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Odd not to touch on Open Banking and PSD2 in Europe; as that is basically the future he is talking about. In essence; financial institutions are legislated to

Odd not to touch on Open Banking and PSD2 in Europe; as that is basically the future he is talking about. In essence; financial institutions are legislated to add customer friendly UX and fraud prevention on top of standard bank to bank transfers. It's effectively a set of APIs that orchestrate it all, with things like dynamic linking to the payment and secure authentication rules for anti fraud. The idea is for commercial offerings to build on top of the standard APIs (for example, to offer bank transfers in checkouts). In practice it's taking a bit to get off the ground - but providers like Tink (sold to Visa for a lot of money) and Truelayer and starting to get traction. Australia and MENA region are heading down the same route. https://www.openbanking.org.uk/ https://www.openbanking.org.uk/ Edit; for clarity, SEPA was the early moves to normalise what the European banks were doing from around 2008 onwards - and ended up with PSD1 rationalising it. As others have said this blog mostly only actually focuses on the direct debit element of SEPA not the credit payment side.

anticristi 5y ago
Cynical me reads this article as follows: Shit! We promised investors that Stripe will be the sh*t, the Global Payment Network. Now banks and regulators have woken up and we are commoditised in India, Japan and EU. Sure hope FedNow won't follow suit. Sorry VCs. Please exit Stripe before it's too late.
- ErrantX 5y ago
  I respect Patrick and his content/judgement. So Hanlon's razor (and I don't mean that in a mean way to Patrick) probably applies. I assume there is a Stripe echo chamber which might explain the focus (I've read several of his money articles and most of them suffer from an incomplete picture). Also; I'm not sure Stripe and Open Banking are incompatible. Realistically it eases stripes integrations in the EU (Ive not checked if they are a registered payments provider under the legislation but I assume they must be). In addition; the thing that springs out of this article is how incompatible we are on a global scale. So there is a market there for them. In the end, SEPA for all it's faults drove European standardisation. Global legislation on that scale is not gonna happen (it's sort of a shame he didn't draw that conclusion)
- ksec 5y ago
  I expect UPI are like Japan's Suica where it basically dominate low value transition like transport, vending machine and convenient store. While Credit Card Based transaction will continue with those who wants credit and pay later type along with big purchase. EUR is sort of out side of these because vast majority of transactions has always been Direct Debit. Credit Card spending just isn't as much a thing. And they use Direct Debit for everything. They also have very good consumer protection in place so using a credit card for delayed payment ( in case of dispute ) doesn't happen as often compare to US. As far as I can tell there isn't a one size fit all solution to every one in the world.
fredkelly 5y ago
exactly. A2A payments are already here in the UK with Open Banking rails and VRP/Sweeping coming in the next year (or so).
- ErrantX 5y ago
  Post Brexit implementation of VRP has been "fun" but I am pleased to see it nearly there!
ErrantX 5y ago
Follow up; I've looked into UPI a bit more. It's... Interesting. I think it's basically solving a very widespread and local use case - which is very low value transactions which are normally done in cash. The AVG value of transactions look to be around $2. Anything of reasonable value (say $10 still tends to be card-based. This makes sense; fees on cards make anything under $5 cost ineffective, plus you need relatively (to the margin) costly hardware. Margin-based street sellers like those in India can't afford the overhead. Looking at the implementation; it's interesting there is very little shared about fraud (I couldn't find any specific numbers but based on lots of articles it seems widespread). Low financial literacy coupled with a system that encourages you to enter your PIN in various interfaces probably makes this something you wouldn't allow high value transactions. Hence the continued dominance of card networks. If is neat though, although it feels like it's quite a local use case.
- programmer_dude 5y ago
  The UPI daily transaction limit is INR 100,000 (~USD 1332). > say $10 still tends to be card-based. What's your source for this info? People here don't use cards if they don't have to. It's a payment mode of last resort. Credit cards do not provide fraud protection here, so there is no point in using it.
  - ErrantX 5y ago
    Various news articles was my source. But re-reviewing a lot were from 2020. I found a source from July that says AVG transactions are now up to around $20 equiv. And the total transaction value is above card transactions now. Although the volume of transactions is 10x which is indicative. My understanding is India is a very cash-based culture? So the idea of UPI replacing that seemed uncontentious? Looks like there are 3/4 Billion dollars worth of card transactions each month though, so that's not insignificant. I wonder how much bigger the cash culture is in value, I'd assume quite large.
    - programmer_dude 5y ago
      > India is a very cash-based culture? This is correct. This leads to a lot of black money floating in the market. I am not sure what's the volume of cash transactions though.

anticristi 5y ago

Cynical me reads this article as follows: Shit! We promised investors that Stripe will be the sh*t, the Global Payment Network. Now banks and regulators have woken up and we are commoditised in India, Japan and EU. Sure hope FedNow won't follow suit. Sorry VCs. Please exit Stripe before it's too late.

ErrantX 5y ago
I respect Patrick and his content/judgement. So Hanlon's razor (and I don't mean that in a mean way to Patrick) probably applies. I assume there is a Stripe echo chamber which might explain the focus (I've read several of his money articles and most of them suffer from an incomplete picture). Also; I'm not sure Stripe and Open Banking are incompatible. Realistically it eases stripes integrations in the EU (Ive not checked if they are a registered payments provider under the legislation but I assume they must be). In addition; the thing that springs out of this article is how incompatible we are on a global scale. So there is a market there for them. In the end, SEPA for all it's faults drove European standardisation. Global legislation on that scale is not gonna happen (it's sort of a shame he didn't draw that conclusion)
ksec 5y ago
I expect UPI are like Japan's Suica where it basically dominate low value transition like transport, vending machine and convenient store. While Credit Card Based transaction will continue with those who wants credit and pay later type along with big purchase. EUR is sort of out side of these because vast majority of transactions has always been Direct Debit. Credit Card spending just isn't as much a thing. And they use Direct Debit for everything. They also have very good consumer protection in place so using a credit card for delayed payment ( in case of dispute ) doesn't happen as often compare to US. As far as I can tell there isn't a one size fit all solution to every one in the world.

fredkelly 5y ago

exactly. A2A payments are already here in the UK with Open Banking rails and VRP/Sweeping coming in the next year (or so).

ErrantX 5y ago
Post Brexit implementation of VRP has been "fun" but I am pleased to see it nearly there!

ErrantX 5y ago

Follow up; I've looked into UPI a bit more. It's... Interesting. I think it's basically solving a very widespread and local use case - which is very low value transactions which are normally done in cash. The AVG value of transactions look to be around $2. Anything of reasonable value (say $10 still tends to be card-based. This makes sense; fees on cards make anything under $5 cost ineffective, plus you need relatively (to the margin) costly hardware. Margin-based street sellers like those in India can't afford the overhead. Looking at the implementation; it's interesting there is very little shared about fraud (I couldn't find any specific numbers but based on lots of articles it seems widespread). Low financial literacy coupled with a system that encourages you to enter your PIN in various interfaces probably makes this something you wouldn't allow high value transactions. Hence the continued dominance of card networks. If is neat though, although it feels like it's quite a local use case.

programmer_dude 5y ago
The UPI daily transaction limit is INR 100,000 (~USD 1332). > say $10 still tends to be card-based. What's your source for this info? People here don't use cards if they don't have to. It's a payment mode of last resort. Credit cards do not provide fraud protection here, so there is no point in using it.
- ErrantX 5y ago
  Various news articles was my source. But re-reviewing a lot were from 2020. I found a source from July that says AVG transactions are now up to around $20 equiv. And the total transaction value is above card transactions now. Although the volume of transactions is 10x which is indicative. My understanding is India is a very cash-based culture? So the idea of UPI replacing that seemed uncontentious? Looks like there are 3/4 Billion dollars worth of card transactions each month though, so that's not insignificant. I wonder how much bigger the cash culture is in value, I'd assume quite large.
  - programmer_dude 5y ago
    > India is a very cash-based culture? This is correct. This leads to a lot of black money floating in the market. I am not sure what's the volume of cash transactions though.