3 ms·

I was thinking the same thing too. I don't understand why someone else hasn't come up with a better product to get around the Visa/Mastercard network.

toasterlovin 8y ago
Network effects. There are probably hundreds of thousands of credit card terminals installed in the US. The delta of potential improvement is small enough that there isn’t a huge motivation to change anything.
Marsymars 8y ago
There are "better" payment networks, but they're regional, and run either by governments or nonprofit organizations. There doesn't seem to be much will in the US for banks to cooperate to form a nonprofit in order to undercut Visa/MC.
clintonb 8y ago
Money. It takes a lot of money to go to all the banks and convince them to switch credit and debit cards. Before that you have to convince the merchants to accept a new card network. That takes even more money. This cost is why we saw some retailers attempt to make their own wallets. A wallet app is a bit easier to integrate for the merchants than a new card network. The downside is that consumers don’t care about wallet apps. We want our credit card rewards!
- jessaustin 8y ago
  Presumably, a properly-implemented retailer wallet app would produce some economic surplus, which could be shared with consumers in order to convince them to participate?
  - runako 8y ago
    Restaurants like Starbucks do exactly this. You pre-buy Starbucks credit that you later use to pay for coffee. Starbucks benefits because they only incur transaction fees for every (say) $25 pre-paid block, instead of for every $3 coffee. Swipe fees decrease as a percentage of revenue. They reward consumers via their loyalty program.
    - jessaustin 8y ago
      That makes sense, thank you.
    - dragonwriter 8y ago
      > Starbucks benefits because they only incur transaction fees for every (say) $25 pre-paid block, instead of for every $3 coffee. Swipe fees decrease as a percentage of revenue. They also incur benefits because money in hand and earning returns today for goods and services that will (maybe) be provided in the future is better than money received only at the point of sale.
bluedino 8y ago
Plenty of vendors take PayPal. AMEX/Discover can't even take over Visa/MC...
- clintonb 8y ago
  AMEX has historically had much higher fees than Visa or MasterCard. Depending on your age, you may remember a time when AMEX was not accepted everywhere. The fees are why.
  - gnicholas 8y ago
    There are still a decent number of places that don't accept AMEX. I ran into this at a shop in a high-end shopping center recently.
anoncoward111 8y ago
I think cryptocurrencies were an attempt at this but apparently it's actually quite hard to make a resilient network that also has robust features and convenience
phonon 8y ago
Debit cards use the same networks (well, sort of, see https://www.helcim.com/us/pin-debit/ https://www.helcim.com/us/pin-debit/ ) and charge much less (using a debit card with PIN from a large bank, $0.22 plus 0.05%) https://paylinedata.com/blog/regulated-debit-vs-unregulated-debit/ https://paylinedata.com/blog/regulated-debit-vs-unregulated-...

toasterlovin 8y ago

Network effects. There are probably hundreds of thousands of credit card terminals installed in the US. The delta of potential improvement is small enough that there isn’t a huge motivation to change anything.

Marsymars 8y ago

There are "better" payment networks, but they're regional, and run either by governments or nonprofit organizations. There doesn't seem to be much will in the US for banks to cooperate to form a nonprofit in order to undercut Visa/MC.

clintonb 8y ago

Money. It takes a lot of money to go to all the banks and convince them to switch credit and debit cards. Before that you have to convince the merchants to accept a new card network. That takes even more money. This cost is why we saw some retailers attempt to make their own wallets. A wallet app is a bit easier to integrate for the merchants than a new card network. The downside is that consumers don’t care about wallet apps. We want our credit card rewards!

jessaustin 8y ago
Presumably, a properly-implemented retailer wallet app would produce some economic surplus, which could be shared with consumers in order to convince them to participate?
- runako 8y ago
  Restaurants like Starbucks do exactly this. You pre-buy Starbucks credit that you later use to pay for coffee. Starbucks benefits because they only incur transaction fees for every (say) $25 pre-paid block, instead of for every $3 coffee. Swipe fees decrease as a percentage of revenue. They reward consumers via their loyalty program.
  - jessaustin 8y ago
    That makes sense, thank you.
  - dragonwriter 8y ago
    > Starbucks benefits because they only incur transaction fees for every (say) $25 pre-paid block, instead of for every $3 coffee. Swipe fees decrease as a percentage of revenue. They also incur benefits because money in hand and earning returns today for goods and services that will (maybe) be provided in the future is better than money received only at the point of sale.

bluedino 8y ago

Plenty of vendors take PayPal. AMEX/Discover can't even take over Visa/MC...

clintonb 8y ago
AMEX has historically had much higher fees than Visa or MasterCard. Depending on your age, you may remember a time when AMEX was not accepted everywhere. The fees are why.
- gnicholas 8y ago
  There are still a decent number of places that don't accept AMEX. I ran into this at a shop in a high-end shopping center recently.

anoncoward111 8y ago

I think cryptocurrencies were an attempt at this but apparently it's actually quite hard to make a resilient network that also has robust features and convenience

phonon 8y ago

Debit cards use the same networks (well, sort of, see https://www.helcim.com/us/pin-debit/ https://www.helcim.com/us/pin-debit/ ) and charge much less (using a debit card with PIN from a large bank, $0.22 plus 0.05%) https://paylinedata.com/blog/regulated-debit-vs-unregulated-debit/ https://paylinedata.com/blog/regulated-debit-vs-unregulated-...