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> "The top credit-card merchant fee actually rose in the United States between 1991 and 2009, and this is a goddamn tragedy, since these fees are baked into the

> "The top credit-card merchant fee actually rose in the United States between 1991 and 2009, and this is a goddamn tragedy, since these fees are baked into the cost of most retail goods and thus born by the working poor (who pay them even if they use cash.) . . . Why are these IT-focused industries so consistently immune to the same technological improvements and cost reductions we see everywhere else?" The simplest apparent answer is that this (the provision of payment services) is not a competitive market and as small retailers have nowhere else to turn, they're forced to pay high rents to what would have been called a trust in late 19th century Gilded Age terminology. The solution is also fairly clear: if you have what's called a 'natural monopoly' then it should be state-owned and state-managed (see the network of roads, water pipes, etc.), and if it's not actually a natural monopoly - meaning a system where competition doesn't make sense, i.e. having multiple networks of privately owned roads is silly - then you need anti-trust actions by the government to foster competition in the industry, which would reduce fees and costs for merchants. Arguably, if consumers had to pay the cost of transactions, rather than merchants, you might seem a lot more political pressure to make credit/debit card transactions the same cost as cash transaction, i.e. no added cost. Cash is a government-supplied taxpayer-supported service supplied free of charge for merchants and customers, so perhaps that's the best option for the credit/debit interface as well. Of course, this would allow government to track everyone's individual non-cash purchases, but then they already have access to the credit/debit ledgers, don't they?

fanf2 4y ago
The solution that has actually been implemented in Europe is to regulate the payment providers, so inter-bank transfers are effectively free and instant, and credit card fees are capped at 0.3% (i.e. 10x less than in the USA).
- randomran01234 4y ago
  This solves inter-bank transfers in EU but does not mean payments going out of, or into, the EU are solved. Crypto takes a different approach: a single protocol that is shared across all countries.
  - thawaya3113 4y ago
    How is crypto any better at doing this than say, Western Union? Ultimately, as someone who finds blockchain technology really cool, what I struggle with is, in which scenarios is blockchain better than Postgres?
    - junofan 4y ago
      Composability; as a user I can prove things publicly about my assets and other people can offer services independently of the asset issuer. E.g. take out a loan against my bacon coins or whatever, even if Bacon Bank didn’t think to implement a way for lenders to verify my ownership of bacon coins.
    - dcolkitt 4y ago
      I agree that anything that can be done with a blockchain can technically be done with a database. But the practical challenge comes down to coordination problems. With blockchains you get credibly neutrality out of the box. Different developers are comfortable building inside a shared execution environment. If Western Union built a smart contract execution system, you'd have a much, much harder time convincing developers to build inside of it than you would on Ethereum. It would be much less likely that Ethereum would shut off, change the rules, ban you from the platform, etc. The advantage that gives blockchains is composability. Thousands of different applications can instantly talk to one another using standardized calls inside atomic transactions. Databases by contrast are siloed. So they work really well if you stay within the application that database was built for. But really poorly once you try to cross applications, and hence databases. Imagine how hard it would be and how many hoops you would have to jump through to be able to use Venmo to buy Nasdaq listed stocks. In contrast USDC and Uniswap work together seamlessly because they're both built on the same common credibly neutral layer, Ethereum.
      - mNovak 4y ago
        "credible neutrality" is a nice phrase for a concept I've struggled to articulate, thanks
      - 4y ago
Nursie 4y ago
> Cash is a government-supplied taxpayer-supported service supplied free of charge for merchants and customers Cash ain't free! Sure, I give you the cash, now you have the cash. But you don't want a heap of singles in the back room, you want money in the bank. Firstly, you need to keep that cash securely, which has a cost. Then, you need staff to reconcile your takings with your figures for the day, which is a cost. Then it needs (secure) transport to the bank (cost) and the bank may charge you fees for cash handling. Sure, for individuals who sell things infrequently, it's fine, but for a business there are significant costs. This is why (for example) in the late 90s and early 2ks in the UK, large businesses pushed pretty hard for the 'cashback' feature on debit transactions, so they could offload some of it back to the consumer! This is almost always missed in this debate. Credit cards are evil because they have fees attached and I, as a pure, innocent cash user have to pay the same price! Scandal! But you may actually be costing the business more, especially in places where such fees are capped. This is part of the reason why we see card-only retailers popping up in some countries now.
landemva 4y ago
>> it should be state-owned and state-managed (see the network of roads ...) Where I live, the 'roads' are owned by each individual property owner with an easement to every other property owner in the town. Why would we want a group of government bureaucrats to literally own our roads?
- lottin 4y ago
  Because we don't want the road owner be able to demand extortionate fees to use their road?
  - landemva 4y ago
    Every land owner has granted reciprocal easement to every other land owner in the town to use what looks like roads through the subdivisions but are actually part of each lot. We don't need government to do this because we use what works like contracts on property - reciprocal easements. In fact, if the town disbanded there would be no questions about who owns what. Oh, maybe you don't know how easements work?
    - lottin 4y ago
      No, I don't know how easements work. So, you need to sign a reciprocity agreement with the road owner before they let you use their road for free? What prevents road owners from charging extortionate fees to people who don't own roads themselves?
      - landemva 4y ago
        The easements stay with the land. A land purchaser who uses a competent title search firm will find these easements filed many years ago with county clerk and recorder. Literally it gets set up once. The easements are reciprocal to everyone else in the town. An interesting thing with this is that if a giant company wants to drive around, take pictures of everything, and then monetize those pictures (G's street view), they would be trespassing. Nobody (but my neighbors, rarely and just for short time) parks cars in front of my house because it is private property. No need to ask a government road owner to pass ordinance to restrict parking of RVs, and put up no parking signs, and have police write tickets ... it's private property and a call to towing company gets it removed from my property. In practice, everybody is polite and friendly.
Synaesthesia 4y ago
This is why it makes sense to have a narionalised bank which can render financiap services at cost, rather than private, for profit banks.

fanf2 4y ago

The solution that has actually been implemented in Europe is to regulate the payment providers, so inter-bank transfers are effectively free and instant, and credit card fees are capped at 0.3% (i.e. 10x less than in the USA).

randomran01234 4y ago
This solves inter-bank transfers in EU but does not mean payments going out of, or into, the EU are solved. Crypto takes a different approach: a single protocol that is shared across all countries.
- thawaya3113 4y ago
  How is crypto any better at doing this than say, Western Union? Ultimately, as someone who finds blockchain technology really cool, what I struggle with is, in which scenarios is blockchain better than Postgres?
  - junofan 4y ago
    Composability; as a user I can prove things publicly about my assets and other people can offer services independently of the asset issuer. E.g. take out a loan against my bacon coins or whatever, even if Bacon Bank didn’t think to implement a way for lenders to verify my ownership of bacon coins.
  - dcolkitt 4y ago
    I agree that anything that can be done with a blockchain can technically be done with a database. But the practical challenge comes down to coordination problems. With blockchains you get credibly neutrality out of the box. Different developers are comfortable building inside a shared execution environment. If Western Union built a smart contract execution system, you'd have a much, much harder time convincing developers to build inside of it than you would on Ethereum. It would be much less likely that Ethereum would shut off, change the rules, ban you from the platform, etc. The advantage that gives blockchains is composability. Thousands of different applications can instantly talk to one another using standardized calls inside atomic transactions. Databases by contrast are siloed. So they work really well if you stay within the application that database was built for. But really poorly once you try to cross applications, and hence databases. Imagine how hard it would be and how many hoops you would have to jump through to be able to use Venmo to buy Nasdaq listed stocks. In contrast USDC and Uniswap work together seamlessly because they're both built on the same common credibly neutral layer, Ethereum.
    - mNovak 4y ago
      "credible neutrality" is a nice phrase for a concept I've struggled to articulate, thanks
    - 4y ago

Nursie 4y ago

> Cash is a government-supplied taxpayer-supported service supplied free of charge for merchants and customers Cash ain't free! Sure, I give you the cash, now you have the cash. But you don't want a heap of singles in the back room, you want money in the bank. Firstly, you need to keep that cash securely, which has a cost. Then, you need staff to reconcile your takings with your figures for the day, which is a cost. Then it needs (secure) transport to the bank (cost) and the bank may charge you fees for cash handling. Sure, for individuals who sell things infrequently, it's fine, but for a business there are significant costs. This is why (for example) in the late 90s and early 2ks in the UK, large businesses pushed pretty hard for the 'cashback' feature on debit transactions, so they could offload some of it back to the consumer! This is almost always missed in this debate. Credit cards are evil because they have fees attached and I, as a pure, innocent cash user have to pay the same price! Scandal! But you may actually be costing the business more, especially in places where such fees are capped. This is part of the reason why we see card-only retailers popping up in some countries now.

landemva 4y ago

>> it should be state-owned and state-managed (see the network of roads ...) Where I live, the 'roads' are owned by each individual property owner with an easement to every other property owner in the town. Why would we want a group of government bureaucrats to literally own our roads?

lottin 4y ago
Because we don't want the road owner be able to demand extortionate fees to use their road?
- landemva 4y ago
  Every land owner has granted reciprocal easement to every other land owner in the town to use what looks like roads through the subdivisions but are actually part of each lot. We don't need government to do this because we use what works like contracts on property - reciprocal easements. In fact, if the town disbanded there would be no questions about who owns what. Oh, maybe you don't know how easements work?
  - lottin 4y ago
    No, I don't know how easements work. So, you need to sign a reciprocity agreement with the road owner before they let you use their road for free? What prevents road owners from charging extortionate fees to people who don't own roads themselves?
    - landemva 4y ago
      The easements stay with the land. A land purchaser who uses a competent title search firm will find these easements filed many years ago with county clerk and recorder. Literally it gets set up once. The easements are reciprocal to everyone else in the town. An interesting thing with this is that if a giant company wants to drive around, take pictures of everything, and then monetize those pictures (G's street view), they would be trespassing. Nobody (but my neighbors, rarely and just for short time) parks cars in front of my house because it is private property. No need to ask a government road owner to pass ordinance to restrict parking of RVs, and put up no parking signs, and have police write tickets ... it's private property and a call to towing company gets it removed from my property. In practice, everybody is polite and friendly.

Synaesthesia 4y ago

This is why it makes sense to have a narionalised bank which can render financiap services at cost, rather than private, for profit banks.