Following up on the previous item, here’s a WSJ report from October on Visa’s dominant position in the payments industry:

Visa, based in San Francisco, has built its network over more than 60 years — going back to clunky manual credit-card readers and carbon-paper copies of receipts. It accounts for around 60% of the total dollar amount of U.S. debit-card purchases and about 50% of U.S. credit-card purchases, according to the Nilson Report, a trade publication. Its closest competitor, Mastercard, accounts for around 22% and 23%, respectively. Visa’s profit totaled $17.3 billion in its 2023 fiscal year, after more than tripling in the last decade.

Amex accounts for about 19% of U.S. credit card transactions (and doesn’t support debit), and Discover is down around 3 or 4%. I really thought Visa and Mastercard had comparable market share, but it turns out Visa is far bigger, and it’s Mastercard and Amex that are around the same size.

AnnaMaria Andriotis, reporting for The Wall Street Journal (News+ link):

The Apple card is up for grabs because Goldman Sachs, the bank behind it, is getting out of the consumer lending world. For months, big banks including JPMorgan Chase and Synchrony Financial have been vying to take over as issuer. What hasn’t been known is the equally fierce fight playing out between the networks to win Apple, with Visa and American Express trying to unseat Mastercard, according to people familiar with the matter.

Apple is expected to select a network for the card before it picks the bank to replace Goldman Sachs. Networks provide the plumbing that transmit information between the banks that issue consumers’ cards and the merchants’ banks.

Visa, the largest network, has made an aggressive pitch to win the card, including offering the kind of upfront payment to Apple that’s normally reserved for the biggest card programs, the people said. Visa offered a similar payment when Costco was selecting its network about a decade ago, The Wall Street Journal reported.

American Express is also in the mix, trying to become both the issuer and network of the Apple card, the people said. Goldman had approached Amex to gauge its interest in taking over the card in 2023, the Journal earlier reported.

I’ve always thought Visa and Mastercard were interchangeable. I can’t recall ever once in my life seeing an establishment where one of them was accepted but the other wasn’t, and they both seem to be accepted everywhere that accepts credit cards at all. If there’s a reason to prefer one over the other I’ve never heard it.

Amex is different because it’s accepted at fewer locations because they charge merchants a higher fee, which they get away with because they offer their customers superior service. I wrote back in 2023 that they share an affinity with Apple: both are built around the idea of offering a premium experience and charging higher prices for it.

But I already have a regular Amex card. One of the things I like about Apple Card being a Mastercard (or if they switched to Visa) is that it’s a card I can use anywhere that doesn’t accept Amex.

Mike Masnick has a great piece at TechDirt running down just how stupid everything about Trump’s tariff trade war is:

Whoever on the Council of Economic Advisers used this formula should turn in their econ degree, because this is not how anything works. Even if they then go on to publish another version of the formula that looks all sophisticated and shit.

Brendan Duke, on X, shows that the fancier version of their formula — which is fancy in the way that Vertu phones are “fancy” — is even stupider, because the two Greek letters they chose to glam it up just cancel each other out.

Back to Masnick:

This is what happens when you ask ChatGPT to “make my wrong econ math look more scientific.” The document even admits that they couldn’t figure out the actual tariff rates, so they “proxied” them with this formula instead. That’s a bit like saying you couldn’t find your house keys, so you proxied them with a banana.

The fundamental problem here isn’t just that the tariff numbers are wrong — though they absolutely are. It’s that the entire premise rests on treating trade deficits as if they were tariffs. They’re not the same thing. At all.

Let’s back up for a moment and talk about trade deficits, because Trump has been getting this wrong for longer than some of his supporters have been alive. His logic appears to be:

1. “Deficit” sounds bad
2. Therefore, trade deficits must be bad
3. Therefore, countries with whom we have trade deficits must be cheating us
4. Therefore, we should punish them with tariffs to “level the playing field”

This sounds like it must be an exaggeration for comic effect, but it’s not. That’s how Trump’s mind works. This is what Trump has been saying about trade deficits for decades. It’s like how he understands “asylum” to mean “insane asylum” and so when he talks about political asylum he starts talking about “the late great Hannibal Lecter”.

The Economist:

On economics Mr Trump’s assertions are flat-out nonsense. The president says tariffs are needed to close America’s trade deficit, which he sees as a transfer of wealth to foreigners. Yet as any of the president’s economists could have told him, this overall deficit arises because Americans choose to save less than their country invests — and, crucially, this long-running reality has not stopped its economy from outpacing the rest of the g7 for over three decades. There is no reason why his extra tariffs should eliminate the deficit. Insisting on balanced trade with every trading partner individually is bonkers — like suggesting that Texas would be richer if it insisted on balanced trade with each of the other 49 states, or asking a company to ensure that each of its suppliers is also a customer.

And Mr Trump’s grasp of the technicalities was pathetic. He suggested that the new tariffs were based on an assessment of a country’s tariffs against America, plus currency manipulation and other supposed distortions, such as value-added tax. But it looks as if officials set the tariffs using a formula that takes America’s bilateral trade deficit as a share of goods imported from each country and halves it — which is almost as random as taxing you on the number of vowels in your name.

There is no way to report on these tariffs in a way that is honest and accurate without describing them as bonkers and nonsensical. News publications that are trying to present them as rational, or describing them as “reciprocal” just because that’s the word the White House is using, are beclowning themselves.

CNBC:

• Markets plunged the day after President Donald Trump imposed a far-reaching “reciprocal tariff” policy, including a 10% baseline tariff on almost every country on earth.
• The plan slaps much steeper tariff rates on many countries, including 34% on China, 20% on the European Union, 46% on Vietnam and 32% on Taiwan.
• Economists and U.S. trade partners are raising questions about how the White House calculated the tariff rates it claimed other countries “charge” the United States.

Apple, in particular, is taking it on the chin, about 9.5% for the day. Amazon and Meta were both down 9%. Nike is down over 13%. From CNBC’s corresponding story on just how the White House computed the “tariff” rates it claims for various countries:

Many observers said the U.S. appeared to have divided the trade deficit by imports from a given country to arrive at tariff rates for individual countries.

Such methodology doesn’t necessarily align with the conventional approach for calculating tariffs and implies the U.S. would have looked at only the trade deficit in goods and ignored trade in services.

“Such methodology doesn’t necessarily align with the conventional approach” is an overlong euphemism for “The president literally doesn’t understand what tariffs are.” James Surowiecki was seemingly the first person to figure out the White House’s nonsensical formula:

Just figured out where these fake tariff rates come from. They didn’t actually calculate tariff rates + non-tariff barriers, as they say they did. Instead, for every country, they just took our trade deficit with that country and divided it by the country’s exports to us.

So we have a $17.9 billion trade deficit with Indonesia. Its exports to us are $28 billion. $17.9/$28 = 64%, which Trump claims is the tariff rate Indonesia charges us. What extraordinary nonsense this is.

Don’t rack your brain trying to make sense out of the nonsensical.