5 ms·

Also maybe, try to innovate instead of suffocating innovation with a pillow stuffed with cash.

deleted 6y ago
[deleted]
toomuchtodo 6y ago
US debit business is likely replaced with Fed instant payments in 2-3 years [1] (the core functionality is approved and building has started [2]). Can't innovate your way out of a central bank replacing your product. You're only left with uncompetitive business options to hold onto your regulatory capture as long as possible. Plaid exists because the US hasn't mandated financial API access like Europe did with PSD2. Regulatory requirements to support this would negate the need for "innovative" startups. EDIT: Real Talk, these networks should not be taxing economies percentage points of total payment volume [3] (again, Europe used regulation to cram down interchange fees to be more reasonable). These are legacy businesses that should be replaced with low cost utility-esq payment services such that the Fed is doing (and already exist in most first world countries [4]). [1] https://www.bankingdive.com/news/fed-gives-new-details-on-its-real-time-payments-system/583153/ https://www.bankingdive.com/news/fed-gives-new-details-on-it... [2] https://www.federalreserve.gov/newsevents/speech/brainard20200806a.htm https://www.federalreserve.gov/newsevents/speech/brainard202... [3] https://theweek.com/articles/850232/why-are-all-paying-tax-credit-card-companies https://theweek.com/articles/850232/why-are-all-paying-tax-c... [4] https://en.wikipedia.org/wiki/Instant_payment#Examples_of_instant_payment_services https://en.wikipedia.org/wiki/Instant_payment#Examples_of_in...
- ballenf 6y ago
  I'm sure there will be lucrative contracts to be had by banks in that scheme. Just like electronic tax filing and ACA health plans.
  - toomuchtodo 6y ago
    I'm not so jaded yet to believe that it won't be an improvement over the status quo. YMMV. Get involved (I am, and submit comments to the Fed and contact reps on the U.S. House Committee on Financial Services). Be the squeaky wheel, do some bureaucracy hacking. Communications and relationships with representatives is some of the greatest leverage you'll ever have. Success is not assured, but constant vigilance is mandatory.
- runako 6y ago
  > these networks should not be taxing economies percentage points of total payment volume I agree, but what value do you place on the insurance aspect of credit-card payments? There are definitely vendors I only buy from because I know I can call Citibank if they screw me.
  - toomuchtodo 6y ago
    "Let merchants charge customers the credit transaction fee as a surcharge [1] [2], and let consumers pay to receive the benefits if they so desire. Everyone else can use debit cards now, and instant payments when they arrive in 2023-2024 [3] [4]. If it's transaction insurance customers demand, let them vote with their dollars (versus mandating everyone pay it as a transaction tax)." Therefore, if you value the insurance, you still should have access to it, but you should pay for it. Citations above are in my original comment on the topic: https://news.ycombinator.com/item?id=24899057 https://news.ycombinator.com/item?id=24899057
    - mchusma 6y ago
      To add to this, there is a big problem with the current structure of "insurance" as a flat rate for all consumers. The risk is shared between the business and consumer, as all legitimate businesses still have disputes and I know many consumers who "just disputed a charge" to not pay. My guess (based on watching data on 2 businesses for 10 years) is that 90% of the risk in the transaction is probably in the consumer (but hard to know for sure). This makes sense, because right now with a flat rate the "good customers" (who rarely disupte) subsidize the "bad customers" (who dispute a lot). It would be a bad idea for everyone got the same rate for car insurance, because it would promote bad behavior (since being a bad driver would be subsidized). Small businesses also get disproportionally hit with this issue. People are less likely to dispute a charge with Amazon (and lose access to its service) than the local store. So the bulk of the "cost" of insurance here is borne by small businesses and good customers.
    - antihero 6y ago
      How are you going to get people to adopt something that makes them pay a surcharge? Mastercard/Visa are free for the consumer (other than shops that charge for card payment, but they made that illegal in the UK).
- antihero 6y ago
  > Can't innovate your way out of a central bank replacing your product. What about the fact that Visa and Mastercard are accepted internationally pretty much universally for transactions, whereas what you're talking about would be more likely analogous to the UK Faster Payments Service (though state backed). It's fantastic, however for buying a coffee tapping a contactless card that's also accepted in most other countries is much nicer. Perhaps with mobile wallets and being able to scan a QR to pay for stuff or using NFC could be equivalent in ease-of-use.
  - toomuchtodo 6y ago
    I don't hand wave away this use case, but it is a much smaller amount of volume compared to domestic payments. As instant payment services sponsored by central banks roll out, the hurdles become lower for cross currency/international transactions. TransferWise already does a swank job interfacing with antiquated financial infra for cross border transfers and payments, I imagine that you'll see more competitors and possibly even native integration with central bank apps for cross border payments as improvements continue. It's all messages (ISO 20022) on a bus or in queues after all.
    - HeadsUpHigh 6y ago
      My country is heavily pushing for this kind of payment system. Given how bad android security and patching is I wouldn't trust anything involving my phone.
    - antihero 6y ago
      So will this mean we go from having a fairly standard international payment system with two main players (Visa/Mastercard) where anyone from any country can pay for things in pretty much any other country, the same, way, to a situation where every country has it's own (perhaps cheaper) system. How does that work for tourism?
      - toomuchtodo 6y ago
        I assume the traditional cross border payments will stick around until better systems using new instant payment primitives are built. I would not anticipate these user experiences to get worse, only better.

deleted 6y ago

[deleted]

US debit business is likely replaced with Fed instant payments in 2-3 years [1] (the core functionality is approved and building has started [2]). Can't innovate your way out of a central bank replacing your product. You're only left with uncompetitive business options to hold onto your regulatory capture as long as possible. Plaid exists because the US hasn't mandated financial API access like Europe did with PSD2. Regulatory requirements to support this would negate the need for "innovative" startups. EDIT: Real Talk, these networks should not be taxing economies percentage points of total payment volume [3] (again, Europe used regulation to cram down interchange fees to be more reasonable). These are legacy businesses that should be replaced with low cost utility-esq payment services such that the Fed is doing (and already exist in most first world countries [4]). [1] https://www.bankingdive.com/news/fed-gives-new-details-on-its-real-time-payments-system/583153/ https://www.bankingdive.com/news/fed-gives-new-details-on-it... [2] https://www.federalreserve.gov/newsevents/speech/brainard20200806a.htm https://www.federalreserve.gov/newsevents/speech/brainard202... [3] https://theweek.com/articles/850232/why-are-all-paying-tax-credit-card-companies https://theweek.com/articles/850232/why-are-all-paying-tax-c... [4] https://en.wikipedia.org/wiki/Instant_payment#Examples_of_instant_payment_services https://en.wikipedia.org/wiki/Instant_payment#Examples_of_in...

ballenf 6y ago
I'm sure there will be lucrative contracts to be had by banks in that scheme. Just like electronic tax filing and ACA health plans.
- toomuchtodo 6y ago
  I'm not so jaded yet to believe that it won't be an improvement over the status quo. YMMV. Get involved (I am, and submit comments to the Fed and contact reps on the U.S. House Committee on Financial Services). Be the squeaky wheel, do some bureaucracy hacking. Communications and relationships with representatives is some of the greatest leverage you'll ever have. Success is not assured, but constant vigilance is mandatory.
runako 6y ago
> these networks should not be taxing economies percentage points of total payment volume I agree, but what value do you place on the insurance aspect of credit-card payments? There are definitely vendors I only buy from because I know I can call Citibank if they screw me.
- toomuchtodo 6y ago
  "Let merchants charge customers the credit transaction fee as a surcharge [1] [2], and let consumers pay to receive the benefits if they so desire. Everyone else can use debit cards now, and instant payments when they arrive in 2023-2024 [3] [4]. If it's transaction insurance customers demand, let them vote with their dollars (versus mandating everyone pay it as a transaction tax)." Therefore, if you value the insurance, you still should have access to it, but you should pay for it. Citations above are in my original comment on the topic: https://news.ycombinator.com/item?id=24899057 https://news.ycombinator.com/item?id=24899057
  - mchusma 6y ago
    To add to this, there is a big problem with the current structure of "insurance" as a flat rate for all consumers. The risk is shared between the business and consumer, as all legitimate businesses still have disputes and I know many consumers who "just disputed a charge" to not pay. My guess (based on watching data on 2 businesses for 10 years) is that 90% of the risk in the transaction is probably in the consumer (but hard to know for sure). This makes sense, because right now with a flat rate the "good customers" (who rarely disupte) subsidize the "bad customers" (who dispute a lot). It would be a bad idea for everyone got the same rate for car insurance, because it would promote bad behavior (since being a bad driver would be subsidized). Small businesses also get disproportionally hit with this issue. People are less likely to dispute a charge with Amazon (and lose access to its service) than the local store. So the bulk of the "cost" of insurance here is borne by small businesses and good customers.
  - antihero 6y ago
    How are you going to get people to adopt something that makes them pay a surcharge? Mastercard/Visa are free for the consumer (other than shops that charge for card payment, but they made that illegal in the UK).
antihero 6y ago
> Can't innovate your way out of a central bank replacing your product. What about the fact that Visa and Mastercard are accepted internationally pretty much universally for transactions, whereas what you're talking about would be more likely analogous to the UK Faster Payments Service (though state backed). It's fantastic, however for buying a coffee tapping a contactless card that's also accepted in most other countries is much nicer. Perhaps with mobile wallets and being able to scan a QR to pay for stuff or using NFC could be equivalent in ease-of-use.
- toomuchtodo 6y ago
  I don't hand wave away this use case, but it is a much smaller amount of volume compared to domestic payments. As instant payment services sponsored by central banks roll out, the hurdles become lower for cross currency/international transactions. TransferWise already does a swank job interfacing with antiquated financial infra for cross border transfers and payments, I imagine that you'll see more competitors and possibly even native integration with central bank apps for cross border payments as improvements continue. It's all messages (ISO 20022) on a bus or in queues after all.
  - HeadsUpHigh 6y ago
    My country is heavily pushing for this kind of payment system. Given how bad android security and patching is I wouldn't trust anything involving my phone.
  - antihero 6y ago
    So will this mean we go from having a fairly standard international payment system with two main players (Visa/Mastercard) where anyone from any country can pay for things in pretty much any other country, the same, way, to a situation where every country has it's own (perhaps cheaper) system. How does that work for tourism?
    - toomuchtodo 6y ago
      I assume the traditional cross border payments will stick around until better systems using new instant payment primitives are built. I would not anticipate these user experiences to get worse, only better.