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> Visa and Mastercard are taking a 3-4% cut of every single consumer payment made in much of the world. That ends up being a very, very big number. In Denmark

by hjk05 7y ago

> Visa and Mastercard are taking a 3-4% cut of every single consumer payment made in much of the world. That ends up being a very, very big number. In Denmark we solved this the lowtech way. Visa cards have to be Dual visa/dancard, where the dancard has extremely low cut limited by law(0,055$/transaction flat rate) It’s not hard, it just requires you have politicians capable of dodging the huge piles of cash MasterCard and Visa throw at them whenever talk of breaking the duopoly hits the table. But maybe for the US, something like bitcoin will be the only way forwards, using technology to try to solve a market problem though “disruptive technology” when what is really needed is just disruptive politicians.

Meekro 7y ago
Dancard works for local payments, but the discussion here is about the growing demand to transact with foreign companies online. For example, if you're in Denmark and you want to buy a SaaS subscription from a US company, you're stuck giving them a Visa/MC number. Some of the downsides of this are the 3% fee, risk of the number being stolen, not to mention Visa/MC applying US law and morals to kill businesses anywhere in the world.
- vageli 7y ago
  > Dancard works for local payments, but the discussion here is about the growing demand to transact with foreign companies online. For example, if you're in Denmark and you want to buy a SaaS subscription from a US company, you're stuck giving them a Visa/MC number. Some of the downsides of this are the 3% fee, risk of the number being stolen, not to mention Visa/MC applying US law and morals to kill businesses anywhere in the world. If there was political will, there is nothing stopping governments from capping the fees taken by Visa/MC.
  - traek 7y ago
    Many people feel the solution to bad products is making better competing products rather than adding government regulation.
    - jodrellblank 7y ago
      Many people feel that regulating abusive monopolies which kill competitors in underhanded ways is a better solution than expecting greed to solve it.
    - SquishyPanda23 7y ago
      I may be in the minority here, but it's possible that there can be a scientific economics. Sure you feel one way. Other people feel another. But it's also possible the correct answer doesn't depend on your feelings but on falsifiable theories.
      - rightos 7y ago
        I don't think you can come up with a quality test for economic scenarios in a truly scientific way, many monopolies dominate for very different reasons, many industries have very different mechanics, and worse, regulations are often implemented in vastly different ways and often won't come out the way you'd like them to even if you have a perfect scientific answer to a given problem. You can't guarantee or even approximate a given input and output for a scenario like this.
        SquishyPanda23 7y ago
        I'm not sure I quite understand, but it's certainly possible the equations that govern economics are sensitive to initial conditions. In that case we will never know enough to specify the initial consitions entirely. But we also don't need to specify initial conditions exactly to do science. I'm less convinced that the equations themselves are unknowable.
        rightos 7y ago
        We also won't be able to specify the outcome precisely even if we somehow had a guaranteed outcome in mind. Politicians will screw up the implementation, businesses will engineer around it and the alternative solution might ultimately come out to be a better one in practice than in theory. Trying to define economics by simple equations which you expect to define policy is a lost cause.
  - bhtru 7y ago
    Agreed, it's not as though Visa/MC will decide to exit a country altogether foregoing any revenue.
  - sgjohnson 7y ago
    The fees on Visa/MasterCard in the EU are capped at 0.2% for debit cards, 0.3% for credit cards. American Express (and all the other schemes where the issuer is also the acquirer, i.e. Diners Club) aren’t capped. The 0.3% cap however did kill Amex’s licensing model where they let other banks around Europe issue their cards, so they simply withdrew from those, as 0.3% is not enough to pay for the rewards. Note that this is just interchange. Payment processors still charge merchants whatever they damn please.
- ivan_gammel 7y ago
  Every additional payment method supported by XaaS is one more reason for using 3rd party payment processing, meaning that there will be a fee even on independent cryptocurrency. It’s not a solution.
jackschultz 7y ago
> It’s not hard, it just requires you have politicians capable of dodging the huge piles of cash MasterCard and Visa throw at them whenever talk of breaking the duopoly hits the table. Ignoring the difficulty of avoiding lobbying money, yes, it'd be difficult. This is a large scale financial change and there are always, always loopholes that will come, not just from politicians who make those because of lobbying money. With how giant the economies are, and how often these cards are used, it isn't a simple move at all. Look at credit card chip readers in the US. The amount of backend equipment change it took to get something "that simple" in action was a lot. I'm not defending them for it not being quicker, but a move like a duel card is absolutely difficult.
- benj111 7y ago
  "Look at credit card chip readers in the US." Europe made this jump well over a decade ago. It isn't a backend equipment problem. Dual cards are easy btw. I used to have a joint Amex MasterCard. Separate cards, but same account.
- CaptainZapp 7y ago
  Look at credit card chip readers in the US. The amount of backend equipment change it took to get something "that simple" in action was a lot. I'd wager that the banks didn't give a damn as long as fraud was cheaper than investing into a new, much securer system. France was the first country to introduce chips into debit cards and tha was in 1990[1] [1] http://www.theukcardsassociation.org.uk/history_of_cards/index.asp http://www.theukcardsassociation.org.uk/history_of_cards/ind...
sytelus 7y ago
Cards are yesterday things. Many countries quickly moving on to phone based payments. Its much secure (requires touch or face ID) than doing fake signatures. I've no idea why visa/mastercard can't move to this. The often given reason for massive 5% cut is potential voided transactions, merchant setup, cashback expected by customers and ofcourse profit. Much of these can be eliminated by phone based transactions. This space is ripe for disruption.
- gruez 7y ago
  >Many countries quickly moving on to phone based payments. Its much secure (requires touch or face ID) than doing fake signatures. EMV is a thing, you know. And cards don't run out of battery or get smashed like phones.
- stef25 7y ago
  > Many countries quickly moving on to phone based payments Even as a tech guy, no thanks. Phones are mostly ok but still fuck up too frequently to trust them with anything serious.
deleted 7y ago
[deleted]
baby 7y ago
But that's the point. Monzo is the best bank in the world and yet it's only available in the UK. As soon as you're trying to cross a border it becomes challenging. A cryptocurrency can be a very useful solution here: it skips decenies of progress to set up an interoperable network for banks and custodians to use (and users as well if they want to).
- dazc 7y ago
  'Monzo is the best bank in the world...' For small, everyday transactions this may be true but mainstream banks are much better for all the other stuff.
  - baby 7y ago
    define "all the other stuff"
    - goatinaboat 7y ago
      Being able to provide services when its customers are outside of its home country? Serious banks have been doing that for literally hundreds of years.
      - baby 7y ago
        Monzo does that too :| I use it all over the world because it has no fees.
    - dazc 7y ago
      Business banking, loans/mortgages, investment, savings and, when things go wrong, accessible human assistance.
- Galanwe 7y ago
  > A cryptocurrency can be a very useful solution here: it skips decenies of progress The fact that it is a _cryto_ currency is merely anecdotal. Its an implementation detail. It makes people think this currency is actually distributed as most other crypto currencies, while in fact it's just a consortium of companies having total control over all aspects (issuance, destruction, etc.) of the currency. > set up an interoperable network for banks and custodians to use This is just plain wrong. It's not banks or custodians that use this currency, it's just end users and the consortium. Banks are heavily controlled and regulated. I _mainly_ trust governments and legal systems to take fair decisions or litigate properly monetary issues. There is nothing like that here. The consortium of companies owning the currency decide the amount they want to create, they decide who gets refund and why, etc. I have much more trust in a country and a judiciary system than a bunch of worldwide companies to handle my currency.
blatantlies 7y ago
Not sure if matters but at least to my understanding, DanKort is a debit card, so I would expect it to have a flat rate since the cost of transaction is less dependent on the total amount vs a credit card transaction where there is more clearance and risk involved? At least in some jurisdictions I lived, debit card is as good as cash (well, not exactly the same but because handling cash has also its cost, most of retailers treat them equally)

by hjk05 7y ago

Meekro 7y ago

Dancard works for local payments, but the discussion here is about the growing demand to transact with foreign companies online. For example, if you're in Denmark and you want to buy a SaaS subscription from a US company, you're stuck giving them a Visa/MC number. Some of the downsides of this are the 3% fee, risk of the number being stolen, not to mention Visa/MC applying US law and morals to kill businesses anywhere in the world.

vageli 7y ago
> Dancard works for local payments, but the discussion here is about the growing demand to transact with foreign companies online. For example, if you're in Denmark and you want to buy a SaaS subscription from a US company, you're stuck giving them a Visa/MC number. Some of the downsides of this are the 3% fee, risk of the number being stolen, not to mention Visa/MC applying US law and morals to kill businesses anywhere in the world. If there was political will, there is nothing stopping governments from capping the fees taken by Visa/MC.
- traek 7y ago
  Many people feel the solution to bad products is making better competing products rather than adding government regulation.
  - jodrellblank 7y ago
    Many people feel that regulating abusive monopolies which kill competitors in underhanded ways is a better solution than expecting greed to solve it.
  - SquishyPanda23 7y ago
    I may be in the minority here, but it's possible that there can be a scientific economics. Sure you feel one way. Other people feel another. But it's also possible the correct answer doesn't depend on your feelings but on falsifiable theories.
    - rightos 7y ago
      I don't think you can come up with a quality test for economic scenarios in a truly scientific way, many monopolies dominate for very different reasons, many industries have very different mechanics, and worse, regulations are often implemented in vastly different ways and often won't come out the way you'd like them to even if you have a perfect scientific answer to a given problem. You can't guarantee or even approximate a given input and output for a scenario like this.
      - SquishyPanda23 7y ago
        I'm not sure I quite understand, but it's certainly possible the equations that govern economics are sensitive to initial conditions. In that case we will never know enough to specify the initial consitions entirely. But we also don't need to specify initial conditions exactly to do science. I'm less convinced that the equations themselves are unknowable.
        rightos 7y ago
        We also won't be able to specify the outcome precisely even if we somehow had a guaranteed outcome in mind. Politicians will screw up the implementation, businesses will engineer around it and the alternative solution might ultimately come out to be a better one in practice than in theory. Trying to define economics by simple equations which you expect to define policy is a lost cause.
- bhtru 7y ago
  Agreed, it's not as though Visa/MC will decide to exit a country altogether foregoing any revenue.
- sgjohnson 7y ago
  The fees on Visa/MasterCard in the EU are capped at 0.2% for debit cards, 0.3% for credit cards. American Express (and all the other schemes where the issuer is also the acquirer, i.e. Diners Club) aren’t capped. The 0.3% cap however did kill Amex’s licensing model where they let other banks around Europe issue their cards, so they simply withdrew from those, as 0.3% is not enough to pay for the rewards. Note that this is just interchange. Payment processors still charge merchants whatever they damn please.
ivan_gammel 7y ago
Every additional payment method supported by XaaS is one more reason for using 3rd party payment processing, meaning that there will be a fee even on independent cryptocurrency. It’s not a solution.

jackschultz 7y ago

> It’s not hard, it just requires you have politicians capable of dodging the huge piles of cash MasterCard and Visa throw at them whenever talk of breaking the duopoly hits the table. Ignoring the difficulty of avoiding lobbying money, yes, it'd be difficult. This is a large scale financial change and there are always, always loopholes that will come, not just from politicians who make those because of lobbying money. With how giant the economies are, and how often these cards are used, it isn't a simple move at all. Look at credit card chip readers in the US. The amount of backend equipment change it took to get something "that simple" in action was a lot. I'm not defending them for it not being quicker, but a move like a duel card is absolutely difficult.

benj111 7y ago
"Look at credit card chip readers in the US." Europe made this jump well over a decade ago. It isn't a backend equipment problem. Dual cards are easy btw. I used to have a joint Amex MasterCard. Separate cards, but same account.
CaptainZapp 7y ago
Look at credit card chip readers in the US. The amount of backend equipment change it took to get something "that simple" in action was a lot. I'd wager that the banks didn't give a damn as long as fraud was cheaper than investing into a new, much securer system. France was the first country to introduce chips into debit cards and tha was in 1990[1] [1] http://www.theukcardsassociation.org.uk/history_of_cards/index.asp http://www.theukcardsassociation.org.uk/history_of_cards/ind...

sytelus 7y ago

Cards are yesterday things. Many countries quickly moving on to phone based payments. Its much secure (requires touch or face ID) than doing fake signatures. I've no idea why visa/mastercard can't move to this. The often given reason for massive 5% cut is potential voided transactions, merchant setup, cashback expected by customers and ofcourse profit. Much of these can be eliminated by phone based transactions. This space is ripe for disruption.

gruez 7y ago
>Many countries quickly moving on to phone based payments. Its much secure (requires touch or face ID) than doing fake signatures. EMV is a thing, you know. And cards don't run out of battery or get smashed like phones.
stef25 7y ago
> Many countries quickly moving on to phone based payments Even as a tech guy, no thanks. Phones are mostly ok but still fuck up too frequently to trust them with anything serious.

deleted 7y ago

[deleted]

baby 7y ago

But that's the point. Monzo is the best bank in the world and yet it's only available in the UK. As soon as you're trying to cross a border it becomes challenging. A cryptocurrency can be a very useful solution here: it skips decenies of progress to set up an interoperable network for banks and custodians to use (and users as well if they want to).

dazc 7y ago
'Monzo is the best bank in the world...' For small, everyday transactions this may be true but mainstream banks are much better for all the other stuff.
- baby 7y ago
  define "all the other stuff"
  - goatinaboat 7y ago
    Being able to provide services when its customers are outside of its home country? Serious banks have been doing that for literally hundreds of years.
    - baby 7y ago
      Monzo does that too :| I use it all over the world because it has no fees.
  - dazc 7y ago
    Business banking, loans/mortgages, investment, savings and, when things go wrong, accessible human assistance.
Galanwe 7y ago
> A cryptocurrency can be a very useful solution here: it skips decenies of progress The fact that it is a _cryto_ currency is merely anecdotal. Its an implementation detail. It makes people think this currency is actually distributed as most other crypto currencies, while in fact it's just a consortium of companies having total control over all aspects (issuance, destruction, etc.) of the currency. > set up an interoperable network for banks and custodians to use This is just plain wrong. It's not banks or custodians that use this currency, it's just end users and the consortium. Banks are heavily controlled and regulated. I _mainly_ trust governments and legal systems to take fair decisions or litigate properly monetary issues. There is nothing like that here. The consortium of companies owning the currency decide the amount they want to create, they decide who gets refund and why, etc. I have much more trust in a country and a judiciary system than a bunch of worldwide companies to handle my currency.

blatantlies 7y ago

Not sure if matters but at least to my understanding, DanKort is a debit card, so I would expect it to have a flat rate since the cost of transaction is less dependent on the total amount vs a credit card transaction where there is more clearance and risk involved? At least in some jurisdictions I lived, debit card is as good as cash (well, not exactly the same but because handling cash has also its cost, most of retailers treat them equally)