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Forget Google, time to end the Visa-MasterCard duopoly
- sm4rk0 6y agoLet's end the duopoly, but please don't forget Google (or Facebook, Apple, Amazon,...)
- seph-reed 6y ago"Both" is word that will not make the Newspeak cut.
- vore 6y agoCalm down. Evoking HN's favorite specter of 1984 about payment processors is a bit much, don't you think?
- seph-reed 6y agoI was feeling quite calm. I'm not talking about payment processors so much as the degree to which people feel "either" when they could feel "both." Divisiveness is quite rampant, and I think the language we use (or don't use) has an effect. ie "Forget Google" -> why not both?
- tiffanyh 6y agoI am reading so much incorrect information in this thread it’s maddening. The card network (Visa, Mastercard, etc) do NOT make money on Interchange. It’s hard to have a healthy dialogue on this topic if folks don’t understand the basics of how the card networks generate revenue. Below is a decent primer. https://www.investopedia.com/articles/markets/032615/how-mastercard-makes-its-money-ma.asp https://www.investopedia.com/articles/markets/032615/how-mas...
- jedberg 6y agoI mean, technically no they don't. But that's just being pedantic. They charge the bank based on gross dollar volume, and the bank gets the money to pay for that from... interchange fees. The more volume the bank does, the more they pay and the more they get from interchange fees. Interchange fee pricing is set based on how much mastercard charges the banks, so while technically true, the interchange fees are basically set by mastercard's pricing.
- ComputerGuru 6y agoInterchange fee pricing is set based on how much MasterCard charges the bank That’s not true though, or at least is a massive oversimplification. In the US, interchange fees are extremely inflated to allow banks to recuperate the rewards they give out to distinguish their card offerings from one another. The 2% cashback has to come from somewhere.
- jedberg 6y agoSure, but the base rate comes from MC/Visa. Precessing credit cards is a low margin business. It's basically a race to see who can charge as close to the MC/Visa rates as possible.
- an_opabinia 6y agoThis isn't really about Visa-MasterCard, it's about a darling like Stripe charging 2.95% because 3% is customary. People will freak about their customary rent/take being threatened. They gotta come out of the woodwork and justify the charge... somehow. A HN proxy battle!
- GoblinSlayer 6y agoThey want to eat too.
- jariel 6y ago
- random3 6y agoCards still account for less than 18% of US payments (source https://go.plaid.com/rs/495-WRE-561/images/Plaid-Modern-guide-to-ACH.pdf https://go.plaid.com/rs/495-WRE-561/images/Plaid-Modern-guid...).
- sm4rk0 6y agoHowever small you think that %-age is, the absolute numbers are still huge (src: Wikipedia): "100 billion transactions during 2014 with a total volume of US$6.8 trillion"
- grawprog 6y agoBet those stats go way up in the next few months as more and more businesses get on the refusing cash bandwagon. Apparently it's for 'safety' but I live in a country where my money's made out of plastic or metal, that shit can be sprayed or dunked in iso. The excuse seems pretty flimsy too when again, places don't seem to bother cleaning off their pinpads before the cashiers or other customers touch them anyway.
- drewbug 6y agoThe other 82% is ACH, not cash
- stevehawk 6y agoThat stat won't change much in the US. It's illegal for a store to turn down cash.
- jedberg 6y agoThat's a myth: https://www.federalreserve.gov/faqs/currency_12772.htm https://www.federalreserve.gov/faqs/currency_12772.htm Private companies can refuse cash.
- elliekelly 6y agoThere’s no federal law but it’s not a myth. It varies by jurisdiction. Several states (New Jersey, Rhode Island, and I’m sure others) and cities (NYC and Philadelphia, for example) don’t allow a retail business to refuse cash.
- xfour 6y agoWhile I agree with the sentiment, things have certainly opened up lately quite a bit with the mainstream-ization of the crypto currencies. One could conceivably avoid Visa / MC in a way that just wouldn't have been possible before. Visa / MC remind me a bit of Ticketmaster in that they've got parties on both sides defending them because of kickbacks. You charge the merchant the "interchange fee" plus some amount and that fee goes back to the "card issuing" bank, so they like the system. The merchant passes on the cost (generally) to the consumer, so they don't really notice, and the ease of moving the money in 99% of cases means everyone is happy.
- lima 6y ago> mainstream-ization of the crypto currencies And modern Tendermint[1]/Cosmos SDK-based chains or Solana are basically distributed databases, using consensus models similar to Raft, except with byzantine fault tolerance and Proof of Stake for leader selection. No mining, no forks, finality within seconds, large throughput. Pretty boring, actually, with little hype surrounding it - it just works, like a regular database, except there's no single entity controlling it. One of the top five payment gateways in Korea - CHAI - uses the decentralized Terra[2] blockchain as their backend. [1]: https://tendermint.com/docs/tendermint.pdf https://tendermint.com/docs/tendermint.pdf [2]: https://terra.money https://terra.money
- sharemywin 6y agoPretty much the digital economy. As long as the consumer only get screwed a little per transaction, and consumers don't see the charge directly.
- logicalmonster 6y agoI’d love to see some action here but I’m skeptical. It seems like attacking payment processors is the main avenue that the thought-crime-police use to attack alt-tech sites that don’t play ball with censoring. If there was any mass protest movement to push change here, the media would absolutely flood the public with scare stories about (insert evil monsters here) using payment networks to finance (evil activity here) and undermine the protest movement. It doesn’t help that so many politicians are old lawyers and activists who generally don’t have the technical knowledge to wade through the BS.
- derefr 6y agoI feel like it'd be fine if every single payment processor were individually part of the surveillance-industrial complex, as long as there were enough players in the space that one could get running a service by hopping around between them. For grey-market businesses to succeed, they don't really need air-tight legal protection; they just need their actions to be illegible. This is basically the situation VPN service providers are in. Yes, in theory, any given provider could be beholden to the state. However, when a new VPN provider can spring up so easily (spin up some DigitalOcean instances, stand up a WordPress/Shopify e-commerce frontend), it's unlikely that any given new player in the space has been gotten to yet by the state (unless, of course, it's a new marque of an existing company, set up specifically to serve as a honeypot for switchers.)
- ur-whale 6y agoThere is something that I've never managed to put my finger on: most companies as huge as Google / Apple / FB etc... or even more traditional ones (banks, oil, etc ...) are sort of "well known" in the sense that they do PR, they have well known figureheads, etc ... VISA has always struck me as a very nebulous entity, whose structure, governance, is not very well know by the general public. I wonder how they managed to grow so large while managing to keep such a conspicuously low profile. edit: and to answer my own question, the wikipedia page is quite informative : https://en.wikipedia.org/wiki/Visa_Inc https://en.wikipedia.org/wiki/Visa_Inc.
- xfour 6y agoI think they were an "association" until the spun out into a company in their own right recently. https://money.cnn.com/2008/03/21/news/companies/visabanks/index.htm?dlbk https://money.cnn.com/2008/03/21/news/companies/visabanks/in...
- thoraway1010 6y agoIf you make $10B/year on revenue of $20B/year (great margin at that scale) you keep quiet I think for good reason :)
- ryanwatkins 6y agoTheir leaders may not be well known, but they spend an absolutely massive amount of money promoting their brands. They are extremely recognizable. Mastercard so much so that the recently removed their name from their logo as its nolonger needed.
- redis_mlc 6y agoIf you don't work in the payments space, then there's a lot of entities that you're not aware of since their members/associates front them. One fintech startup recently sold for $5 billion to VISA. They issused a PR statement that was completely false, but if you didn't work in payments you'd never know they didn't have 11,000+ clients (hint: that's the number of institutions in NACHA.) https://en.wikipedia.org/wiki/ACH_Network https://en.wikipedia.org/wiki/ACH_Network https://en.wikipedia.org/wiki/NACHA https://en.wikipedia.org/wiki/NACHA
- tibu 6y agoImmediate wire transfer could exchange it if people wouldn't be so used to the card. What would be the motivation to do a wire transfer from you account directly to the merchant instead of tapping your Paypass card...
- taurath 6y agoHaving worked in fintech, they're essentially the gatekeepers of any new technology. Have a great idea for a value add in the payment processing gateway? They will not let you on any platform for 4 years while they launch a (poor) competitor at scale.
- rbrtl 6y agoSometimes the turn around is quicker, because rather than building their poor competitor they just buy one.
- x87678r 6y agoAmex/Discover cards exist too, you should use them!
- jedberg 6y agoI used to carry an Amex, but I also had to carry a Visa for all the times the merchant wouldn't take my Amex. Life got a lot easier when I got a Visa with all the same rewards as my Amex.
- badrabbit 6y agoWould be happy to buy a usable cryptocoin card. I was thinking about interest-free crypto-loans where the debtor would speculate on the value of the currency at the time it will paid off (like options trading). If you loan 100btc you would loan with the speculation that for example it would be 10% more valuable in a year. If in a year your speculation is correct, you break even, if the price is 10% lower, the debtee still has to pay using your speculated valuation, if the price is 10% higher you lost potential money you coulf have gained had you hold onto it. Either way, you have insurance against loss the debtee takes on risk but they don't get endlessly canibalized by interest payment. Escrow or credit rating is something I have not figured out. Regardless, an acual card and a payment processing network would cost billions to deploy.
- milkytron 6y agoThat seems extremely risky.
- badrabbit 6y agoYou will still have credit checks and collaterals as usual. The person taking on the loan absorbs all risk in exchange for not having a interest accumulate. Think of it this way, with APR loan, how much you pay at the end depends on how the interrst rate is adjusted and how long it takes you to pay off. With my approach you might end up owing a lot of money but it will never depend on how fast you can pay it off. It will not canibalize your cash flow like an interest debt. The debtor gets free loss insurance and debtee gets freedom from interest and the total cost depends on the currency value at the time of first payment. Also,the total cost will not be a surprise to anyone, the person taking on the loan knows how much they have to pay back. Ideally if you don't have credit, you will need to place in escrow some amount of the base loan and take on more risk in terms of paying at a higher valuation should the currency value be higher at the time of payment(which all goes away with collateral or good credit score) Anyway, I was just thinking out loud my idea. I hate interest and mandatory insurance alike.
- bluesign 6y agoYou have 1 btc lets say 10k usd. So in one year i have to pay you 11k. It is basically 10% interest.
- except 6y agoSo, how does one build a card network?
- User23 6y agoIt's easy, you just convince a plurality of banks to honor your IOUs.
- intopieces 6y agoFTA: > And it could potentially have been even worse. Had their few competitors also gone down, literally all electronic payments would have broken at once. This... is not true. As noted by another comment here, a vast majority of the value transferred (82%) is ACH in the US.
- ajb 6y agoCoincidentally I just read a post from a business that's finding ordinary bank transfers getting more traction from customers than they expected: https://www.revk.uk/2020/06/beyond-credit-cards-is-this-way-forward.html?m=1 https://www.revk.uk/2020/06/beyond-credit-cards-is-this-way-...
- peteretep 6y agoThis is very common in Thailand, in person and online. Shops often have QR codes than encode their bank details. Also, cash on delivery, and also you can finish some online purchases by taking money into 7-Eleven.
- jpkoning 6y agoThis is good news on the competition front. The traditional problem with bank-to-bank transfers in a retail, or point-of-sale, setting has been speed. Cheque was about the fastest that could be mustered. But with developments like UK Faster Payments (which is mentioned in your link) bank-to-bank transfers are getting faster, in some cases instant. And so usability at the point-of-sale is now on par with cards. In Holland, iDEAL is used a lot for retail purchases. It's an instant bank-to-bank payment option that competes with the card networks. The equivalent in Sweden is Swish. It too is moving into point-of-sale payments. As for the US, I suspect that at some point Zelle will pivot into retail point-of-sale payments. At which point the card networks will have a big competitor. All of this is good news if you are worried about the card oligopolies!
- daveoc64 6y agoI can't really see bank transfers taking of at the point of sale in the UK. Making a payment with most banking apps is very clunky - especially for the first time with 2FA. As a consumer, a credit or debit card gives me a lot of protection. I wouldn't give that up for anything (oh, and the cashback I get too).
- jiggunjer 6y agoBut I thought debit card = bank transfer? There is no protection?
- seibelj 6y agoUnpopular opinion here (from my experience), but crypto / blockchain is ever so slowly and deliberately destroying the moat around payments and the artificial barriers constructed. Probably 5 more years for some very serious mainstream business movements into it, and 10 more for non-technical consumers, but I believe with the rise of stablecoins (USDC) and Ethereum scaling via proof of stake (ETH2) their days are numbered.
- erostrate 6y agoAnd one year after that we will get self driving cars. And the next one will definitely be the year of Linux on the desktop :) Sure, it could happen somewhere down the line but saying that blockchain is "destroying the moat" today is a big stretch. Blockchain barely just started to realize that the moat is actually much larger than previously thought. And that parts of the moat exist for a reason. It's barely starting to understand the moat, still far from attacking it, let alone destroying it. Hopefully it will but I'm not holding my breath nor my bitcoins.
- Jerry2 6y ago>Forget Google How about NO! How about we go after all three of them? Google should not be left off the hook. This is just whataboutism by Google's PR. Anyway, Google's employees are all over this thread.
- rvz 6y agoWell one of the reasons why they (MasterCard and Visa) backed Libra is because they were after the potential of cryptocurrencies, but in a controlled fashion, which Libra was perfect for them, Unlike other alternatives until they themselves left Libra. Anything this duopoly can't control is a big no-no to them which is why they detest Bitcoin and the other alternative cryptocurrencies. Some online services are beginning to accept cryptocurrencies, which is a start. Cryptocurrency ATMs are a thing to cash out money, thus one could say that you might have bypassed them. A side note, for those offended by master/slave terminology perhaps now you can ask Mastercard to change their name. Since, its pretty much has somehow offended somebody out there. /s
- sonicggg 6y agoThe terminology issue just shows us that people have got way too much spare time during the pandemic.
- monkeycantype 6y agoTerms like master and slave would probably be fine with everybody if we actually properly addressed the history of slavery and genocide that set our countries up so comfortably for some of us. I don't think anyone really cares about a word, they care about a casual flippant reference to something they care deeply about, an unfair society in which some of us are beneficiaries of brutality that is not entirely in the past.
- crazygringo 6y agoI don't get it -- Amex and Discover are still providing healthy competition, so the "duopoly" the author complains about seems to be largely irrelevant. Competition between cards is thriving and consumers benefit -- witness the miniscule transaction fee the credit card companies keep after paying your rewards back of 2% to 5%, when you pay your bill on time. The article's main point is that such large companies are a cybersecurity risk, and that the government should regulate/nationalize/globalize payment infrastructure. Unfortunately, experience tends to show that governments would be far worse at providing secure, low-cost payment services. Also, credit cards already are highly regulated when it comes to consumer protections. So, this article is just not making a lot of sense to me.
- briffle 6y agoImagine if companies charged 2-5% less because they didn't have to fund CC company marketing tools like cashbacks.
- newacct583 6y agoIndeed, let's imagine. I'm guessing that the increase in seller revenue and decrease in consumer price would sum to... somewhere between two and five percent. No one cares about numbers like that. That's way, way below the convenience threshold for a typical consumer. Most of us, me included, would rather pay an extra 3.5% than fiddle with deciding on which card to use. Which is to say: the market has spoken. We've settled on the duopoly not because it's a trap but because it actually maximizes utility. The uniform convenience of "credit cards just work" has quantifiable economic value. And it turns out to be somewhere around 2-5% of the transaction.
- crazygringo 6y agoThat is common. My grocery store, my bodega, my doctor's office, my dentist -- they all offer a 5% discount for paying in cash. Obviously not everyone does it, but it's certainly not uncommon. On the other hand, there are also a lot of costs associated with handling cash. The expense of tracking bills and coins and going to the bank every day is not insignificant. So it's pretty easy to argue that there's no reason for cash discounts either, because handling cash can actually be more expensive than handling cards, particularly when you're doing it for only 5 or 10 percent of customers.
- raffraffraff 6y agoWell whatever, but the mastercard name is so uncool right now I'm amazed they haven't changed their brand to primarycard.
- julienb_sea 6y agoThere is literally direct competition with Amex. Sure not everywhere takes amex but the majority do, and you can speak with your dollars (and still hold Visa / MC in case amex fails you). Consumers derive huge benefit from the safety, consistency and reliability of the networks Visa and MasterCard have built out, and yes the consolidation is a certain price to pay for that. These companies invest billions into anti-fraud technology. But they are at their core public companies that want to maintain their image. They are reactive to public pressure and political headwinds, and will cover their bases by running away from thorny messy situations. This crosses the aisle in every imaginable way - whether its stifling whistleblowers or stifling supposed hate speech. The reaction to public pressure is not going to be avoidable with any conceivable system, privately owned or otherwise. The best defense is competition, and despite this post's assertions, there is competition in this space.
- pfundstein 6y ago> Sure not everywhere takes amex but the majority do Perhaps in the US, but elsewhere around the world Amex is barely ever accepted. That said this duopoly only really applies to internationally accepted credit cards, lots of countries have alternative payment methods, but these generally don't reach beyond the borders.
- wolco 6y agoAmerican Express is not the answer. Let's not replace bad for worse.
- Karupan 6y agoI use my Amex regularly. Can you explain how it’s worse?
- PeterisP 6y agoThe problem with VISA-MasterCard duopoly is that in many markets the intermediaries (banks plus VISA/MC) skim off 2.5% off of the transaction between the mercant and the customer. Amex takes much more (~4%?), so the problem is even worse there. Of course, they can and do bribe the customer with part of that fee so that it seems attractive, but from the wider perspective it's a huge overhead for no good reason, and if every transaction was like this (i.e. if Visa-MC was replaced by Amex) then that would be a big drain on the economy.
- exprZ 6y agoGiving everyone access to payment processing means giving platform to unworthy people like misogynists, white supremacists and conservatives as well. Maybe we are better off with VISA.
- voldacar 6y agoCan't tell if satire or not
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- programAgaib 6y agoForget finance and tech, medical is under the tight grip of Physicians. Every medical service requires paying a physician. And it's no trivial amount, its a huge expense. Further, any numbers on physicians salaries are horribly skewed because they don't consider specialists "physicians".
- throwawaysea 6y agoThis has been a problem for a long time and unfortunately the outrage around the duopoly died out the last time we confronted it, which was in 2010 when Visa/Mastercard blocked Wikileaks (https://www.forbes.com/sites/andygreenberg/2010/12/07/visa-mastercard-move-to-choke-wikileaks/#187180132cad https://www.forbes.com/sites/andygreenberg/2010/12/07/visa-m...). It is still a problem in 2020. Gab was recently impacted by Visa blacklisting them (https://news.gab.com/2020/06/19/gab-blacklisted-by-visa/ https://news.gab.com/2020/06/19/gab-blacklisted-by-visa/) and also drew parallels to the realities of the "social credit score" system used in China (https://news.gab.com/2020/06/26/social-credit-score-is-in-america-visa-blacklisted-my-business-and-my-family-for-building-gab/ https://news.gab.com/2020/06/26/social-credit-score-is-in-am...). The vagueness of Visa's allegations stood out to me as problematic, given the lack of viable alternatives. Ultimately, the lack of a provider who acts neutrally is a threat to freedom of speech and expression for all practical intents and purposes.
- chejazi 6y agoIt's trickled into other mainstream/downstream services as well like Patreon. Patreon bans certain creators because they have a "policy" on acceptable content that is backstopped by visa/mc policies.
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- moralsupply 6y ago> time to end the Visa-MasterCard duopoly Why? Because monopolies are bad, and we don't like them, no matter if they provide value to people, if they are not built around government regulations that stop competition from happening.
- notpushkin 6y agoThey would have to provide more value for less money, were there some competition. I don't see a way in which one can compete with those two (without resorting to aggression) on a global level though.
- ww520 6y agoAmex/Discover, plus PayPal and a host of lessor money transfer apps/companies, like Venmo and Zelle.
- adjkant 6y agoVenmo is owned by Paypal. Zelle is owned by all of the big banks collectively (Bank of America, Capital One, Wells Fargo et al.). The closest thing to a "small" player is the Cash app, owned by Square. No commentary on the larger picture here or Amex/Discover, just pointing out your other examples don't exactly fit your point fully.
- ww520 6y agoGood points. Thanks for pointing out.
- julius_set 6y agoJust curious why PayPal or Venmo?
- ww520 6y agoWell. PayPal is a payment gateway/system where merchants and consumers can both use; it's serving the same role as Visa/MasterCard. Venmo is a bit off but once Venmo allows merchants as cash recipients, it will serve the same role.
- totetsu 6y agoIs the timing of this by chance related to this https://news.ycombinator.com/item?id=23671933 https://news.ycombinator.com/item?id=23671933? (visa denylisting builder of Gab)
- programmarchy 6y agoWhy not nationalize credit and banking? The industry has shown its gross incompetence time and time again, notably in 2008 and now with COVID they’re yet again settled with bad debt, this time corporate instead of housing. The nation already subsidizes their risks and failures, so why not the upside. Establish a clear hierarchy of accountability rather than the free for all smash and grab we’ve been seeing for decades.
- twirlock 6y agoNo actually fuck Google.
- annadane 6y ago...can't we go after every monopoly and power abusers and not 'forget' any of them?
- RichardHeart 6y agoNear the entire economy paying a % rent to these couple companies is unfair. Cryptocurrency can remove these middlemen, however, they're missing some important features. 1. Dispute resolution. 2. Recurring billing. When you see how expensive it is to do #1, credit cards start to look like a wonderful deal. Someone is going to say: Micropayments (it's never worked.) Pre-auth'd lower amounts retailers can pull from you (might work.) Crypto-escrow (Any place that used to do it has gone out of business I beleive.) Too volatile: (Peer to Peer stable coins, or "trusted" stable coins protected by laws instead of code address this.) Thus, peer to peer open source value transfer is the minimum amount of middlemen possible, but is crippled by regulatory overhead at the end points, giving the incumbents entrenched advantage. Caveat: I founded a cryptocurrency.
- partiallypro 6y agoI feel like card competition is actually pretty steep. MasterCard and Visa may have the majority of the market, but there are still Discover and AmEx. I have been using things like NerdWallet to figure out what is the best card to go with, it is usually a healthy balance. I think the main thing is that most Debit cards are Visa or MasterCard...and you are locked in by your bank. Where as credit & charge cards are a free for all. When it comes to advertising online though, you have only 2 choices...Google or Facebook. As a business I can't not go with those two or I'll lose immense business. I can go with a Visa, Mastercard, Discover, Amex...and it really has no effect on me outside of the benefits the card gives me. The fees charged to the banks, etc are essentially the same. So it's really no comparison as to which is worse for the market itself.
- teej 6y agoYou’re talking about different things. When you shop credit card offers, you are comparing issuers (eg Chase vs Capital One). That’s not the same as the payment processor aka card network (Visa vs MasterCard). Of course it’s endlessly more complicated then that but it’s important to make the distinction.
- numpad0 6y agoWhen you open a web shop, you pay to get SDK from payment processor to integrate them with the site. When customer clicks “Checkout”, they are sent to payment processor website to enter card number like 1234 ...5678... and whichever card it is, it goes through, and shop owner receive the payment later. Which means payment processor has contracts and connects with every card networks, absorb API differences, and on top of that, obeys and agrees to everything CC network thinks or says, to be able to handle any cards customers may have with them. So if a Visa or MasterCard exec thinks maybe he don’t like Cheetos and make a call to processor CEOs how they think about it, no later than by Friday no one will be able to order a single bag of Cheetos, especially online, using any credit card because payment processors will have explicitly communicated that Cheetos had never been tolerated from the beginning and any store who let that happen will have accounts frozen. It happens somewhat softer than that but kind of happening once couple years these days.
- tistoon 6y agoSpeaking of monopolies: what about the handful guys (there are only 3!) who manage ALL of our credit scores.. Experian ,TransUnion and Equifax.
- choiway 6y agoEnding the duopoly is easy: create a payment processing system that charges nothing. However, you start peeling the onion on that and you wonder if it's just easier to create a new search engine.
- coronadisaster 6y agoIt is kind of crazy that anyone can buy my purchase history... Are there any way around this besides using cash?
- dannyw 6y agoI would rather see Visa, MasterCard, and other big banks regulated and require them to accept all legal businesses. Fraud can still be blocked but on an individualised, reasoned level. No more denying legal pornography businesses, no more denying legal fireworks stores, etc.
- basicplus2 6y agoOne option would be for people to start paying each other in gold.
- ggm 6y agoIt always fascinated me that the process went to a semi regulated user pays cost recovery competition model, not to a regulated utility model. At this point, the innovation stream has just about dried up. We're left with a need for micropayments that don't cost more to process than the value of the transaction, and almost all innovation has taken place to one side of card services. If we fixed international funds transfer we'd probably get some incremental benefit. KYC is only part of the problem here, I recently did some IBAN transactions to the UK government from Australia and the expectations of fixed-field width (send this 15+ char reference string, but the input side has 12 chars for the reference field) were bizarre. Huge amount of excess profit in TT. Cheques? dead except for the USA. Coins are dying of covid. Remittence processes and the Islamic banking tradition is waiting to be somewhat unlocked. (trust is not transitive, unless you are a migrant worker from S.E.Asia and you have to get money back to mom and dad efficiently, without having any formal ID in the host country because your boss took your passport)
- arcticbull 6y ago> We're left with a need for micropayments that don't cost more to process than the value of the transaction. I disagree completely. There's no technical or business reason why we couldn't have micropayments tomorrow. It's been tried many times already. The thing about micropayments is nobody actually wants them. Each time you make a payment of any magnitude, your brain has to process a 'purchase' which carries a large mental burden, and eventually you get decision fatigue. Micropayments are one of those ideas that people think we want, but in practice, nobody does. As a thought exercise, why do you pay Netflix $13/month and deal with sporadic content disappearances, when you could pay Apple $1.99 for a perpetual license to whatever piece of content you could ever want? Nobody wants to make that purchasing decision each and every time they want something. They'd rather pay for an all you can eat buffet even if it's objectively worse and more expensive over time. > If we fixed international funds transfer we'd probably get some incremental benefit. Check out TransferWise! They've done a ton to solve this problem. They even have a currency agnostic bank account with local banking details in 6+ regions and supports 50+ currencies. [1] IMO they've largely solved remittences for the average joe. If you've got a ton of money to move you can use InteractiveBrokers to exchange currencies at market rates for $20 per million (!!) in commission. [1] https://transferwise.com/us/borderless/ https://transferwise.com/us/borderless/
- scarlac 6y agoIt will probably happen, but will take a while. My bet is that this is what Apple is working on. They will launch a version of Apple Card that is free of MasterCard. So far it's been a really long-haul play where Apple has spent a lot of time establishing deals with banks manually, in order to get a tiny fee, which they can due to the increased security of their system. This hard work is necessary in order to create a payment network that can work for everyone. Eventually, Apple will be in a position to launch their own network, while increasing fees for themselves and lowering fees for merchants. As someone who's been a merchant I'm very happy to see this happening, although it's like watching a tree grow (paint drying would be exciting in comparison). It's likely Google will follow suit, and depending on Apple's choice of implementation, we could hope that it will be backed by a stable cryptocurrency - but that's just a shot in the dark.
- erostrate 6y agoHow come we haven't had big privacy scandals from Visa/ Mastercard? Big companies, a rent-like business, no pressure to do things well, own lots of very sensitive personal data, clients giving the data away without realizing it, little regulatory oversight on the data front, etc. I would expect them to sell or leak poorly anonymised personal data, leading to huge privacy issues. Why hasn't this happened?
- osamagirl69 6y agoBecause they know they have a golden goose and are not willing to risk it all pushing boundaries like the FANG companies are. They also have literally 50 years of experience with their data mining and the only think more powerful that incompetence is 50 years of bureaucracy....
- Animats 6y agoVisa is now a publicly traded company, but it used to be a chaord, owned by the banks that used it. It's a data network and a standards organization. It doesn't issue cards or handle the money, it just passes transactions from one bank to another. The banks settle up separately.
- harry8 6y agohttps://www.forbes.com/sites/andygreenberg/2010/12/07/visa-mastercard-move-to-choke-wikileaks https://www.forbes.com/sites/andygreenberg/2010/12/07/visa-m... Note that this was a policy decision based on whim and a politician lobbying. No hearing, no evidence, no recourse, no rights and no meaningful alternative. Also a decision not taken by the banks nor, I believe, were they consulted. The upopular person's (Wikileaks here) rights are your rights and my rights. If you think the've done the wrong thing, you're entitled to that opion and establishing that is literally what courts are for. Much the same way we might want law and courts involved for suspension of a driving license and not simply because a politician doesn't like you and lobbies a bit. "Nobody who drives for UPS can drive on the roads because they love Putin" --not as ridiculous a fabricated politician's quote as it should be. But going back to it being a data network and standards organisation that describes the classic long-run decreasing average total cost curve of the natural monopoly which makes privatising it for profit a pure "rent-seeking" play. So we can see how egregious the monopoly is two ways there. Practically with an example and according to classic and relatively uncontroversial micoreconomic theory. So what about the classic monopolists' defence, which will come up again here. Define the market to be bigger and claim it's a small fraction of that bigger market. Can we just dismiss that as total B.S.? ie "You can also use cash to buy things." Try running a business or calculate the additional cost of buying the things you need without using the visa/mastercard network. Unless you have multiple networks with very low switching costs it's a disaster. Disclosure: Ajit Pai disagrees with all that totally.
- ricksunny 6y agoNicely put. The problem of duopolies isn't limited to the debit-cards space. Every single industry with a strong US footprint regresses to duopology structure. The root cause of this phenomenon needs to be identified and addressed.
- jerrysievert 6y agothere's a Futurama gag about a 3rd option that's just as apropos as when it aired: > Fry: $30? I can't afford that. Unless... Do you take Visa? > Salesman: Visa hasn't existed for 500 years. > Fry: American Express? > Salesman: 600 years. > Fry: Discover card? > Salesman: Sorry we don't take Discover. the good news is that Amex seems to have stepped up while partnering with Walmart for their BlueBird cards - while not perfect, at least helping to add more options. and with walmart in the mix it seems to help get a 3rd (Amex) option accepted more places. maybe not the perfect solution, but at least a step in the right direction.
- CryptoPunk 6y agoAren't they just networks for transmitting credit issuance messages, and a set of processes for handling disputes? Anyone familiar with the intricacies of these operations know how amenable they are to being debundled into discrete components and provided via an Ethereum-like protocol?
- adultSwim 6y agoLet's tackle both. Harmful anti-trust violations are rampant.
- craftydevil 6y agoAlready India start doing it, its UPI system enable us to avoid cards for all type of payments with processing fee. Also Rupay backed by GOI enable us to use those cards in abroad using vast connection.
- rishav_sharan 6y agoUPI is godsent. Probably the only good thing to come out of demonetization. I use it everyday, from buying groceries at roadside stalls to paying for my life insurance. I have pretty much stopped using cash altogether and use cards mainly in those outlets which don't have upi.
- jb775 6y agoCould Stripe swoop in and make a play to become a third major CC option? I feel like they have the core infrastructure in place and are still nimble enough to make it happen if they wanted.
- francislavoie 6y agoI feel like if they tried anything, MC/Visa would try to squeeze them until it becomes unviable. They would still need to support MC/Visa until they get enough market share to not totally hinder their existing business.
- GordonS 6y agoVisa own a stake in Stripe, and are unlikely to be supportive of such a play.
- deleted 6y ago[deleted]
- tappio 6y agoThis is a very us centric view. Most of the europe is so much ahead of US in payments that it is funny. There are dozens of alternative payment methods in the Europe. Especially in the Nordics card payments are on a big decline. There are basically two "tracks" to move money - card networks and bank to bank. Most new payment methods use bank transfer as the method of moving money. In the Nordics, every country has a mobile payments system where your bank account is attached to your phone number, any anyone can issue a payment to your phone number and you receive it to your bank account. You can use this also in brick and mortar stores etc. Not to talk about all the bill-payment based companies like Klarna... And how about China? They don't use cards either, just look at Alipay.
- Ninn 6y agoWhile it is true that we have more options, I do not agree that non credit card mobile payment options are a primary payment. These still lack a lot of usability improvement in comparison to the now widespread mobile credit cards supported by almost all banks too. So I still recognise visa and their support for Apple Pay helps maintain this power. Heres to hoping that Apple Pay (and Android) will open up directly to banks or solutions such as Mobile Pay, which bridges to direct bank transfers for member banks and then utilise credit cards as a backup for unsupported banks.
- tappio 6y agoOf course Visa and Mastercard still have a big role, especially in the brick & mortar. But when looking at e-commerce, the share of card payments is 40%. I don't think it is very relevant to discuss "duopoly" and say that they have the power to censor user content - because they don't. If they ban you, you still have many other options. AFAIK the point in the article was that we should break the credit card duopoly because they have too much power. I don't think that is the case here. Do you think that the credit card companies having too much power is a big problem in the Nordics?
- mrweasel 6y agoI'm not sure about the other Nordics countries, but Denmark still have its own card solution "Dankort". It's not nearly as popular as it once was, and I would say that most cards are now dual-branded as VISA/Dankort, where the card will work as a VISA card, if Dankort isn't supported. Our politicians and banks probably don't see it this way, but having a local alternative can help keep MasterCard and VISA in check. If they become to expensive or unreasonable most people already have a competitor in their wallet, one for whom fees are strictly controlled.
- pwdisswordfish2 6y agoLet's tackle Google first then we will have a look at the other complaints. Not going to "forget" Google. Sorry.
- IvanK_net 6y agoThe worst part is, that the fee for a card payment is shared between Visa/MasterCard and your bank. Bank transfers within a country are often free of charge, but are quite uncomfortable to make (typing numbers) and usually are not sent immediately (so that you can not pay this way in a grocery store). Banks have no interest in making bank transfers easier or faster, or opening up to cheaper competitors of Visa/MasterCard. Meanwhile, people happily keep their money in a bank, seeing that all bank services are free and that it "can not get any better". I think, if anyone is to replace Visa/MasterCard, they should also make their own bank (a place where people keep money in a long-term).
- spockz 6y agoWe have instant transfers between banks here in the Netherlands. It is coming for the whole EER. Some payment terminals now can also generate a QR code that you can use to pay, in addition to the normal debit/credit card payments.
- MaximumYComb 6y agoWhat was on NP2 that it's been censored by Mastercard? A quick search online suggested it was right wing politics but I suspect it must have had some content cross some legal line in order for it to be blacklist.
- m12k 6y agoThe experience of receiving credit card payments for a SaaS subscription sucks badly, even if you disregard the inflated payment processing fee. Banks can allow the charge to happen the first five months, then on the sixth charge, randomly turn on a penny and reject the charge with a completely opaque do_not_honor code, which probably translates to 'our fraud detection algorithm felt extra paranoid today'. There's a whole industry of companies who help other companies "poke" their customers when their payments randomly fail, to prevent churn. This seems ripe for disruption. My dream tool for receiving payments: - Isn't tied to a piece of plastic that expires - Front loads the fraud prevention by requiring 2FA to make sure up front that the buyer actually wants to pay for this. - Opt-in, per-transaction chargeback/escrow service (intended for shipment of physical goods) that you don't pay for if you don't activate. Transactions are clearly marked whether they include this during checkout. Otherwise transactions are final - For subscriptions, allows you to specify the conditions under which future charges should also be accepted, and when they should be held and you get contacted to approve them instead. - Basically anywhere the current system can fail/reverse a charge, the improved system would verify this up ahead, so the payment processor can be sure the buyer really wants to pay, and the merchant can be sure charges don't fail unless the buyer runs out of money in their account or actively cancels the subscription. - Charge a much more reasonable processing fee, due to not needing to wade into disputes and fraud recovery all the time.
- Polylactic_acid 6y agoThe whole system seems to be designed in such a bad way and relies on a bunch of heuristics and insurance to make up for easy fraud. Why is it that to pay for something you give the seller the keys to your account and they go in and withdraw the money they want instead of the seller sending you a request and you accepting to send the requested money.. Another plus side of your suggestion is it now becomes trivial to cancel any subscriptions since you can simply stop allowing the payment to go through rather than getting the seller to stop taking your money.
- imtringued 6y agoI'm still wondering why there is no electronic SEPA mandate. When you want to authorize e.g. for your landlord to be allowed to withdraw rent payments from your account the landlord has to physically mail you a SEPA mandate which you have to sign and mail to your bank. This may sound like a slightly obsolete but otherwise well thought out system until you notice that revoking the SEPA mandate requires you to contact the vendor first which is kind of silly.
- mtgx 6y agoWhy forget Google? Who says anti-trust should be applied in a mutual-exclusive way? I hate headlines like these.
- deadalus 6y agoVisa recently banned gab.com from accepting payment over dubious 'hate' speech.
- dao- 6y ago> Like almost complete control over what can be sold online. Ever wonder why certain things are difficult to buy via PayPal or other similar systems? So, why? The article doesn't seem to answer that question. What prevents shops from supporting alternative payment systems?
- ssn 6y agoI don't understand Hacker News. Tim Bray's post on Break Up Google was buried and not visible on HN's front page. The next day this on Visa-MasterCard post shows up on the top with a "forget Google" comment. Why? Is this a result from the community or the algorithm? HN seems to have changed a lot in the last few years.
- biolurker1 6y agoblockchain can change that with stablecoins.
- sub7 6y agoIndia figured this out years ago. Launched a domestic government Visa alternative called RuPay and also launched BHIM - an interface where everyone gets an email address like payment address and can send/receive directly. Both have traction. Sidenote: A bunch of the payment gateways began integrating BHIM and charging merchants a cut of the sale for what they pay 0 for. Can't see that lasting if people move off V/M completely.
- Ratiofarmings 6y agoSo instead of sometimes one of the two not being accepted, you want me to carry 50 different ones and have 2/3 rejected? No, thank you.
- apexalpha 6y agoThe only reason some cards are not accepted somewhere is because Visa-Mastercard are so powerful they force 3%-5% margins on transactions for merchants. In the EU the just use bank cards. And since there's regulations the fees are lows and everyone can use it everywhere.
- rbrtl 6y agoNo... You have the option of any of 50, and they can all be accepted everywhere; rather than the option of only two if you want a chance of being accepted. I believe this is already law in the EU anyway, but there are few competitors to the big two.
- richardwhiuk 6y agoWhat's law? That you have to accept all types of payment? Nope. If everything has to be accepted everywhere, then there's no differentiation
- kidsil 6y agoThe fastest way to do that is through phone-based payments. Those protocols are substantially more open than Visa/MasterCard, and introducing a competition shouldn't require hardware changes for the POS.
- stiray 6y agoWhat is extremely important here: we will not forget Google (Facebook, Amazon,...) but just add Visa and Mastercard to the same list. But still concentrate on Google (...) as large technological corporation have potential to end up worse.
- deleted 6y ago[deleted]
- cactus2093 6y agoYou can’t talk about credit cards in isolation without considering the rest of the consumer finance sector in the US. A big part of the reasons credit cards rose to such prominence is that the banking and payment rails are so incredibly stupidly designed. The check system and ACH which is the highest volume way that money is sent between people with different banks requires you to give out the secret key every time you make a payment. Plus it takes at least 1-2 days to clear which makes fraud more difficult to deal with. Interestingly the credit card system also suffers from the first part, your number is printed right there on your card. But they’ve managed to find and/or strong arm ways to reduce fraud on their network, and as a consumer I’m not liable for paying it which is a huge benefit. The author really lost me at the end though, I don’t see how regulation magically solves everything and they didn’t explain it at all. There is already a ton of regulation in the payment industry. And this comically flimsy underlying system could easily be improved by existing regulators, how about starting with small steps and seeing how that goes? Instead of advocating for throwing out the entire payment system all at once under the very flimsy assumption that the government will do it better.
- vinniejames 6y ago"not liable for paying it," but you're still paying it at the end of the day via fees and increased merchant prices
- ferzul 6y agoif the merchant doesn't charge a creditcard surcharge, and using a credit card is worth 1€ to me, and costs 1.01€/transaction to the merchant. but only 90% of transactions are by credit card. well, then i am better off paying by credit card, since 10% of transactions are subsidising my 1€. (strangely, in australia, card surcharges became normalised just before cash payments fell off a cliff. credit card transactions have also declined; it's visa/mc debit that have skyrocketed.)
- sukilot 6y agoA credit card costs about 3% not 1%. A credit card is a prisoner's dilemma problem where once anyone uses it, the others are pressured to use it also to cut their losses.
- vinniejames 6y agoOP needs to read about Bitcoin, it solves most of the problems discussed in the article
- frankzen 6y agoBitcoin Cash
- HeavyStorm 6y agoThe author clearly has little knowledge on the subject of payments. He's likely a consumer. Getting this "duopoly" right is very hard. Payments has a number of actors, and the label is there to ensure fair play between acquirer and card issuer. While mastercard and visa controls the market, it's not like there isn't competition: Amex, discovery, etc., are all labels that compete with the so-called duopoly.
- bitreality 6y agoA major issue here is that payment processors literally choose which industries, and which players will succeed. If your industry is deemed high risk by payment processors, you are fighting a brutal battle to accept customer payments. If you can't process payments, you don't have a business. Conversions will drop off a cliff if you try to switch them to niche payment methods like crypto currency, or even something like Skrill. Even worse, the payment processors do not apply their own ToS unilaterally. You'll find some websites will retain processing, while you lose it, even though the reason is that your business model is high risk. PayPal is notorious for this. Their ToS will only be enforced in certain countries, leaving companies in places like China with PayPal processing while your company is permanently banned from the platform. It becomes impossible to compete if you are banned from Stripe & PayPal while your competitors are not. If their own rules are not applied equally across your industry, they effectively pick the winners. Their platform also favors long-standing merchants in many ways. First by providing them an account manager, second by essentially grandfathering in certain accounts. You'll find it very difficult to process payments in certain industries on PayPal, likely not even being successful in on-boarding, while sites operating in the exact same business have functioning PayPal accounts. It's incredibly anti-competitive. These processors run such a large scale monopoly; there are so few comparable alternatives, I've seen so many people go out of business purely by losing their PayPal.
- app4soft 6y ago> Forget Google, time to end the Visa-MasterCard duopoly It's bad idea to forget "issue 1" and focusing on "issue 2". Both issues are major.
- xtat 6y agowas all on board until the conclusion was "regulation"
- Proven 6y agoReally? Can't say I give a damn about Visa and MasterCard.
- bibbitybobbity 6y agoWe shouldn't forget about google. It also needs to be regulated. This is addressed in the article but the title doesn't reflect this accurately. TLDR; Clickbait title :sad face: