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US payments is a very complex system - there are around 4900 banks and a similarly large number of non-bank players. Managing change is really hard. Not everyo

US payments is a very complex system - there are around 4900 banks and a similarly large number of non-bank players. Managing change is really hard. Not everyone wants a change. One person's costs are another person's revenues. There are also a lot of managers managing organizations that process fraud, errors, and other irregularities. Costs don't matter if you can charge enough in fees and interest. In the case of chip cards, the US wasn't about to pay for the French smartcard patents. In general, financial technology is a patent thicket and its best to wait 20 years before implementing new ideas unless you have really positive financial case and can be sure you have the IP locked down.

simonh 7y ago
I find it really hard to believe that the costs of those patents would have been higher, to the US economy as a whole and thus citizens in general, than the costs of sticking to the old inefficient, manual systems for 15 to 20 years. I smell politics. I suspect there's also the old argument that standardisation takes regulation, and regulation is evil. Government should stay out of this (oh, btw, Government - can you just pay the next tranche of subsidies directly into the executive bonus account. Thanks!).
- Merrill 7y ago
  An earlier transition to chip cards may have reduced costs to the US economy as a whole and thus citizens in general. On the other hand, it would have shrunk the size of the credit card business. It's not politics. It's simply self interest of the key players in the business.
- nybble41 7y ago
  If government had stayed out of it then the cost of patents would not be a factor; the improved system could have been universally adopted and standardized as quickly as it could be reverse-engineered.
  - Merrill 7y ago
    Standards actually help somewhat, since standards committees generally require that participants disclose their patents that are essential to practice of the standard and pledge to license them on "fair, reasonable, and non-discriminatory" basis. Of course, there is debate on what is actually FRAND. And other parties that are not members of the standards committee may claim that they own patents essential to the standard. But government recognized standards are better than nothing.

simonh 7y ago

I find it really hard to believe that the costs of those patents would have been higher, to the US economy as a whole and thus citizens in general, than the costs of sticking to the old inefficient, manual systems for 15 to 20 years. I smell politics. I suspect there's also the old argument that standardisation takes regulation, and regulation is evil. Government should stay out of this (oh, btw, Government - can you just pay the next tranche of subsidies directly into the executive bonus account. Thanks!).

Merrill 7y ago
An earlier transition to chip cards may have reduced costs to the US economy as a whole and thus citizens in general. On the other hand, it would have shrunk the size of the credit card business. It's not politics. It's simply self interest of the key players in the business.
nybble41 7y ago
If government had stayed out of it then the cost of patents would not be a factor; the improved system could have been universally adopted and standardized as quickly as it could be reverse-engineered.
- Merrill 7y ago
  Standards actually help somewhat, since standards committees generally require that participants disclose their patents that are essential to practice of the standard and pledge to license them on "fair, reasonable, and non-discriminatory" basis. Of course, there is debate on what is actually FRAND. And other parties that are not members of the standards committee may claim that they own patents essential to the standard. But government recognized standards are better than nothing.