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I always wondered why no governments decided to get into the payments ecosystem. If you keep the existing rate structure, payment processing represents a ~3% s

by hakfoo 7y ago

I always wondered why no governments decided to get into the payments ecosystem. If you keep the existing rate structure, payment processing represents a ~3% sales tax that yields a huge margin for all players, a tantalizing revenue stream to nationalize. Id you use the state resources to subsidize the price down to zero, you have a great "pro-business"/"pro-inclusive-economy" plank for political points. Either way, you get a huge amount of data and a massive lever you can use for political ends. Think of the deplatforming debates of a year or two ago, but magnified by "this is basically the only payment platform used in the country."

clairity 7y ago
good idea. i'd go further and advocate a government option for every utility-type service, like banking, internet, healthcare, etc. businesses would be free to compete with these government services, but they'd also provide a competitive anchor to help keep markets efficient.
- mtts 7y ago
  We used to have that in the Netherlands. For banking, regular banks refused to service small businesses and lower income private people. The government set up two banks of their own, one for small businesses and one for ordinary people to do things like deposit their paychecks and have simple savings accounts. The latter especially was wildly successful and innovative, with a truly forward thinking IT department (they had online banking over dialup in 1987!) Alas, the 90s hit and these banks, along with the energy companies, the cable companies and the postal company, were privatized. Innovation ground to a halt and service quality plummeted. In the end, they had to be bailed out during the 2008 financial crisis.
leosarev 7y ago
Russian Central Bank (our financial authority) have done exactly that. The so called Faster Payments System (Система Быстрых Платежей), launched last year, offers instant money transfers in Russia for 0.05-6 rubles (≈$0.01-0.1). Your bank can charge you on top of that, but i.e. in my bank it totally free (subsidized by other services). Now (since autumn) they are slowly launching payments system (it's not gained traction yet, but it's just started). Tariff for payment system is 0.4-0.7 for retailers, split between your and retailer's bank. Afaik, China also has something like that for for years. I think that USA don't have something like that because political tradition forbids government to compete with established private services. I have read that Americans have to buy commercial software for filing taxes. :-) In Russia, it would be unbelievable — you just using government provided tax filing software free of charge.
- zdragnar 7y ago
  The IRS had a no-compete agreement with tax software companies under the premise that simple, standard filings would be offered for free. That agreement recent expired, and since the tax software companies used scummy tactics to hide the free option, the IRS has recently indicated that it is willing to build its own platform. Personally, I would much prefer that our legislators simplified the tax code to the point that specialist preparers and software wasn't necessary, but all of the incentives around elections pretty much guarantee that won't happen.
johannes1234321 7y ago
On a global scale: Since PayPal and U.S.-based credit card companies are too strong. Outside the U.S. there are differences in payment system. Here in Germany we have working wire transfers for most things working fine. However that system lacks online authorization ... only in 2015 German banks started their PayPal copy PayDirekt, which however fails to attract vendors and users, to a degree due to hen and egg issues and to some degree due to competition law issues (such a cooperation between banks might for a cartell, thus they've built a complicated structure) Government can't really regulate this much, unless they want to rule prices completely.
znpy 7y ago
The EU should be working in something like that. It's called TIPS iirc. Edit: yup, tips: https://www.ecb.europa.eu/paym/target/tips/html/index.en.html https://www.ecb.europa.eu/paym/target/tips/html/index.en.htm...

by hakfoo 7y ago

clairity 7y ago

good idea. i'd go further and advocate a government option for every utility-type service, like banking, internet, healthcare, etc. businesses would be free to compete with these government services, but they'd also provide a competitive anchor to help keep markets efficient.

mtts 7y ago
We used to have that in the Netherlands. For banking, regular banks refused to service small businesses and lower income private people. The government set up two banks of their own, one for small businesses and one for ordinary people to do things like deposit their paychecks and have simple savings accounts. The latter especially was wildly successful and innovative, with a truly forward thinking IT department (they had online banking over dialup in 1987!) Alas, the 90s hit and these banks, along with the energy companies, the cable companies and the postal company, were privatized. Innovation ground to a halt and service quality plummeted. In the end, they had to be bailed out during the 2008 financial crisis.

leosarev 7y ago

Russian Central Bank (our financial authority) have done exactly that. The so called Faster Payments System (Система Быстрых Платежей), launched last year, offers instant money transfers in Russia for 0.05-6 rubles (≈$0.01-0.1). Your bank can charge you on top of that, but i.e. in my bank it totally free (subsidized by other services). Now (since autumn) they are slowly launching payments system (it's not gained traction yet, but it's just started). Tariff for payment system is 0.4-0.7 for retailers, split between your and retailer's bank. Afaik, China also has something like that for for years. I think that USA don't have something like that because political tradition forbids government to compete with established private services. I have read that Americans have to buy commercial software for filing taxes. :-) In Russia, it would be unbelievable — you just using government provided tax filing software free of charge.

zdragnar 7y ago
The IRS had a no-compete agreement with tax software companies under the premise that simple, standard filings would be offered for free. That agreement recent expired, and since the tax software companies used scummy tactics to hide the free option, the IRS has recently indicated that it is willing to build its own platform. Personally, I would much prefer that our legislators simplified the tax code to the point that specialist preparers and software wasn't necessary, but all of the incentives around elections pretty much guarantee that won't happen.

johannes1234321 7y ago

On a global scale: Since PayPal and U.S.-based credit card companies are too strong. Outside the U.S. there are differences in payment system. Here in Germany we have working wire transfers for most things working fine. However that system lacks online authorization ... only in 2015 German banks started their PayPal copy PayDirekt, which however fails to attract vendors and users, to a degree due to hen and egg issues and to some degree due to competition law issues (such a cooperation between banks might for a cartell, thus they've built a complicated structure) Government can't really regulate this much, unless they want to rule prices completely.

znpy 7y ago

The EU should be working in something like that. It's called TIPS iirc. Edit: yup, tips: https://www.ecb.europa.eu/paym/target/tips/html/index.en.html https://www.ecb.europa.eu/paym/target/tips/html/index.en.htm...