6 ms·

I really don't get why we accept this de-facto tax on the world economy by US companies. Amex, Visa and Mastercard are all based in the US, and all charge a (no

I really don't get why we accept this de-facto tax on the world economy by US companies. Amex, Visa and Mastercard are all based in the US, and all charge a (nowadays) non-negotiable fee on selling anything. Cash has many problems, and clearly won't work for online purchases, but at least small business owners could pay their employees "out of the till" at the end of the week, bypassing bank transaction fees and a fairly substantial (~1%) barely-negotiable and highly regressive charge on their income.

IdoRA 5y ago
Cash is not free to handle. Considering the whole “cash lifecycle”: shrinkage, cost of secure transport to the bank, &c., costs can be up to 8% for some industry sectors.
tryptophan 5y ago
I wonder what will happen when fedNow goes live. https://www.frbservices.org/financial-services/fednow/about.html https://www.frbservices.org/financial-services/fednow/about.... It will be a cheap/free, instant, money sending service. What will be the point of visa/mastercard/paypal then?
- valzam 5y ago
  Australia has had instant, free interbank transfers for years now (PayID) but for some reason I have yet to see a business accept it at PoS and only very rarely for online purchases. The only business that seem to accept it are crypto and stock exchanges, to get your money in fast...
viktorcode 5y ago
That's dependent on a world region. It is a question to regulations in this area your country employs. Also, there are different payment systems (non US). It is up to sellers to support them.
toyg 5y ago
Bootstrapping a worldwide payment system is very, very expensive.
- azalemeth 5y ago
  If anything, that's an argument in favour of the whole thing being government controlled -- it's clearly a natural monopoly with a large capital expenditure requirement and a comparatively minimal (as a percentage of transactions) ongoing charge required to continue to run it. I mean, it clearly doesn't cost Visa / MC any more to make a £/$/€45 000 payment than a £/$/€5 one – database writes are not cheaper or more expensive if the fixed point value you change is smaller or larger (subject to fitting within the range requirements, etc)...
  - kasey_junk 5y ago
    You are forgetting about risk management which does change based on the fixed point value.
  - gtirloni 5y ago
    Brazil has gone that route with PIX [0]. It's a fund transfer system with realtime confirmation. Many e-commerce stores accept it besides debit/credit, they can confirm the payment almost instantaneously and they usually give discounts if you use PIX instead of debit/credit (3-10%). Also, paying at stores, clinics, doctors, etc.. all done with PIX nowadays. Very few people are carrying cash these days. Very few clinics had a payment machine to accept debit/credit cards and now with PIX they have no incentive to do so anymore. To transfer funds, you can specify the user's ID (which can be a phone number, national tax identification or some random string the user creates). To pay for purchases, you usually scan a QR code or copy a payment string using your bank's app/website. It's very convenient. 0 - https://www.bcb.gov.br/en/financialstability/pix_en https://www.bcb.gov.br/en/financialstability/pix_en
    - radiator 5y ago
      Interesting. Is having a brazilian bank account a prerequisite to use PIX?
kasey_junk 5y ago
Cash management is not free. Unless a business is extremely small, extremely low margin or doesn’t want an electronic record of the transaction most businesses prefer not to deal with cash. So you are back to a payments network. Those are very hard to bootstrap and are not free to run.
baq 5y ago
> "Pablo was earning so much that each year we would write off 10% of the money because the rats would eat it in storage or it would be damaged by water or lost," Escobar wrote. https://www.businessinsider.com/pablo-escobar-and-rubber-bands-2015-9?r=US&IR=T https://www.businessinsider.com/pablo-escobar-and-rubber-ban...
kall 5y ago
"We“ don‘t. In the EU, the base fee is capped at 0.2% (debit) and 0.3% (credit) which sounds reasonable for what they provide.
- toomuchtodo 5y ago
  Which doesn’t apply in the UK post Brexit, hence this situation. The UK could cram down interchange fees (such that the EU had) with their own regulation if they don’t want merchants banning rent seeking payment networks.
  - tim333 5y ago
    Following Brexit they'll probably be able to jack it up by offering consulting roles to Tory politicians.
  - LatteLazy 5y ago
    The whole point of brexit was to get rid of the sort of fair, efficient, reasonable legislation the EU pushes. Brits want to be fucked over by big US mega corps and are tired of the EU refusing them that right. As a Brit I wish it wasn't true but here we are.
  - ArgyleSound 5y ago
    It still applies in the UK, just not between UK-EU transactions because those are cross border now
- alecco 5y ago
  Doesn't translate to real life: "1.45% + € 0.05 per transaction" https://www.mypos.eu/en/pricing-and-fees https://www.mypos.eu/en/pricing-and-fees
  - kall 5y ago
    Yeah sure, but that‘s all added on by other parties. As far as I know, the layers above VISA/MC are diverse enough (not a duopoly). If that‘s true you could rely on the market to drive down fees if it‘s profitable.
Denvercoder9 5y ago
It's a problem of regulation. E.g. in my home country, the Netherlands, practically everyone uses a Maestro or V Pay card issued by Mastercard or Visa, but card fees are very reasonable: € 0.0082 + 0,010% (for domestic transactions). The bank charges a much higher fee, but total fees still come out to less € 0.05. That's much cheaper than handling cash is.
tumetab1 5y ago
Because regulations which goverments supports because they prefer digital transactions to physical money for several reasons. (EU country perspective) By VISA/ MasterCard contract backed by governments' regulations a merchant in EU can not charge more because he's using a card instead of cash. Of course the transactions costs are paid by the customer, it's just all customers instead of those paying by card. That's why some cards have charges, to the merchants, of around 2%... because the customer who use that cards does not pay them. If I, as a customer, when doing an Amazon checkout saw a 2% charge to use VISA I would drop them in a second. Because that's hidden on purpose, I keep using it.
- tumetab1 5y ago
  To clarify, it seems that transactions costs vary a lot in the EU. I have the prices in Portugal for 2 terminal payments provider and I see lot of comissions around 2% which is strange because the EU states that the comissions are much lower. No idea what's going here.
  - Dah00n 5y ago
    Aren't you looking at the PoS fee instead of the VISA fee?
    - tumetab1 5y ago
      I think so, I was looking into the fees paid by merchants to accept a card payment on in a physical terminal.

IdoRA 5y ago

Cash is not free to handle. Considering the whole “cash lifecycle”: shrinkage, cost of secure transport to the bank, &c., costs can be up to 8% for some industry sectors.

tryptophan 5y ago

I wonder what will happen when fedNow goes live. https://www.frbservices.org/financial-services/fednow/about.html https://www.frbservices.org/financial-services/fednow/about.... It will be a cheap/free, instant, money sending service. What will be the point of visa/mastercard/paypal then?

valzam 5y ago
Australia has had instant, free interbank transfers for years now (PayID) but for some reason I have yet to see a business accept it at PoS and only very rarely for online purchases. The only business that seem to accept it are crypto and stock exchanges, to get your money in fast...

viktorcode 5y ago

That's dependent on a world region. It is a question to regulations in this area your country employs. Also, there are different payment systems (non US). It is up to sellers to support them.

toyg 5y ago

Bootstrapping a worldwide payment system is very, very expensive.

azalemeth 5y ago
If anything, that's an argument in favour of the whole thing being government controlled -- it's clearly a natural monopoly with a large capital expenditure requirement and a comparatively minimal (as a percentage of transactions) ongoing charge required to continue to run it. I mean, it clearly doesn't cost Visa / MC any more to make a £/$/€45 000 payment than a £/$/€5 one – database writes are not cheaper or more expensive if the fixed point value you change is smaller or larger (subject to fitting within the range requirements, etc)...
- kasey_junk 5y ago
  You are forgetting about risk management which does change based on the fixed point value.
- gtirloni 5y ago
  Brazil has gone that route with PIX [0]. It's a fund transfer system with realtime confirmation. Many e-commerce stores accept it besides debit/credit, they can confirm the payment almost instantaneously and they usually give discounts if you use PIX instead of debit/credit (3-10%). Also, paying at stores, clinics, doctors, etc.. all done with PIX nowadays. Very few people are carrying cash these days. Very few clinics had a payment machine to accept debit/credit cards and now with PIX they have no incentive to do so anymore. To transfer funds, you can specify the user's ID (which can be a phone number, national tax identification or some random string the user creates). To pay for purchases, you usually scan a QR code or copy a payment string using your bank's app/website. It's very convenient. 0 - https://www.bcb.gov.br/en/financialstability/pix_en https://www.bcb.gov.br/en/financialstability/pix_en
  - radiator 5y ago
    Interesting. Is having a brazilian bank account a prerequisite to use PIX?

kasey_junk 5y ago

Cash management is not free. Unless a business is extremely small, extremely low margin or doesn’t want an electronic record of the transaction most businesses prefer not to deal with cash. So you are back to a payments network. Those are very hard to bootstrap and are not free to run.

baq 5y ago

> "Pablo was earning so much that each year we would write off 10% of the money because the rats would eat it in storage or it would be damaged by water or lost," Escobar wrote. https://www.businessinsider.com/pablo-escobar-and-rubber-bands-2015-9?r=US&IR=T https://www.businessinsider.com/pablo-escobar-and-rubber-ban...

kall 5y ago

"We“ don‘t. In the EU, the base fee is capped at 0.2% (debit) and 0.3% (credit) which sounds reasonable for what they provide.

toomuchtodo 5y ago
Which doesn’t apply in the UK post Brexit, hence this situation. The UK could cram down interchange fees (such that the EU had) with their own regulation if they don’t want merchants banning rent seeking payment networks.
- tim333 5y ago
  Following Brexit they'll probably be able to jack it up by offering consulting roles to Tory politicians.
- LatteLazy 5y ago
  The whole point of brexit was to get rid of the sort of fair, efficient, reasonable legislation the EU pushes. Brits want to be fucked over by big US mega corps and are tired of the EU refusing them that right. As a Brit I wish it wasn't true but here we are.
- ArgyleSound 5y ago
  It still applies in the UK, just not between UK-EU transactions because those are cross border now
alecco 5y ago
Doesn't translate to real life: "1.45% + € 0.05 per transaction" https://www.mypos.eu/en/pricing-and-fees https://www.mypos.eu/en/pricing-and-fees
- kall 5y ago
  Yeah sure, but that‘s all added on by other parties. As far as I know, the layers above VISA/MC are diverse enough (not a duopoly). If that‘s true you could rely on the market to drive down fees if it‘s profitable.

Denvercoder9 5y ago

It's a problem of regulation. E.g. in my home country, the Netherlands, practically everyone uses a Maestro or V Pay card issued by Mastercard or Visa, but card fees are very reasonable: € 0.0082 + 0,010% (for domestic transactions). The bank charges a much higher fee, but total fees still come out to less € 0.05. That's much cheaper than handling cash is.

tumetab1 5y ago

Because regulations which goverments supports because they prefer digital transactions to physical money for several reasons. (EU country perspective) By VISA/ MasterCard contract backed by governments' regulations a merchant in EU can not charge more because he's using a card instead of cash. Of course the transactions costs are paid by the customer, it's just all customers instead of those paying by card. That's why some cards have charges, to the merchants, of around 2%... because the customer who use that cards does not pay them. If I, as a customer, when doing an Amazon checkout saw a 2% charge to use VISA I would drop them in a second. Because that's hidden on purpose, I keep using it.

tumetab1 5y ago
To clarify, it seems that transactions costs vary a lot in the EU. I have the prices in Portugal for 2 terminal payments provider and I see lot of comissions around 2% which is strange because the EU states that the comissions are much lower. No idea what's going here.
- Dah00n 5y ago
  Aren't you looking at the PoS fee instead of the VISA fee?
  - tumetab1 5y ago
    I think so, I was looking into the fees paid by merchants to accept a card payment on in a physical terminal.