4 ms·

Those payment networks are another relic that needs to be gotten rid of.

by melony 5y ago

ThunderSizzle 5y ago
Perhaps, but there are several advantages those payment networks provide me: 1) Security. I'm not using my money when I use a credit card. If someone stole a credit card, my bank account is not at risk in the same way if I lost a debit card or a check. 2) Fraud protection. On top of not using my own money, if someone does spend with a credit card, I'm protected much better than if it was my own money. Disputes and fraud on bank-issued debit cards tie up my money, meaning I can't pay my bills. Fraud and disputes on credit cards tie up some of my credit, and is not interest-bearing while it's under review. 3) Grace period. I basically have 45-60 days from when I purchase something to when I have to pay the statement balance that charge is part of. This gives me 45-60 days of cash that _if I needed to use_, I could. Granted, that would typically be in an emergency-type situation. That means if I have a flat tire, and my rent is due, and I didn't happen to have the cash ready that second, I don't need to make a decision (yet) or get a payday loan. I can figure out what to do over the next 45 days while not missing rent. 4) Interest. While almost every credit card out there has predatory interests, you can get low-interest credit cards, which can help in a tight squeeze. While it might be worse than a personal loan (depending), other options, such as a payday loan or even lay-away, are very much worse. 5) Cashback & rewards. I can easily get 4% cash back average for purchases I make, without paying any more or facing any inconvenience. Sometimes you run into a 3% credit charge, which I'm okay with if I'm getting similar cash back or the above protections. If you can figure out a system that gives me all that and can be used nearly everywhere, then I'm all ears. But any new system needs to address the above.
- KptMarchewa 5y ago
  The fraud is only a problem because of an ancient model where snooping on a bunch of numbers printed on a card can be used to verify any random transaction. Cashback is only a thing because those payment providers are taxing all transactions in the US to an unreasonable level, which just raises overall prices. Great business model though, take 5% to give back 3% and the customer is happy about that.
  - lmm 5y ago
    > The fraud is only a problem because of an ancient model where snooping on a bunch of numbers printed on a card can be used to verify any random transaction. No, there are plenty of fraud models that affect all payment methods, such as "hand over a box that's full of bricks instead of the product". Settling the payment exactly when the goods are delivered is often not practical.
    - KptMarchewa 5y ago
      >Settling the payment exactly when the goods are delivered is often not practical. That's what OLX, most popular "person-to-person marketplace" in Poland does (is there a word for it?) If you use delivery, the funds are kept in escrow by OLX until you confirm or dispute.
      - lmm 5y ago
        As a consumer, that sounds less good than what a credit card provides: I can't chargeback if a fault develops after I've already received the goods. I have to figure out whether to trust this OLX, which is better than having to figure out whether to trust the individual seller, but less good than only having to trust my card provider - particularly when it presumably involves learning their dispute-resolution processes, which are going to be different from everyone else's. For a seller it sounds more cumbersome too. Having to lock up all the payments you receive is significantly worse than receiving it upfront and paying back in the case of a dispute, and makes some kinds of business completely impossible (think travel agents). It's hard to do usage-based billing - you'd have to figure out how much to ask for as a deposit up-front instead, which is awkward if usage levels differ by orders of magnitude (think cloud providers). And fundamentally this OLX is taking a very similar role to a credit card network and most of the downsides of them still apply. They're presumably taking a cut of most transactions that they do this for (either directly or through other fees). They presumably make judgements about what you are and aren't allowed to sell on their platform, and at the point where they're big enough to be useful to the consumer they're also big enough to be subject to political pressure about those judgements.
- melony 5y ago
  The issue is not what they can provide, just like the issue is not what Apple brings to the table. The problem is that both are too big and overwhelming dominance poses risks of anti-trust/deplatforming depending on which side you believe in.
  - Nextgrid 5y ago
    I'll be in favour of throwing out card processors (who take low single-digit percentages of every transaction) after we've thrown out Apple and their 30%.

Those payment networks are another relic that needs to be gotten rid of.

by melony 5y ago

Those payment networks are another relic that needs to be gotten rid of.

Perhaps, but there are several advantages those payment networks provide me: 1) Security. I'm not using my money when I use a credit card. If someone stole a credit card, my bank account is not at risk in the same way if I lost a debit card or a check. 2) Fraud protection. On top of not using my own money, if someone does spend with a credit card, I'm protected much better than if it was my own money. Disputes and fraud on bank-issued debit cards tie up my money, meaning I can't pay my bills. Fraud and disputes on credit cards tie up some of my credit, and is not interest-bearing while it's under review. 3) Grace period. I basically have 45-60 days from when I purchase something to when I have to pay the statement balance that charge is part of. This gives me 45-60 days of cash that _if I needed to use_, I could. Granted, that would typically be in an emergency-type situation. That means if I have a flat tire, and my rent is due, and I didn't happen to have the cash ready that second, I don't need to make a decision (yet) or get a payday loan. I can figure out what to do over the next 45 days while not missing rent. 4) Interest. While almost every credit card out there has predatory interests, you can get low-interest credit cards, which can help in a tight squeeze. While it might be worse than a personal loan (depending), other options, such as a payday loan or even lay-away, are very much worse. 5) Cashback & rewards. I can easily get 4% cash back average for purchases I make, without paying any more or facing any inconvenience. Sometimes you run into a 3% credit charge, which I'm okay with if I'm getting similar cash back or the above protections. If you can figure out a system that gives me all that and can be used nearly everywhere, then I'm all ears. But any new system needs to address the above.

KptMarchewa 5y ago
The fraud is only a problem because of an ancient model where snooping on a bunch of numbers printed on a card can be used to verify any random transaction. Cashback is only a thing because those payment providers are taxing all transactions in the US to an unreasonable level, which just raises overall prices. Great business model though, take 5% to give back 3% and the customer is happy about that.
- lmm 5y ago
  > The fraud is only a problem because of an ancient model where snooping on a bunch of numbers printed on a card can be used to verify any random transaction. No, there are plenty of fraud models that affect all payment methods, such as "hand over a box that's full of bricks instead of the product". Settling the payment exactly when the goods are delivered is often not practical.
  - KptMarchewa 5y ago
    >Settling the payment exactly when the goods are delivered is often not practical. That's what OLX, most popular "person-to-person marketplace" in Poland does (is there a word for it?) If you use delivery, the funds are kept in escrow by OLX until you confirm or dispute.
    - lmm 5y ago
      As a consumer, that sounds less good than what a credit card provides: I can't chargeback if a fault develops after I've already received the goods. I have to figure out whether to trust this OLX, which is better than having to figure out whether to trust the individual seller, but less good than only having to trust my card provider - particularly when it presumably involves learning their dispute-resolution processes, which are going to be different from everyone else's. For a seller it sounds more cumbersome too. Having to lock up all the payments you receive is significantly worse than receiving it upfront and paying back in the case of a dispute, and makes some kinds of business completely impossible (think travel agents). It's hard to do usage-based billing - you'd have to figure out how much to ask for as a deposit up-front instead, which is awkward if usage levels differ by orders of magnitude (think cloud providers). And fundamentally this OLX is taking a very similar role to a credit card network and most of the downsides of them still apply. They're presumably taking a cut of most transactions that they do this for (either directly or through other fees). They presumably make judgements about what you are and aren't allowed to sell on their platform, and at the point where they're big enough to be useful to the consumer they're also big enough to be subject to political pressure about those judgements.
melony 5y ago
The issue is not what they can provide, just like the issue is not what Apple brings to the table. The problem is that both are too big and overwhelming dominance poses risks of anti-trust/deplatforming depending on which side you believe in.
- Nextgrid 5y ago
  I'll be in favour of throwing out card processors (who take low single-digit percentages of every transaction) after we've thrown out Apple and their 30%.