Neither Visa nor Mastercard gets 1-3% of purchases. Both payment processors practically get something around 0.2% of card purchases for themselves.
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Do the bank and someone else still take a cut from that? However, as far as I understand, the merchant pays that 1%-3%.
The bank takes the biggest cut there, while Visa and MA take a very marginal one.
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A very comprehensive overview can be found in the thread 
In addition, there is volume-based pricing, meaning large merchants can often negotiate significantly lower fees.
So when headlines report Amazon or Walmart exploring alternative payment methods (Pay by bank or most recently stablecoins), this is likely also used as leverage against the Visa and Mastercard duopoly.
Assuming that fees would have to be lowered for the benefit of merchants, where would the cuts be made and who would compromise on their margins? “Merchant discount” is an item that covers other costs, meaning that among the actual cost items, the single largest is the “Interchange fee,” which is what the merchant’s bank pays to the cardholder’s bank. As @Malanko mentioned, this fee funds the customer benefits offered by the card issuer and serves as an incentive to issue cards. Interestingly, however, the following is true: “Interchange fees are set by the card networks (Visa, Mastercard) but earned by issuing banks”. V / MA thus wield significant power by facilitating the system.
This role, I believe, is an essential part of the business moat. Substantial fees align incentives with banks (and of course also cardholders’ benefits) and thus act as a kind of competitive advantage / moat for existing payment networks. At the same time, however, a balance must be struck between the interests of merchants and issuers, because merchants seemingly finance the entire ecosystem (although the costs are ultimately passed on to the consumer). The value merchants receive is based on network effects, and this can be quite difficult to measure directly in dollars.
However, the interchange fee is a clear lever that V / MA can adjust to compensate merchants if they wish. So, on top of their own margin (19bps), there is a significant buffer in the form of interchange (205bps). Therefore, I do not believe that Visa’s or Mastercard’s slice would be the first target for cuts.
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That’s what the banks’ ability to offer cashback and Payment Method Benefit is based on. Banks are therefore more at a disadvantage than Visa as technology evolves.
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I’d like to offer another perspective on that percentage and slice. In children’s hobbies, I’ve encountered situations where coffee and sausage grilling are offered, and then a card payment terminal is needed. The options are then iZettel or SumUp, which take about a 2% slice of the payment. Every time this has been discussed, someone considers it large. Well, the price of a sausage is usually 2€, and 2% means 4 cents. On the other hand, every unsold sausage at a package price of 2€ results in a 25 cent loss. Nowadays, people simply don’t have cash. Sales are usually at least double if card payment is possible. With cash, the price of a sausage must be exactly 2€. When paying by card, 2.5€ is not a problem at all.
The above illustrates that card payment is the prevailing payment method. The same situation is certainly true in every restaurant and cafe. Even if you had other cheaper and even better payment methods, the customer would likely use a card. Mobile applications have certainly become more common, but they also largely operate with cards. Furthermore, if you set up an online store, you should choose VISA as the payment method. For example, domestic banks are not enough because you exclude foreign customers.
The usability of money is based on trust in its use as a medium of exchange. Clearing is an important step in this. If even some have distrust in this, money will not work or its function will be incomplete.
At the turn of the millennium, I visited some more exotic places, including work assignments in China, away from the big cities, and then in Cambodia. At that time, Visa was a must in Asia. Other cards were often not accepted. Amex already had more payment points at that stage, but certain continents were missing. This leads to another point. Later, after changing employers, the company card changed to Diners Club. Then you usually had to carry your own Visa as a companion. The only good thing was getting into the lounge. Nowadays, you hardly see any Diners signs. It’s hard to say what makes them shunned. But every payment method causes some cost and inconvenience. Not many extra ones are kept. Nowadays it’s either Visa or Master, there’s no need to get another if you’re a customer of one.
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Visa won a class-action lawsuit in which consumers accused the company of not warning about the susceptibility of Vanilla gift cards to scams.
The judge ruled that it is not reasonable to expect that gift cards would be completely protected from scams, and that Visa’s logo does not imply preventing scams or a promise of compensation.
Visa has faced some minor backlash because of this.
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In this thread, you might be interested to know that Visa’s competitor, American Express, released its Q2 results. Development was stable, but net income was slightly below last year’s level.
Revenue rose to a record level, and adjusted EPS grew nicely. The company reported record card usage and strong demand, especially for premium products. The credit segment also performed well.
The full-year guidance remained unchanged.
No major conclusions can probably be drawn from this, but one could imagine that Visa doesn’t have anything particularly worse or unusual in store. Of course, there are differences between these companies.
https://x.com/earnings_guy/status/1946163126165966897
Company’s Own Materials:
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Visa had a solid Q2, where revenue grew significantly, and profit also improved, which indicates the company’s stable position and continued strong demand for its services.
Key business drivers remained strong, and consumer spending in the United States continued to be robust.
According to CEO Ryan McInerney, the company continuously invests in innovation and product development, especially in areas such as artificial intelligence and stablecoins. Through these, the company aims to shape the future of commerce and generate sustainable value for its shareholders in the long term.
https://x.com/earnings_guy/status/1950286902768050444
Company’s Own Materials
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The Bloomberg article below states that credit card companies facilitate payments, but expert Vass Bednar warns of their growing influence as content censors and market regulators. For example, Visa and Mastercard stopped processing payments for certain gaming platforms due to pressure.
Bednar emphasizes the need for digital sovereignty and highlights Brazil’s free Pix system as an example of an alternative model, which Canada aims to follow with its Real-Time Rail project.
There should be no wall.
Credit card companies offer a convenient way to facilitate payments between consumers and merchants, but a public policy expert is concerned the two biggest players in the space are extending their power as global regulators, censoring content, influencing markets and sparking international disputes.
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@Kaisa_Vanha-Perttula and @Marianne_Palmu grabbed some Visa for Femmesalkku. 
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Here’s a fresh “Visa vs Mastercard” comparison:)
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Visa’s revenue grew, and so did its profit, in addition to the number of payments continuing to rise. Consumers’ active card usage supported strong full-year development, and the company’s broad business model also continued to prove its effectiveness.
The company invests in payment system technology and aims to be a key player in the transformation of commerce. Visa sees artificial intelligence, real-time payments, and tokenization, in particular, opening up new opportunities for its future services.
https://x.com/earnings_guy/status/1983264868787503132
https://x.com/EconomyApp/status/1983269050559131845
The company’s own materials
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The most profitable segment, cross-border payments, continues its reasonably strong growth, which naturally reflects positively on the bottom line. The number of cards is still growing at a nice 6% overall, and 9% for credit cards (both figures relative to the statistics at the end of the previous year’s quarter).
The guidance for next year expects low double-digit growth in revenue and earnings per share, with the first quarter being stronger than that. Visa’s fiscal year thus ended with this now published result, meaning their first quarter includes, for example, the Christmas season.
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Visa reported better-than-expected earnings as revenue grew by 12 percent.
Japanese banking and financial group Mizuho believes the company’s growth will continue and sees stablecoins as a long-term opportunity for Visa. Visa is described as “the stablecoin of stablecoins” because it connects networks and expands its stablecoin programs globally.
*Dolev noted that Visa’s stablecoin-linked programs have expanded to “more than 130 card issuing programs in over 40 countries,” with related spending quadrupling year-over-year. *
The analyst highlighted Visa Direct, which he estimates has grown at a compound rate of about 50 percent since 2016 and now accounts for up to 20 percent of Visa’s global debit volume, as a major driver.
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Visa aikoo laajentaa stablecoin-maksujen selvityskykyään CEMEA-alueella yhteistyössä Aquanow’n kanssa.
Tavoitteena on nopeammat ja edullisemmat kansainväliset maksut.
Yhtiö oli jo 2023 pioneeri USDC-selvityksissä, eli pystyy hoitamaan maksutapahtumia USDC:llä. USDC-stablecoin on Yhdysvaltain dollariin sidottu digitaalinen valuutta.
Lisäksi Visa ja Mastercard sopivat 38 miljardin dollarin ratkaisusta ja alentavat korttimaksujen palkkioita.
Separately, Visa and Mastercard on November 10 reported a $38 billion revised settlement with merchants who argued the card networks charged too much, in response to a judge rejecting a smaller settlement. This agreement would bring to an end 20 years of lawsuits in which businesses accused Visa, Mastercard, and banks of antitrust violations, particularly related to swipe fees. The settlement requires Visa and Mastercard to reduce swipe fees, which were roughly 2.35% in 2024 and normally lie between 2% to 2.5%, by 0.1% for five years. Meanwhile, stand consumer rates would be limited at 1.25% for eight years, which indicates a reduction of over 25%. A court filing also enabled businesses to levy up to 3% surcharges on card transactions while selecting which cards to accept.
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