Having a government payment processor I'm sure would be quite a nightmare as well. Imagine your credit card is the DMV.

The reason these credit card companies wield so much power is the modern duopolistic system. "Monopolies are ILLEGAL" they said. Thusly, an array of duopolistic megacorps essentially acting as a monopoly. Something something game theory. Visa and mastercard. Coke and Pepsi. iPhone and Android. Windows and MacOS. Google search and google search. NASDAQ and NYSE.

The answer is to have 10+ actually competing, financially healthy payment processors. At some point the cabal-like duopolistic behavior breaks down.