argument for using credit cards! If you pay $25 for a widget in cash and I pay $25 for the same widget on my credit card, then we're literally both paying the same price, but I'm getting the ostensible benefit of using the credit card and you're not. (I would actually argue, unlike the OP, that this is mostly true for debit cards as well, in that you still have a bank fighting to get your money back in a way that isn't true with cash.)
In Australia now, the restriction that Visa/MC used to enforce (same price for cash or CC) has been changed by the Reserve Bank (AU equiv of the Fed) so that surcharges etc are visible. So these days most merchants apply a ~1% surcharge for CC transactions.
We also have an "EFTPOS" network that is independent of Visa/MC. It's a debit account network owned by the banks that give you access to savings or cheque accounts. It's charges are much lower than Visa/MC, so merchants like when you use it and don't apply a surcharge.
