Valve confirms credit card companies pressured it to delist certain adult games

Why do payment processors do stuff like this? Is there some regulation that requires them to? I get that they don't want to process fraudulent transactions, but I'd think the response to a higher percentage of fraud from some industry would be to charge them more. It doesn't make sense to me why they would be concerned about the content of games, as long as everything is legal and the parties concerned aren't subject to sanctions.

Some of these games seem completely abhorrent, and probably illegal in more restrictive jurisdictions, but not the United States. And I've not seen any suggestion they're funding terrorism or something. So I'm perplexed.

One factor is the ongoing campaigns from number of moral crusading groups who lobby them to cut off payment processing for things they don't approve of. NCOSE has been working for decades on the project, and targeting credit card companies has been a successful tactic for them for a decade or so.

[1] https://www.eff.org/deeplinks/2020/12/visa-and-mastercard-ar...

[2] https://www.newsweek.com/why-visa-mastercard-being-blamed-on...

[3] https://scholarworks.iu.edu/dspace/bitstreams/761eb6c3-9377-...

Targeting them with what?

What could possibly hold enough leverage that Visa would jeopardize their sweet gig as an ideology-neutral, essential piece of American infrastructure siphoning 1-2% off of every dollar of consumer spending?

The leverage is that the activists will potentially be able to draw the ire of the government. Visa and MC get away with absolute murder in terms of the size of the fees that they charge in the US. Most developed countries don't allow that. The US government could easily regulate them (as they already do with debit card fees) or use anti-trust law against the obvious duopoly charging exorbitant prices. Because of this situation, Visa and MC have a very strong incentive to crack down on things the government doesn't like.

The unspoken arrangement is that the government allows them to keep charging a de facto sales tax on a massive portion of the economy as long as they cooperate and de facto ban things that the government wants banned but can't ban themselves due to that pesky constitution.

Tbh that's quite alarming what you've just said, and I'm not saying about government. I'm saying about an additional huge sales tax. I understand that wiring money or sending them in an envelope is the thing of past, but e.g. in my country and in whole EU the digital payment is promoted as the only righteous, because "cash is only used by gangsters and human traffickers" etc. And this is really playing against us and pushing us to the duopoly you've mentioned

Credit cards are much less heavily relied on in Europe than in the USA. Europe basically runs on debit cards that every kid can have and where the fees are minuscule. There are countless banks providing the service and everything is highly regulated. On top of that, Europe still curbed Visa and Mastercard several times for antitrust behaviour. And the idea that physical money primarily aids social fraud, money laundering and other illegal activities is pretty well established. They even killed the 500€ bank note, because it was almost exclusively used by criminals and most normal people never even touched one, much less used one for legit transactions.

I'm not sure which European country you're talking about, but in France most transaction are now done by card. Yes it's mostly debit cards, but they're still handled almost exclusively by Visa and Mastercard.

Many banks have tried to start other electronic payments independent from those 2 (for example Wero) but it doesn't really get any traction.

So I don't see how the duopoly is any less powerful here.