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OpenTransact - A simple spec for financial transactions

5 points by pelle 17y ago

sophacles 17y ago
Something like this will never become widespread unfortunately. See, banking has it too good right now. They get to charge people strange fees, and credit interest AND they get to charge per transaction on credit cards as well. This means they get paid whenever transactions happen. With this system it becomes so laughably cheap to pass money around, it will be like going back to cash, which means there doesn't need to be a per-transaction overhead. As such, lots of institutions would lose out on the money they get now. Such things scare the large existing banks, so they won't support it until they have to. No merchants will accept it, for the reason that no one uses it. Thus you end up with a chicken/egg problem.
- pelle 17y ago
  While existing institutions could use it, I agree that they probably wont. This is a classic innovators dilemma where a bunch of small new services could form, be ignored, grow and eventually replace the status quo. I wrote a long 5 post article series about this last summer, which has spawned the Agile Banking community behind OpenTransact: http://stakeventures.com/articles/2009/06/29/risky-business http://stakeventures.com/articles/2009/06/29/risky-business
  - sophacles 17y ago
    Interesting -- looks like a good series. You're right about the potential, but honestly I'm pretty sure that this won't happen. There is just too much regulation in place that prevents you from doing anything money related unless you have a major backer.
    - pelle 17y ago
      Regulators are absolutely our biggest headache, but while hard I don't think it's impossible. It is one of the biggest areas of discussion on the mailing list. If you're interested you should join the Agile Banking group: http://groups.google.com/group/agile-banking?hl=en http://groups.google.com/group/agile-banking?hl=en Regulation is definitely one of the biggest issues, but I theorize if you build small low value services via the grass roots I am convinced we can then work with regulators.
      - sophacles 17y ago
        I am interested, thanks for the pointer.

5 points by pelle 17y ago

Something like this will never become widespread unfortunately. See, banking has it too good right now. They get to charge people strange fees, and credit interest AND they get to charge per transaction on credit cards as well. This means they get paid whenever transactions happen. With this system it becomes so laughably cheap to pass money around, it will be like going back to cash, which means there doesn't need to be a per-transaction overhead. As such, lots of institutions would lose out on the money they get now. Such things scare the large existing banks, so they won't support it until they have to. No merchants will accept it, for the reason that no one uses it. Thus you end up with a chicken/egg problem.

pelle 17y ago
While existing institutions could use it, I agree that they probably wont. This is a classic innovators dilemma where a bunch of small new services could form, be ignored, grow and eventually replace the status quo. I wrote a long 5 post article series about this last summer, which has spawned the Agile Banking community behind OpenTransact: http://stakeventures.com/articles/2009/06/29/risky-business http://stakeventures.com/articles/2009/06/29/risky-business
- sophacles 17y ago
  Interesting -- looks like a good series. You're right about the potential, but honestly I'm pretty sure that this won't happen. There is just too much regulation in place that prevents you from doing anything money related unless you have a major backer.
  - pelle 17y ago
    Regulators are absolutely our biggest headache, but while hard I don't think it's impossible. It is one of the biggest areas of discussion on the mailing list. If you're interested you should join the Agile Banking group: http://groups.google.com/group/agile-banking?hl=en http://groups.google.com/group/agile-banking?hl=en Regulation is definitely one of the biggest issues, but I theorize if you build small low value services via the grass roots I am convinced we can then work with regulators.
    - sophacles 17y ago
      I am interested, thanks for the pointer.