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The fact that Plaid even exists, and that their core business will probably continue to thrive for another decade makes me almost certain that the US will lose

The fact that Plaid even exists, and that their core business will probably continue to thrive for another decade makes me almost certain that the US will lose its stranglehold on innovation soon. In the US, I have to pass through so many rent seekers to move some digits over (Plaid, Stripe, and Visa/MasterCard). Meanwhile Europe has PSD2 now and China AliPay/WeChat Pay. Even India, which in the past 3 months has unfortunately proven dysfunctional has UPI, which is orders of magnitude better than what we have. When has the US recently passed legislation or standards that fosters innovation? (this is a serious good faith question - there seems to be a lot of govt grants for stuff like basic research, but a whiff of money churns out stuff like repealing net neutrality).

seanhunter 5y ago
It boggles my mind how far behind the payments curve the US is. If you go to India or Indonesia you can pay guy cooking street food at the side of the road by scanning a QR code but in New York you still have people paying for sandwiches in Pret a Manger using a cheque.
- stuaxo 5y ago
  Unbelievable, I can't remember why last saw a cheque in the UK.
  - cactus2093 5y ago
    Don’t believe everything you read online, especially when the parent commenter is clearly not even American based on their spelling. I live in the US and have only used a “check” a couple of times in the past 5 years. And almost nobody would ever use one at a retail store or restaurant or food truck, if anything they’re only used for sending large sums of money to small businesses who want to avoid the 3% card processing fee. It’s still bad that this fee is so high on our primary payment rails, but it’s not as ridiculous as people in this thread are making it sound.
    - seanhunter 5y ago
      I didn't just read it online- this is based on my experience as a UK citizen who used to live and work in Manhattan a lot up to 2 years ago (think: not permanently but enough in any given year to have to pay Federal and NY state income tax). More than once I saw people do this to buy sandwiches in the financial district and near to Madison square park, and I've even see people pay for groceries by cheque and get cash back the way that that people used to before ATMs existed. I can dimly remember my parents doing this maybe 40 years ago but have certainly never done myself. I was also for some time the unhappy owner of an extremely small number of shares and the company insisted on sending me my dividend (less than $5) every quarter by cheque. When I opened my US bank account they asked me how many cheques I wanted "to get started". I said none. Like why would I ever use one for anything? I don't use a quill pen either.
  - afavour 5y ago
    It is literally not believable. I live in New York and have absolutely never seen anyone pay for sandwiches by check. Maybe, maybe if they were paying for a catering order of 50 sandwiches. But even then they'd probably be using a corporate credit card.
  - vidarh 5y ago
    I got my first ever checkbook when I moved to the UK in 2000 and marveled at how quaint and old fashioned it seemed - in Norway my parents had them in the 1980s, but they'd been phased out by the time I got my first adult bank account in the 90s. I still have a UK checkbook, but haven't written a cheque in a decade.
FractalParadigm 5y ago
Hell even here in Canada we have the Interac system, which from what little I know of the US banking system, is consistently 10+ years ahead of the game. I've had "Chip & PIN" on my cards since at least 2008, and distinctly remember getting my first "tap" card in ~2011 or so. I genuinely couldn't tell you the last time I inserted my card into a machine because anything under $100 (>99% of my in-store purchases) can be tapped for, and >99% of businesses support tap (looking at you, Walmart and Pilot/Flying J. Get with the times!). From what I understand tap is still barely on the docket at a lot of the US banks. The big kicker for me is Interac e-Transfers, where you simply log into your banking and can email (or text) money to anyone in the country - they click the link in the email/SMS they receive, log into their bank account, and choose where the money is deposited. We've had this system in place since at least 2014? Hell I pay my rent and buy weed just by sending e-transfers, they're treated the same as cash and happen instantly. I reminds me of something that happened recently, I stumbled into a conversation with some of my American friends trying to figure out how the one person was going to pay the other >1000 miles apart; it was absolute lunacy listening to them decide between PayPal, Cash App, Venmo, etc., trying to figure out who had the lowest fees for both parties, factoring in the time it takes for the transaction to happen and transferring to/from their bank account if necessary. It's insane to me how the banking system underlying the world's largest economy is so far behind the times.
- seryoiupfurds 5y ago
  Interac E-Transfers are great, except that I wish they didn't train people to click a link from their email and type in their bank password. Sure, it redirects to a login page on your own bank's web site, but how does a non-technical user know it's not a phishing lookalike? Really, the existing autodeposit feature would be perfect if it let you log in to your online banking and confirm pending transactions before autodepositing them. For that matter it would be nice if the email gave me a string I could paste into my online banking to get to the existing confirmation page. It's all much better than having to link your bank account to some third party or give away your credentials though.
  - tialaramex 5y ago
throwkeep 5y ago
Crypto innovation is mostly coming from the US, which is in the process of replacing the financial system.
deleted 5y ago
[deleted]
TaylorAlexander 5y ago
I kind of feel like China has already passed us. The US defines "innovation" as patents but in reality innovation is so much more than that. The US feels like its slowly grinding to a halt, and when I see how China is growing, I think we're already behind. I have been shopping for machine tools, and the stuff in China isn't just cheap knock offs anymore. It's good enough for them to use in country to build bullet trains and passenger jets. Of course they do import machinery from elsewhere too, but I just get the sense that they are moving very fast. If they'd passed us on daily innovation, we wouldn't exactly know it. Its hard to quantify. By the way I blame patents for this. Patents are a legal blockade on third party innovation. But that's how progress is made! Everyone copies everyone. You see something and you make a better version. Patents gum up the works and drive things to a standstill. They don't have this problem in China. Some people think investment won't happen without IP restrictions, but I think it will, just differently. There's no more unicorns and whales, but there's a lot more fish.
- ngc248 5y ago
  More like implementation inertia, most other countries have leapfrogged from their primitive systems directly to the latest and greatest, while in the US they are still making do with decades old technology.
- latch 5y ago
  At best, being able to build things that are built elsewhere would indicate parity. Further, for passenger jets, the C919 is far from being 100% domestically built (e.g., the engine comes from an american/french venture). I'm hopeful we'll see all countries converge onto a similar pace of innovation and progress. Large countries/regions (as a simple proxy for population and access to raw resources) will hopefully reach this parity sooner than later. At that point, I also hope that 1 country/ideology will never be able to pull far ahead of another - short of some fluke breakthrough that can be kept secret.
  - TaylorAlexander 5y ago
    Well to be clear, I am responding specifically to the phrase "makes me almost certain that the US will lose its stranglehold on innovation soon." Imagine two nations. A wealthy nation that used to innovate but has completely stopped innovation. It could continue to make advanced things using existing infrastructure and people, but could not improve beyond its current state. (This is the extreme, for illustration). Then imagine a larger poorer nation that is rapidly advancing. Even before the poorer nation has surpassed the other in technological capabilities, it would be producing more total innovation per year. Growing requires lots of innovation. Stagnating... not so much. So I am suggesting that the rate of innovation could be slowing in the US, and the rate of innovation could be higher in China. Even if absolute output is more advanced in the US, which would be a different metric. But the rate of innovation is important for projecting where each nation will be in the future, and I do believe intellectual property restrictions slow the rate of innovation.
ngc248 5y ago
"Even India, which in the past 3 months has unfortunately proven dysfunctional" what exactly does this mean? Other countries did not have a corona virus wave?
- lonesword 5y ago
  Indian here. > what exactly does this mean? That our response to the current wave has been tragic. > Other countries did not have a corona virus wave? Yes they did. However, we had the opportunity to learn from the tragic things that happened elsewhere and could have done stuff to prevent it/soften the blow but we didn't. The problem is not that we "allowed" another wave to happen, but that we allowed people to die due to a lack of oxygen and ICU beds.
  - ngc248 5y ago
    When did we get unlimited resources, should we stop everything else and put everything into oxygen and beds. These kind of things can only be reacted to not prepare surplus before hand coz for a developing country like India resources are never enough.
blueblisters 5y ago
I think the problem with forcing financial companies to develop interoperable systems is that the rules governing the standards are often set by the regulator who really don't have any skin in the game. If you take UPI, for instance, it's a fairly robust standard that has been developed by a non-governmental body that has been ruined by the regulator insisting that banks charge 0 transaction fees even for individuals that do a large number of transactions. This is because the regulator believes even a small fee will hamper adoption. This results in a relatively high failure rate because banks refuse to invest in servers and technologies that can handle the huge volume of transactions. I am happy that technological standards are largely untouched by the government.
- wmf 5y ago
  Most of the time government standards are based on "advice" from industry so it ends up as regulatory capture. A case of forcing fees to zero sounds less bad than usual.
bradleybuda 5y ago
Operation Warp Speed
rmesters 5y ago
This is a problem that can only be solved by regulated open banking (i.e. regulator enforcing banks/FIs to build APIs following one standard). Until US has regulated open banking, users will be sharing bank credentials in plain text and providers will be screen-scraping bank accounts. There's lots of good examples of regulated open banking. Europe has PDS2. Australia has Consumer Data Right Act. Several other countries that are now implementing open banking legislation: Brazil, Japan, Saudi Arabia, Mexico, Singapore, Hong Kong, India. It would be great to see US on that list some day.
- RileyJames 5y ago
  Australia’s open banking initiative is well captured by the big 4 banks. Good luck getting any access to it. Having an act, and being able to use it any useful manner are two very different things.
tgsovlerkhgsel 5y ago
PSD2 seems like a total disaster to me. From my understanding, banks are required to provide an API. Not a specific one - any API. Which means each bank has a different one and you need yet another rent seeker that aggregates those APIs. That's on top of requiring specific, often outdated security mechanisms, so now every time I want to pay something with a credit card I have to do extra authentication, >1 GB of my phone's memory is filled just with bank auth apps (again, each bank has their own).
- cookguyruffles 5y ago
  > Not a specific one - any API Defining this is a job for industry bodies and suchlike, as is keeping it current. Lest we forget jokes like the 2020 Brexit agreement containing references to Netscape Navigator 4.0
  - tgsovlerkhgsel 5y ago
    Having a rule that banks need to agree on one and then implement it would be fine. What is not fine is allowing each bank to come up with their own, especially as banks have no interest of making usage of their API easy.
- lmm 5y ago
  > you need yet another rent seeker that aggregates those APIs. If anyone can implement such an aggregator, market competition should drive the cost of that close to zero soon enough.
  - scrollaway 5y ago
    And indeed it is. Nordigen's product for example is free; they make money on upselling an optional product on top. https://nordigen.com/ https://nordigen.com/
  - tgsovlerkhgsel 5y ago
    Since the aggregator will process sensitive data, you need a lot of audits etc. If you'd like to use the API to access your own account using open source software, good luck (unless you find an aggregator that is certified and allows you to access your own account through them).
cactus2093 5y ago
Payments in the US are more of a minor nuisance than a serious problem. And the rise of companies like stripe, Shopify, plaid, and PayPal before them seem to be doing a fine job filling the gaps. I’m sure eventually we’ll get better low level payment rails, but I don’t think it would actually affect the day to day life of the average American much if at all which is why it hasn’t happened yet. If anything is going to kill the US it will be something like the collapse of fair elections or the huge ballooning healthcare and education costs, not the payment rails.
- hahaxdxd123 5y ago
  I feel like this is just a more general trend of US legislators deadlocked so hard that it provides rent seekers the opportunity to step in and entrench themselves. I would argue that healthcare - which you mentioned - is another prime example of this. If you think about it, the payments system is a 2+% sales tax! Levied by private corporations! I don't even have an alternative since by contract with Visa/MC stores can't provide a lower price for paying cash.
  - ac29 5y ago
    > I don't even have an alternative since by contract with Visa/MC stores can't provide a lower price for paying cash. This hasnt been true for over a decade. Cash discounts are allowed by the Durbin amendment. See: https://www.law.cornell.edu/uscode/text/15/1693o-2 https://www.law.cornell.edu/uscode/text/15/1693o-2 (b)(2)(A)
    - hahaxdxd123 5y ago
      Ahh thanks for the correction. This seems like it's still pretty consumer unfriendly though - you still have to advertise the card price in store and then you can take a discount at the register, as opposed to advertising a cash price and then adding a card charge. There are a lot of small businesses around me that are cash only under $10/15 dollars. Given human psychology around advertised prices (i.e. most people don't think about opportunity cost), I'm not surprised cash discounts aren't common.

seanhunter 5y ago

It boggles my mind how far behind the payments curve the US is. If you go to India or Indonesia you can pay guy cooking street food at the side of the road by scanning a QR code but in New York you still have people paying for sandwiches in Pret a Manger using a cheque.

stuaxo 5y ago
Unbelievable, I can't remember why last saw a cheque in the UK.
- cactus2093 5y ago
  Don’t believe everything you read online, especially when the parent commenter is clearly not even American based on their spelling. I live in the US and have only used a “check” a couple of times in the past 5 years. And almost nobody would ever use one at a retail store or restaurant or food truck, if anything they’re only used for sending large sums of money to small businesses who want to avoid the 3% card processing fee. It’s still bad that this fee is so high on our primary payment rails, but it’s not as ridiculous as people in this thread are making it sound.
  - seanhunter 5y ago
    I didn't just read it online- this is based on my experience as a UK citizen who used to live and work in Manhattan a lot up to 2 years ago (think: not permanently but enough in any given year to have to pay Federal and NY state income tax). More than once I saw people do this to buy sandwiches in the financial district and near to Madison square park, and I've even see people pay for groceries by cheque and get cash back the way that that people used to before ATMs existed. I can dimly remember my parents doing this maybe 40 years ago but have certainly never done myself. I was also for some time the unhappy owner of an extremely small number of shares and the company insisted on sending me my dividend (less than $5) every quarter by cheque. When I opened my US bank account they asked me how many cheques I wanted "to get started". I said none. Like why would I ever use one for anything? I don't use a quill pen either.
- afavour 5y ago
  It is literally not believable. I live in New York and have absolutely never seen anyone pay for sandwiches by check. Maybe, maybe if they were paying for a catering order of 50 sandwiches. But even then they'd probably be using a corporate credit card.
- vidarh 5y ago
  I got my first ever checkbook when I moved to the UK in 2000 and marveled at how quaint and old fashioned it seemed - in Norway my parents had them in the 1980s, but they'd been phased out by the time I got my first adult bank account in the 90s. I still have a UK checkbook, but haven't written a cheque in a decade.

FractalParadigm 5y ago

Hell even here in Canada we have the Interac system, which from what little I know of the US banking system, is consistently 10+ years ahead of the game. I've had "Chip & PIN" on my cards since at least 2008, and distinctly remember getting my first "tap" card in ~2011 or so. I genuinely couldn't tell you the last time I inserted my card into a machine because anything under $100 (>99% of my in-store purchases) can be tapped for, and >99% of businesses support tap (looking at you, Walmart and Pilot/Flying J. Get with the times!). From what I understand tap is still barely on the docket at a lot of the US banks. The big kicker for me is Interac e-Transfers, where you simply log into your banking and can email (or text) money to anyone in the country - they click the link in the email/SMS they receive, log into their bank account, and choose where the money is deposited. We've had this system in place since at least 2014? Hell I pay my rent and buy weed just by sending e-transfers, they're treated the same as cash and happen instantly. I reminds me of something that happened recently, I stumbled into a conversation with some of my American friends trying to figure out how the one person was going to pay the other >1000 miles apart; it was absolute lunacy listening to them decide between PayPal, Cash App, Venmo, etc., trying to figure out who had the lowest fees for both parties, factoring in the time it takes for the transaction to happen and transferring to/from their bank account if necessary. It's insane to me how the banking system underlying the world's largest economy is so far behind the times.

seryoiupfurds 5y ago
Interac E-Transfers are great, except that I wish they didn't train people to click a link from their email and type in their bank password. Sure, it redirects to a login page on your own bank's web site, but how does a non-technical user know it's not a phishing lookalike? Really, the existing autodeposit feature would be perfect if it let you log in to your online banking and confirm pending transactions before autodepositing them. For that matter it would be nice if the email gave me a string I could paste into my online banking to get to the existing confirmation page. It's all much better than having to link your bank account to some third party or give away your credentials though.
- tialaramex 5y ago

throwkeep 5y ago

Crypto innovation is mostly coming from the US, which is in the process of replacing the financial system.

deleted 5y ago

[deleted]

TaylorAlexander 5y ago

I kind of feel like China has already passed us. The US defines "innovation" as patents but in reality innovation is so much more than that. The US feels like its slowly grinding to a halt, and when I see how China is growing, I think we're already behind. I have been shopping for machine tools, and the stuff in China isn't just cheap knock offs anymore. It's good enough for them to use in country to build bullet trains and passenger jets. Of course they do import machinery from elsewhere too, but I just get the sense that they are moving very fast. If they'd passed us on daily innovation, we wouldn't exactly know it. Its hard to quantify. By the way I blame patents for this. Patents are a legal blockade on third party innovation. But that's how progress is made! Everyone copies everyone. You see something and you make a better version. Patents gum up the works and drive things to a standstill. They don't have this problem in China. Some people think investment won't happen without IP restrictions, but I think it will, just differently. There's no more unicorns and whales, but there's a lot more fish.

ngc248 5y ago
More like implementation inertia, most other countries have leapfrogged from their primitive systems directly to the latest and greatest, while in the US they are still making do with decades old technology.
latch 5y ago
At best, being able to build things that are built elsewhere would indicate parity. Further, for passenger jets, the C919 is far from being 100% domestically built (e.g., the engine comes from an american/french venture). I'm hopeful we'll see all countries converge onto a similar pace of innovation and progress. Large countries/regions (as a simple proxy for population and access to raw resources) will hopefully reach this parity sooner than later. At that point, I also hope that 1 country/ideology will never be able to pull far ahead of another - short of some fluke breakthrough that can be kept secret.
- TaylorAlexander 5y ago
  Well to be clear, I am responding specifically to the phrase "makes me almost certain that the US will lose its stranglehold on innovation soon." Imagine two nations. A wealthy nation that used to innovate but has completely stopped innovation. It could continue to make advanced things using existing infrastructure and people, but could not improve beyond its current state. (This is the extreme, for illustration). Then imagine a larger poorer nation that is rapidly advancing. Even before the poorer nation has surpassed the other in technological capabilities, it would be producing more total innovation per year. Growing requires lots of innovation. Stagnating... not so much. So I am suggesting that the rate of innovation could be slowing in the US, and the rate of innovation could be higher in China. Even if absolute output is more advanced in the US, which would be a different metric. But the rate of innovation is important for projecting where each nation will be in the future, and I do believe intellectual property restrictions slow the rate of innovation.

ngc248 5y ago

"Even India, which in the past 3 months has unfortunately proven dysfunctional" what exactly does this mean? Other countries did not have a corona virus wave?

lonesword 5y ago
Indian here. > what exactly does this mean? That our response to the current wave has been tragic. > Other countries did not have a corona virus wave? Yes they did. However, we had the opportunity to learn from the tragic things that happened elsewhere and could have done stuff to prevent it/soften the blow but we didn't. The problem is not that we "allowed" another wave to happen, but that we allowed people to die due to a lack of oxygen and ICU beds.
- ngc248 5y ago
  When did we get unlimited resources, should we stop everything else and put everything into oxygen and beds. These kind of things can only be reacted to not prepare surplus before hand coz for a developing country like India resources are never enough.

blueblisters 5y ago

I think the problem with forcing financial companies to develop interoperable systems is that the rules governing the standards are often set by the regulator who really don't have any skin in the game. If you take UPI, for instance, it's a fairly robust standard that has been developed by a non-governmental body that has been ruined by the regulator insisting that banks charge 0 transaction fees even for individuals that do a large number of transactions. This is because the regulator believes even a small fee will hamper adoption. This results in a relatively high failure rate because banks refuse to invest in servers and technologies that can handle the huge volume of transactions. I am happy that technological standards are largely untouched by the government.

wmf 5y ago
Most of the time government standards are based on "advice" from industry so it ends up as regulatory capture. A case of forcing fees to zero sounds less bad than usual.

bradleybuda 5y ago

Operation Warp Speed

rmesters 5y ago

This is a problem that can only be solved by regulated open banking (i.e. regulator enforcing banks/FIs to build APIs following one standard). Until US has regulated open banking, users will be sharing bank credentials in plain text and providers will be screen-scraping bank accounts. There's lots of good examples of regulated open banking. Europe has PDS2. Australia has Consumer Data Right Act. Several other countries that are now implementing open banking legislation: Brazil, Japan, Saudi Arabia, Mexico, Singapore, Hong Kong, India. It would be great to see US on that list some day.

RileyJames 5y ago
Australia’s open banking initiative is well captured by the big 4 banks. Good luck getting any access to it. Having an act, and being able to use it any useful manner are two very different things.

tgsovlerkhgsel 5y ago

PSD2 seems like a total disaster to me. From my understanding, banks are required to provide an API. Not a specific one - any API. Which means each bank has a different one and you need yet another rent seeker that aggregates those APIs. That's on top of requiring specific, often outdated security mechanisms, so now every time I want to pay something with a credit card I have to do extra authentication, >1 GB of my phone's memory is filled just with bank auth apps (again, each bank has their own).

cookguyruffles 5y ago
> Not a specific one - any API Defining this is a job for industry bodies and suchlike, as is keeping it current. Lest we forget jokes like the 2020 Brexit agreement containing references to Netscape Navigator 4.0
- tgsovlerkhgsel 5y ago
  Having a rule that banks need to agree on one and then implement it would be fine. What is not fine is allowing each bank to come up with their own, especially as banks have no interest of making usage of their API easy.
lmm 5y ago
> you need yet another rent seeker that aggregates those APIs. If anyone can implement such an aggregator, market competition should drive the cost of that close to zero soon enough.
- scrollaway 5y ago
  And indeed it is. Nordigen's product for example is free; they make money on upselling an optional product on top. https://nordigen.com/ https://nordigen.com/
- tgsovlerkhgsel 5y ago
  Since the aggregator will process sensitive data, you need a lot of audits etc. If you'd like to use the API to access your own account using open source software, good luck (unless you find an aggregator that is certified and allows you to access your own account through them).

cactus2093 5y ago

Payments in the US are more of a minor nuisance than a serious problem. And the rise of companies like stripe, Shopify, plaid, and PayPal before them seem to be doing a fine job filling the gaps. I’m sure eventually we’ll get better low level payment rails, but I don’t think it would actually affect the day to day life of the average American much if at all which is why it hasn’t happened yet. If anything is going to kill the US it will be something like the collapse of fair elections or the huge ballooning healthcare and education costs, not the payment rails.

hahaxdxd123 5y ago
I feel like this is just a more general trend of US legislators deadlocked so hard that it provides rent seekers the opportunity to step in and entrench themselves. I would argue that healthcare - which you mentioned - is another prime example of this. If you think about it, the payments system is a 2+% sales tax! Levied by private corporations! I don't even have an alternative since by contract with Visa/MC stores can't provide a lower price for paying cash.
- ac29 5y ago
  > I don't even have an alternative since by contract with Visa/MC stores can't provide a lower price for paying cash. This hasnt been true for over a decade. Cash discounts are allowed by the Durbin amendment. See: https://www.law.cornell.edu/uscode/text/15/1693o-2 https://www.law.cornell.edu/uscode/text/15/1693o-2 (b)(2)(A)
  - hahaxdxd123 5y ago
    Ahh thanks for the correction. This seems like it's still pretty consumer unfriendly though - you still have to advertise the card price in store and then you can take a discount at the register, as opposed to advertising a cash price and then adding a card charge. There are a lot of small businesses around me that are cash only under $10/15 dollars. Given human psychology around advertised prices (i.e. most people don't think about opportunity cost), I'm not surprised cash discounts aren't common.