No, US interchange fees pay for "reward" cards. You charge everybody 5% extra, you give Karen 5% cashback, she thinks you're "rewarding" her and everybody else get screwed, the payment network keeps the difference.

The EU caps the interchange fee, does that mean the networks exit the business because they can't make money? No. Does it mean they've eliminated fraud? No. But it does mean they can't pay Karen 5% "reward" so they don't. There aren't any cards like that in Europe. For everybody else it makes the system cheaper.

I can assure you they use part of the interchange fee to cover fraudulent transactions or they offload the risk via insurance covering fraudulent transactions. There’s no way the issuing banks or Visa/MC just eat the fraud charges, we all pay for it.

Yes, rewards cards are paid for with interchange fees, but that doesn’t mean that’s the only thing they pay for. Most people pay more interest than they earn in fees per year anyways shrug

Early on the customers were completely liable because the banks claimed that the only wait a fradulent charge could be made is if the customer "allowed" their PIN to get stolen. Eventaully they changed this and made it more customer friendly.

IN Europe the liability shifted to the non complying partner - which helped takeup.

Already the same in the US once EMV was rolled out.