Credit Card Financial Transaction Taxes

Following up my latest post on how much I get charged for using a credit card for making payments that are not in Euros (answer - a minimum of about 2%), I thought I would have a look at what sort of financial transaction taxes are being paid by the merchants.

It seems very complicated. You can find places where they say that the rate is typically between 1-3%, but it is difficult for the merchant to know precisely what they are paying. Everything gets wrapped up in what is called the merchant discount  that includes not only charges made by the credit card network (Visa, MasterCard, American Express etc), but also charges made by the bank.

It will probably be very difficult for me to get the full details, but I have found rates charged by Visa in the USA here. The table is full of variants,  with the lowest rate appears to be offered to Supermarkets (0.95% + $0.20). But what is called the "Standard Interchange Reimbursement Fee" is a whopping 2.95% + $0.10. Add some additional bank fees on that, and the so-called "Merchant discount" could be 4% or more.

For Mastercard, I found another website where they explain that the rates depend on which country you are in. Here's how they explain the variations : "Interchange fees are set by taking into account local market conditions including, inter alia, competitive pressures from other payment methods, long-term trends in costs, regulatory context, the need for investment in new technology, and the need to provide incentives to increase the efficiency of the system."

In other words, they charge as much as they can get away with.

For some reason, in Germany, the highest rate mentioned is 0.90% + €0.05. For France and the UK , on the other hand, the "Base" rate charged on MasterCard Corporate transactions is 1.90%. Why are German merchants given a better deal?? Beats me.

In conclusion, I would like to know if there is any moral justification for the banks charging transaction taxes of 1-3% (plus 2% if you have the nerve to make a payment in another currency), and then complaining about the possibility of being charged 0.1% by the EU or by a national government for making their financial transactions.  For me, the banks just provide the infrastructure for making the transactions. The governments provide the education system, the transport system, the health system, the police forces and the defense.  Which system is providing the best deal for the public??