6 ms·

Micro-loans actually seem better than the standard western practice of credit cards. With a credit card the individual never pays for their own transactions, th

Micro-loans actually seem better than the standard western practice of credit cards. With a credit card the individual never pays for their own transactions, they're completely sidelined then pay back the cost + more later. At least with a micro-loan the individual actually is involved and in control of the money.

mattmanser 7y ago
You don't have to pay more on a credit card if you pay the balance in full each month.
- jjoonathan 7y ago
  Right, but for anyone who has to keep a close eye on their balance (so excluding most HNers), the credit card UX makes it as easy as possible to be irresponsible and as difficult as possible to be responsible. That's why responsible poor people are sometimes willing to pay entire percentage points of their total spend (!) in order to use debit cards so that the balance check gets done at the point of sale.
  - metaphor 7y ago
    > Right, but for anyone who has to keep a close eye on their balance (so excluding most HNers)... Keeping a close eye on your balance is basic financial responsibility and maintaining situational awareness against the ever looming threat of fraud. It doesn't matter if you operate on a bank account with $10 or $100,000...if you're not actively accounting for your transactions, that's a personal flaw. The way how I see it: if you don't have the discipline to properly account for even the smallest expenses, you'll never be able to sustain wealth at any significant level. Anecdotally, a recurring pet peeve encountered is when I'm not provided with a receipt for purchases by default. This happens more often than not at fast food joints and gas stations, and when kindly asked for one, I almost always receive a reaction of either dubious entitlement or disgusted inconvenience, highly correlated to which car I happened to take that day. Although this class of expense is in the noise with respect to my financial posture, I still track them with unwaivering vigilance and find it so ironic when a minimum wage cashier who probably struggles to make ends meet every week disrespects that little piece of paper which enables personal accountability. Stochastically speaking, many of us--including myself--come from humble beginnings.
    - dahdum 7y ago
      Why do you need the receipt itself for fast food or gas? I categorize transactions once a month based on the statements, if something looked crazy I’d dispute it (never has). I do take photos of larger dining receipts, since errors can be made entering the tip after I’ve left. Usually anything over $75 I’ll take a photo. Seems unnecessary to me to spend much time on the noise since I can see in aggregate if some behavior like eating out is problematic.
      - kortilla 7y ago
        As long as you don’t mind being stolen from, sure. Things I’ve witnessed on my account that are difficult to catch weeks after the fact: - tip added to receipt when I didn’t leave one - tip increased by $10 - tip entered as total amount - entire amount charged twice - credit card number stolen and used at another fast food chain location for one I sometimes visit
        aliceryhl 7y ago
        I don't know how it works in the US, but here in Europe we can see the amount we were billed on the card terminal and the shop isn't just able to go change it after the fact.
        valleyer 7y ago
        In the US, the terminal is not brought to the table. The tip amount is written on a paper receipt and entered by the clerk at a (usually) out-of-sight terminal, usually after you've left. A customer doesn't interact with a terminal at all.
        lol768 7y ago
        This is one of the (many!) problems with how financial technology works in the US. Cards get an auth placed twice for the same bill (one without tip, one with tip), there's little to no card-based security in place when making purchases and customers don't get to hear about their transactions until many days have passed since the purchase.
  - aliceryhl 7y ago
    I don't know about yours, but my credit card is automatically paid off at the end of each month, so unless I run out of money I won't incur interest.
    - lol768 7y ago
      > I don't know about yours, but my credit card is automatically paid off at the end of each month, so unless I run out of money I won't incur interest. This, it's easy to set-up a direct debit to pay off the entire balance every month in the UK. Every major CC provider I've had a card with has supported it.
      - ajsnigrutin 7y ago
        In slovenia, that's the "default" option (for mastercard and visa atleast). You need a special "loan mastercard" to be able to do partial pays.
    - yorwba 7y ago
      I think "anyone who has to keep a close eye on their balance (so excluding most HNers)" refers to people who easily run out of money.
    - globular-toast 7y ago
      My credit limit is many times higher than the amount of money I keep in my current account and that's only for a single card. It's very, very easy to overspend on a credit card and after you've done it once it can be difficult to recover. The entire financial world is designed to exploit people who are not very good with money.
      - mattmanser 7y ago
        Err, reduce your credit limit then, if you're worried about it? I buy all my groceries on my credit card, basically get a 30-day, interest free-loan on food all year round.
- deleted 7y ago
  [deleted]
ac29 7y ago
FTA: "Borrowers don’t incur any interest unless they miss payment deadlines or sign up for installment plans." So yes, this sounds exactly like a western style credit card, just with a micro-credit limit. You get X days of interest free credit, then pay interest if you take longer than that to pay (or set up a fixed payment plan, which some western cards also offer).
- bitcoinbutter 7y ago
  Credit card companies also make a huge amount of revenue from merchant fees. Every transaction carries a fixed and percentage-based fee. Often something like $0.29 + 2.5%. Payment companies like Alipay have much lower fees to the merchant, from what I recall.
  - hrktb 7y ago
    That's pretty expensive. Even Stripe is below that (1.5%) in EU, going another PSP gets it down to something lower in general. E.g. for Adyen it's 1.1% with 1.1E fixed. [0] https://www.adyen.com/pricing/full-list https://www.adyen.com/pricing/full-list
    - toomuchtodo 7y ago
      Interchange fees are regulated in Europe. https://ec.europa.eu/commission/presscorner/detail/en/IP_19_2311 https://ec.europa.eu/commission/presscorner/detail/en/IP_19_...
adrr 7y ago
Credit cards give you a 30 day loan with no interest. Interest only starts on purchases after one bill cycle. What is the average duration of a microloan?
notfromhere 7y ago
Credit cards are 30 day interest-free micro-loans. There's no difference.
- metters 7y ago
  Maybe there are some differences concerning the dataprocessing on spending history/behaviour. I know that credit card data is processed and sold, too. But maybe there micro loan data is less restricted for that kind of data business.
brnt 7y ago
When you say Western, you mean American. Almost nowhere in Europe is buying on credit the norm, but debit cards or credit cards that debit your bank account directly.
- deleted 7y ago
  [deleted]
- gexla 7y ago
  They're missing out on a useful feature of credit cards. If you get hit with a fraudulent transaction, you can dispute the charge to get it reversed. I have never tried this with a debit card, but the credit card companies make this much easier than dealing with your bank. Also, if you pay the balance in full every month, you don't get charged interest. If you're disciplined, then you'll use credit cards for every cashless purchase.
  - systemtest 7y ago
    Depends on your definition of fraudulent. If money is stolen out of your account or your card is cloned then you will get your money back with a debit card. If the restaurant overcharges you or you are not happy with your webshop purchase then the bank will not help you out. It might be an added benefit but in the end you do pay a couple percent on each purchase for that insurance.
    - Vinnl 7y ago
      > If the restaurant overcharges you or you are not happy with your webshop purchase then the bank will not help you out. I don't know what it's like in other European countries, but I have to enter my PIN code before a transaction can take place (except for very small transactions). So since overcharging or webshops charging my account cannot really happen without my explicit permission, I don't really see how that could happen?
    - boring_twenties 7y ago
      You pay the couple of percent whether you use the credit card or not, since there is usually no discount for cash or debit. On the other hand, a credit card will give you back 1-2% of that in the form of cash back or other rewards. So in effect you are paying to not use a credit card.
anonytrary 7y ago
The smaller you make the loan, the more pointless it becomes for more and more of the population. For clarity, consider the extreme case: very few people would consider taking a loan of a penny, however many people would consider taking a load of $10,000. A penny is a negligible fraction of your earning power, so it makes more sense to wait 2 seconds at work than to spend 3 seconds taking out a penny loan (and I'm being generous to modern tech; it will take you longer than 3 seconds to take out a loan). Credit cards acknowledge this issue by construction. They assume that there's some overhead (convenience, time, effort, etc.) with paying back a loan, so what they effectively do is allow you to batch transactions together and pay them all back at once. That way, you don't have to log in every time you make a purchase to "refill". Of course, if this "refill" has no overhead cost, then it wouldn't matter.

mattmanser 7y ago

You don't have to pay more on a credit card if you pay the balance in full each month.

jjoonathan 7y ago
Right, but for anyone who has to keep a close eye on their balance (so excluding most HNers), the credit card UX makes it as easy as possible to be irresponsible and as difficult as possible to be responsible. That's why responsible poor people are sometimes willing to pay entire percentage points of their total spend (!) in order to use debit cards so that the balance check gets done at the point of sale.
- metaphor 7y ago
  > Right, but for anyone who has to keep a close eye on their balance (so excluding most HNers)... Keeping a close eye on your balance is basic financial responsibility and maintaining situational awareness against the ever looming threat of fraud. It doesn't matter if you operate on a bank account with $10 or $100,000...if you're not actively accounting for your transactions, that's a personal flaw. The way how I see it: if you don't have the discipline to properly account for even the smallest expenses, you'll never be able to sustain wealth at any significant level. Anecdotally, a recurring pet peeve encountered is when I'm not provided with a receipt for purchases by default. This happens more often than not at fast food joints and gas stations, and when kindly asked for one, I almost always receive a reaction of either dubious entitlement or disgusted inconvenience, highly correlated to which car I happened to take that day. Although this class of expense is in the noise with respect to my financial posture, I still track them with unwaivering vigilance and find it so ironic when a minimum wage cashier who probably struggles to make ends meet every week disrespects that little piece of paper which enables personal accountability. Stochastically speaking, many of us--including myself--come from humble beginnings.
  - dahdum 7y ago
    Why do you need the receipt itself for fast food or gas? I categorize transactions once a month based on the statements, if something looked crazy I’d dispute it (never has). I do take photos of larger dining receipts, since errors can be made entering the tip after I’ve left. Usually anything over $75 I’ll take a photo. Seems unnecessary to me to spend much time on the noise since I can see in aggregate if some behavior like eating out is problematic.
    - kortilla 7y ago
      As long as you don’t mind being stolen from, sure. Things I’ve witnessed on my account that are difficult to catch weeks after the fact: - tip added to receipt when I didn’t leave one - tip increased by $10 - tip entered as total amount - entire amount charged twice - credit card number stolen and used at another fast food chain location for one I sometimes visit
      - aliceryhl 7y ago
        I don't know how it works in the US, but here in Europe we can see the amount we were billed on the card terminal and the shop isn't just able to go change it after the fact.
        valleyer 7y ago
        In the US, the terminal is not brought to the table. The tip amount is written on a paper receipt and entered by the clerk at a (usually) out-of-sight terminal, usually after you've left. A customer doesn't interact with a terminal at all.
        lol768 7y ago
        This is one of the (many!) problems with how financial technology works in the US. Cards get an auth placed twice for the same bill (one without tip, one with tip), there's little to no card-based security in place when making purchases and customers don't get to hear about their transactions until many days have passed since the purchase.
- aliceryhl 7y ago
  I don't know about yours, but my credit card is automatically paid off at the end of each month, so unless I run out of money I won't incur interest.
  - lol768 7y ago
    > I don't know about yours, but my credit card is automatically paid off at the end of each month, so unless I run out of money I won't incur interest. This, it's easy to set-up a direct debit to pay off the entire balance every month in the UK. Every major CC provider I've had a card with has supported it.
    - ajsnigrutin 7y ago
      In slovenia, that's the "default" option (for mastercard and visa atleast). You need a special "loan mastercard" to be able to do partial pays.
  - yorwba 7y ago
    I think "anyone who has to keep a close eye on their balance (so excluding most HNers)" refers to people who easily run out of money.
  - globular-toast 7y ago
    My credit limit is many times higher than the amount of money I keep in my current account and that's only for a single card. It's very, very easy to overspend on a credit card and after you've done it once it can be difficult to recover. The entire financial world is designed to exploit people who are not very good with money.
    - mattmanser 7y ago
      Err, reduce your credit limit then, if you're worried about it? I buy all my groceries on my credit card, basically get a 30-day, interest free-loan on food all year round.
deleted 7y ago
[deleted]

ac29 7y ago

FTA: "Borrowers don’t incur any interest unless they miss payment deadlines or sign up for installment plans." So yes, this sounds exactly like a western style credit card, just with a micro-credit limit. You get X days of interest free credit, then pay interest if you take longer than that to pay (or set up a fixed payment plan, which some western cards also offer).

bitcoinbutter 7y ago
Credit card companies also make a huge amount of revenue from merchant fees. Every transaction carries a fixed and percentage-based fee. Often something like $0.29 + 2.5%. Payment companies like Alipay have much lower fees to the merchant, from what I recall.
- hrktb 7y ago
  That's pretty expensive. Even Stripe is below that (1.5%) in EU, going another PSP gets it down to something lower in general. E.g. for Adyen it's 1.1% with 1.1E fixed. [0] https://www.adyen.com/pricing/full-list https://www.adyen.com/pricing/full-list
  - toomuchtodo 7y ago
    Interchange fees are regulated in Europe. https://ec.europa.eu/commission/presscorner/detail/en/IP_19_2311 https://ec.europa.eu/commission/presscorner/detail/en/IP_19_...

adrr 7y ago

Credit cards give you a 30 day loan with no interest. Interest only starts on purchases after one bill cycle. What is the average duration of a microloan?

notfromhere 7y ago

Credit cards are 30 day interest-free micro-loans. There's no difference.

metters 7y ago
Maybe there are some differences concerning the dataprocessing on spending history/behaviour. I know that credit card data is processed and sold, too. But maybe there micro loan data is less restricted for that kind of data business.

brnt 7y ago

When you say Western, you mean American. Almost nowhere in Europe is buying on credit the norm, but debit cards or credit cards that debit your bank account directly.

deleted 7y ago
[deleted]
gexla 7y ago
They're missing out on a useful feature of credit cards. If you get hit with a fraudulent transaction, you can dispute the charge to get it reversed. I have never tried this with a debit card, but the credit card companies make this much easier than dealing with your bank. Also, if you pay the balance in full every month, you don't get charged interest. If you're disciplined, then you'll use credit cards for every cashless purchase.
- systemtest 7y ago
  Depends on your definition of fraudulent. If money is stolen out of your account or your card is cloned then you will get your money back with a debit card. If the restaurant overcharges you or you are not happy with your webshop purchase then the bank will not help you out. It might be an added benefit but in the end you do pay a couple percent on each purchase for that insurance.
  - Vinnl 7y ago
    > If the restaurant overcharges you or you are not happy with your webshop purchase then the bank will not help you out. I don't know what it's like in other European countries, but I have to enter my PIN code before a transaction can take place (except for very small transactions). So since overcharging or webshops charging my account cannot really happen without my explicit permission, I don't really see how that could happen?
  - boring_twenties 7y ago
    You pay the couple of percent whether you use the credit card or not, since there is usually no discount for cash or debit. On the other hand, a credit card will give you back 1-2% of that in the form of cash back or other rewards. So in effect you are paying to not use a credit card.

anonytrary 7y ago

The smaller you make the loan, the more pointless it becomes for more and more of the population. For clarity, consider the extreme case: very few people would consider taking a loan of a penny, however many people would consider taking a load of $10,000. A penny is a negligible fraction of your earning power, so it makes more sense to wait 2 seconds at work than to spend 3 seconds taking out a penny loan (and I'm being generous to modern tech; it will take you longer than 3 seconds to take out a loan). Credit cards acknowledge this issue by construction. They assume that there's some overhead (convenience, time, effort, etc.) with paying back a loan, so what they effectively do is allow you to batch transactions together and pay them all back at once. That way, you don't have to log in every time you make a purchase to "refill". Of course, if this "refill" has no overhead cost, then it wouldn't matter.