The rewards programs are the anti-competitive lock-in.
Visa and Mastercard charge high fees because their dominant market position forces merchants to accept them. Then they use part of the fees to bribe customers with rewards programs.
A new payment network doesn't have leverage against merchants so can't charge the same high fees and therefore can't offer the same rewards programs, but then they can't get consumers to use their card, which is what they would need in order to get any leverage.
The rewards programs are a grift. The price of everything goes up by 3% and if you get a rewards card you get 1-2% of it back, therefore you get one. Then you're still out the other 1-2% you wouldn't have been if the market was competitive, the people who don't get one get punished by being out the entire 3% (which inhibits competitors with lower fees), and Visa and Mastercard suck billions of dollars out of the economy into their Scrooge McDuck money bin because consumers have been defrauded into thinking this arrangement is to their advantage.
Even being aware of all that, I don't feel I've been defrauded. I don't have to carry around a wad of cash that can be lost or stolen, and on the rare occasions that I need to I can get the help of the credit card company in recovering money when I actually get defrauded.
This is a great argument for forcing network interop. Akin to net neutrality, allow card companies to transit over the network for reasonable rates. This removes any networks ability to squeeze things like this
It depends where the division is, I guess. It always feels a bit heavy-handed to force private companies to interoperate within their infrastructure. That being said, I don't really know a better way to do it.
Having terminals be more universal would be good, but good luck replacing old ones and convincing entrenched market participants to offer them..
The newer generation of products like BNPL are even worse; they often contractually prevent merchants from charging a surcharge commensurate with the cost of accepting that payment method.
It's the card network using their excessive leverage as a result of a lack of competition that allows the issuing bank to charge such high fees. Because if you accept Visa, you have to accept every Visa.
Visa and Mastercard charge high fees because their dominant market position forces merchants to accept them. Then they use part of the fees to bribe customers with rewards programs.
A new payment network doesn't have leverage against merchants so can't charge the same high fees and therefore can't offer the same rewards programs, but then they can't get consumers to use their card, which is what they would need in order to get any leverage.
The rewards programs are a grift. The price of everything goes up by 3% and if you get a rewards card you get 1-2% of it back, therefore you get one. Then you're still out the other 1-2% you wouldn't have been if the market was competitive, the people who don't get one get punished by being out the entire 3% (which inhibits competitors with lower fees), and Visa and Mastercard suck billions of dollars out of the economy into their Scrooge McDuck money bin because consumers have been defrauded into thinking this arrangement is to their advantage.