don't the incentives seem wrong? they're limited to 10% margin so what's the incentive for them to keep costs down for consumers? they only make more money when the costs go up.

It's called a perverse incentive, and it's really common when politicians think themselves economists.

The one that bugs me the most is that the margin generated by credit and debit card transaction fees is similarly limited in the US, but insuring transactions against fraud is part of the costs. Because of this, US credit card transactions are like a playbook of what not to do in security.

The way it works is that their margin is essentially fixed, so they drive wasteful spending to increase profits. It's worse for all of us because we have to pay for both the waste and the profits.