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I was expecting this about disrupting the MasterCard/Visa duopoly and sure was I disappointed. All fintech relies on two things: A bank and a payment network (

by csomar 4y ago

I was expecting this about disrupting the MasterCard/Visa duopoly and sure was I disappointed. All fintech relies on two things: A bank and a payment network (Mastercard/Visa). This makes fintech an inferior product and most fintech I have tried have an abysmal customer service. Also, because fintech does its verification thing over the Internet, it seems that they rely more on their AI to block/ban people than a phone call. Fintech also seems to be more down to lick regulation, banks and mastercard feet at the expense of their customers. This explosion of credit cards/offers/rewards is hardly innovation. It has already happened with banks (every big store has its own credit card) and it's usually a bad deal for customer as it requires "loyalty" to that brand. That's it folks. The market has been cornered by a couple guys and it seems the regulatory barriers have been lifted high enough that nobody can enter again. Remember when MasterCard/Visa used to send these cards for free without any KYC whatsoever?

AviationAtom 4y ago
Congress is poised to force Visa and Mastercard to allow their branded cards to be processed through alternate processing networks. That should be an interesting shakeup, if it pans out.
- anonporridge 4y ago
  Sounds like Congress is feeling like Visa/Mastercard haven't been spending enough money on lobbying recently.
  - danaris 4y ago
    Does the reason really matter, if what they're doing is a clear positive?
CharlesW 4y ago
> All fintech relies on two things: A bank and a payment network (Mastercard/Visa). Fintech is much bigger than credit card networks. Bitcoin may be the most obvious fintech example that requires neither, but there are many others.
- csomar 4y ago
  I don't think Bitcoin is categorized as fintech but rather crypto/blockchain.
  - CharlesW 4y ago
    Fintech encompasses all financial technologies. Cryptocurrency is a cornerstone financial technology. https://en.wikipedia.org/wiki/Financial_technology https://en.wikipedia.org/wiki/Financial_technology
    - Godel_unicode 4y ago
      Cryptocurrency is a niche hobbyist area within fintech, nothing more. If it all turned off tomorrow, virtually nobody would notice. Compare that with Visa or SWIFT, which are actual cornerstones.
      - CharlesW 4y ago
        Let me rephrase — the type of people (consultants, VCs, industry analysts, blockchain bros, etc.) who use the term "fintech" on a regular basis consider crypto/blockchain technologies to be a key area of fintech innovation. From https://en.wikipedia.org/wiki/Financial_technology https://en.wikipedia.org/wiki/Financial_technology: "[Fintech] is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, Blockchain, Cloud computing, and big data are regarded as the 'ABCD' (four key areas) of FinTech." In contrast, the credit card networks which have been with us for decades are considered to be "traditional financial methods". Even Visa thinks about itself as a company that partners with "fintechs" and "fintech enablers" rather than being a "fintech" itself, e.g. "Our worldwide network helped fintechs like Chime, Rappi and Airwallex deliver on their vision". (https://usa.visa.com/partner-with-us/info-for-partners/info-for-fintechs.html https://usa.visa.com/partner-with-us/info-for-partners/info-...)
        Godel_unicode 4y ago
seydor 4y ago
Yep, more middlemen is not innovation. True progress would be CBDC or actual usage of cryptocurrency
jjtheblunt 4y ago
Diners and AmEx too, no?
- CharlesW 4y ago
  Yes, and Discover (which owns Diners).
- telchior 4y ago
  Do they really have any presence? I spend almost all of my time internationally and basically never see AmEx. Had a Discover card years ago when I began traveling but got rid of it because its presence was spotty in the US and nonexistent elsewhere. I'd expect more out of UniPay at this point -- I do actually see that quite often.
  - ChuckNorris89 4y ago
    AmEx is pretty big in Europe for corporations and big businesses to issues to their workers for business expenses.
    - sph 4y ago
      Is it? I have actually never seen one and I live in Europe.
      - ChuckNorris89 4y ago
        If you work for some F500 or other such rich multinational mega corp, you'll see them everywhere, otherwise nobody gets them for private use.
        jjtheblunt 4y ago
        I got one for private use: somehow they swing a deal with US grocers that recovers a significant fraction of the transaction processing fee back to the consumer. no idea why, but that's why i got one.
anonporridge 4y ago
This sounds exactly why people like Jack Dorsey are pushing for bitcoin + lightning network adoption. They've experienced first hand how much gatekeeping has developed in the space (via Square + CashApp in his case) that make true innovation almost impossible. An open, permissionless, and GLOBAL monetary network for final settlement and small payments (and micropayments) which no single competing nation state has unilateral control over would be a game changer for fintech innovation. The function of everything from Visa/Mastercard, Fedwire, SWIFT, Paypal, Western Union, etc, all rebase onto one global network with countless businesses competing on top of it to provide the most appealing user experience.
- AlexandrB 4y ago
  I'd rather have a bunch of gatekeepers than losing money with no recourse if my credit card number is stolen. The trade-off for crypto-style decentralization is complete loss of consumer protection.
  - anonporridge 4y ago
    Then you won't ever use raw bitcoin. You'll continue using a service that obfuscates their use of bitcoin and lightning, like you do now with services that obfuscate their use of Fedwire and SWIFT. They'll provide you with consumer protection services, either for a fee or in exchange for harvesting and selling your data, like they do now. I'm not suggesting that everyone is going to use raw bitcoin and have to manage their own keys. I'm suggesting that nation states and corporations (and many individuals) will all rebase their money operations on an open network, digital protocol. Bitcoin.
    - alxhill 4y ago
      So there's a bunch of existing intermediaries, which is bad, and to fix that we're going to add the exact same set of intermediaries, but on top of bitcoin, which means its good?
      - snotrockets 4y ago
avianlyric 4y ago
> That's it folks. The market has been cornered by a couple guys and it seems the regulatory barriers have been lifted high enough that nobody can enter again. Remember when MasterCard/Visa used to send these cards for free without any KYC whatsoever? It’s a fundamentally hard market for anyone else to enter because Mastercard and Visa basically have natural monopolies. The value that both Mastercard and Visa bring to the table is: 1) if you’re a bank, most merchants accept their cards 2) if you’re a merchant, most banks provide a card from one of them. So any new network has the classic chicken and egg problem. How do you convince merchants to accept your card (and potentially additional payment processing terminals) when none of the merchants customers have the card. And in the inverse, how you get a bank to invest in integrating with your network, when no merchants accept your card? The EU tried to force a fox on this issue by creating EuroPay. Which ultimately failed and was bought by… Mastercard. But on the upside, part of the purchase deal require that Mastercard provide “at-cost” access to its network for a new card network to piggy back off, to help solve the above chicken and egg problem. But atlas’s, even that doesn’t reduce the barrier to entry enough, especially when coupled with the EU rules capping maximum interchange fees.
- MikePlacid 4y ago
  > How do you convince merchants to accept your card (and potentially additional payment processing terminals) when none of the merchants customers have the card. And in the inverse, how you get a bank to invest in integrating with your network, when no merchants accept your card? In Russia banks and merchants were convinced to use the national payment system basically overnight.
  - cuteboy19 4y ago
    In India, RuPay (Rupee+Pay not Russia+Pay) was essentially adopted through a combination of incentives and penalities. Though not overnight, they did manage to get a sizable share of the domestic market in a few years
- rieTohgh6 4y ago
  > How do you convince merchants to accept your card (and potentially additional payment processing terminals) when none of the merchants customers have the card. Well, at least at the national scale, it can and is done. You start with terminal providers or select the niche that doesn't use them at all (online payments). Then you need top 5 banks to support your new method in their mobile apps/transaction systems. All is left is massive advertising campaign, and if it is successful, other banks will join. https://en.wikipedia.org/wiki/Mobile_payment https://en.wikipedia.org/wiki/Mobile_payment contains a huge list of attempts that worked out (or not). It is going international where things get very tricky. Even Paypal and Stripe had to be based on Visa/MC, there are no other worldwide options than credit cards. It is a bit better if you want to only cover EU(thanks to PSD2 banks had to provide APIs), but that is all. Google's and Apple's payment systems could become independent from Visa/MC but people just don't want to top up some weird accounts when they can just "connect" a card instead.
jjoonathan 4y ago
> regulatory barriers Because markets are never anti-competitive on their own, oligopolies are only ever due to big bad regulators, right? Uh-huh. Some alternate ideas about why the CC payment processors are an oligopoly: 1. They have a card in every wallet and a reader in every aisle. 2. They can force merchants to hide the fees they charge. 3. They don't just process payments, they arbitrate disputes. (1) could be addressed by standardization (see: Europe). (2) could be outlawed. (3) could be replaced with better consumer protections or smoother small-claims process. Most markets have a substantial undergrowth of perverse incentives and anti-competitive strategies. Killing the gardener doesn't make the weeds disappear.
- anamax 4y ago
  > (3) could be replaced with better consumer protections or smoother small-claims process. Doing that doesn't actually depend on eliminating Visa/MC, so the fact that it hasn't been done suggests that there are other barriers. If you want to argue that eliminating Visa/MC will also eliminate those barriers, some details would be nice.
isaac-sway 4y ago
> All fintech relies on two things: A bank and a payment network Actually, one of those two isn't necessary – the payment network. It's possible to build a payment platform _just_ on top of banks. We're doing exactly this at Sway. In Europe this is driven by Open Banking initiatives. In the US, this will land next year with the FedNow service. In other parts of the world, like China, Brazil, and India, instant (and free) payment networks have existed for a long while. https://sway.money https://sway.money https://standards.openbanking.org.uk/customer-experience-guidelines/payment-initiation-services/latest/ https://standards.openbanking.org.uk/customer-experience-gui... https://www.frbservices.org/financial-services/fednow/about.html https://www.frbservices.org/financial-services/fednow/about....
bel_marinaio 4y ago
Completely disagree. I have tried 3 fintechs. I still use two as my primary "banks". They got rid of all the fees and BS the banks had been abusing me with for decades. There have been a few times traditional banking was better so I used a credit union I kept open. All my other traditional bank accounts have been closed for years.
- nerdyadventurer 4y ago
  May I know the names of those fintechs, please?

by csomar 4y ago

AviationAtom 4y ago

Congress is poised to force Visa and Mastercard to allow their branded cards to be processed through alternate processing networks. That should be an interesting shakeup, if it pans out.

anonporridge 4y ago
Sounds like Congress is feeling like Visa/Mastercard haven't been spending enough money on lobbying recently.
- danaris 4y ago
  Does the reason really matter, if what they're doing is a clear positive?

CharlesW 4y ago

> All fintech relies on two things: A bank and a payment network (Mastercard/Visa). Fintech is much bigger than credit card networks. Bitcoin may be the most obvious fintech example that requires neither, but there are many others.

csomar 4y ago
I don't think Bitcoin is categorized as fintech but rather crypto/blockchain.
- CharlesW 4y ago
  Fintech encompasses all financial technologies. Cryptocurrency is a cornerstone financial technology. https://en.wikipedia.org/wiki/Financial_technology https://en.wikipedia.org/wiki/Financial_technology
  - Godel_unicode 4y ago
    Cryptocurrency is a niche hobbyist area within fintech, nothing more. If it all turned off tomorrow, virtually nobody would notice. Compare that with Visa or SWIFT, which are actual cornerstones.
    - CharlesW 4y ago
      Let me rephrase — the type of people (consultants, VCs, industry analysts, blockchain bros, etc.) who use the term "fintech" on a regular basis consider crypto/blockchain technologies to be a key area of fintech innovation. From https://en.wikipedia.org/wiki/Financial_technology https://en.wikipedia.org/wiki/Financial_technology: "[Fintech] is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, Blockchain, Cloud computing, and big data are regarded as the 'ABCD' (four key areas) of FinTech." In contrast, the credit card networks which have been with us for decades are considered to be "traditional financial methods". Even Visa thinks about itself as a company that partners with "fintechs" and "fintech enablers" rather than being a "fintech" itself, e.g. "Our worldwide network helped fintechs like Chime, Rappi and Airwallex deliver on their vision". (https://usa.visa.com/partner-with-us/info-for-partners/info-for-fintechs.html https://usa.visa.com/partner-with-us/info-for-partners/info-...)
      - Godel_unicode 4y ago

seydor 4y ago

Yep, more middlemen is not innovation. True progress would be CBDC or actual usage of cryptocurrency

jjtheblunt 4y ago

Diners and AmEx too, no?

CharlesW 4y ago
Yes, and Discover (which owns Diners).
telchior 4y ago
Do they really have any presence? I spend almost all of my time internationally and basically never see AmEx. Had a Discover card years ago when I began traveling but got rid of it because its presence was spotty in the US and nonexistent elsewhere. I'd expect more out of UniPay at this point -- I do actually see that quite often.
- ChuckNorris89 4y ago
  AmEx is pretty big in Europe for corporations and big businesses to issues to their workers for business expenses.
  - sph 4y ago
    Is it? I have actually never seen one and I live in Europe.
    - ChuckNorris89 4y ago
      If you work for some F500 or other such rich multinational mega corp, you'll see them everywhere, otherwise nobody gets them for private use.
      - jjtheblunt 4y ago
        I got one for private use: somehow they swing a deal with US grocers that recovers a significant fraction of the transaction processing fee back to the consumer. no idea why, but that's why i got one.

anonporridge 4y ago

This sounds exactly why people like Jack Dorsey are pushing for bitcoin + lightning network adoption. They've experienced first hand how much gatekeeping has developed in the space (via Square + CashApp in his case) that make true innovation almost impossible. An open, permissionless, and GLOBAL monetary network for final settlement and small payments (and micropayments) which no single competing nation state has unilateral control over would be a game changer for fintech innovation. The function of everything from Visa/Mastercard, Fedwire, SWIFT, Paypal, Western Union, etc, all rebase onto one global network with countless businesses competing on top of it to provide the most appealing user experience.

AlexandrB 4y ago
I'd rather have a bunch of gatekeepers than losing money with no recourse if my credit card number is stolen. The trade-off for crypto-style decentralization is complete loss of consumer protection.
- anonporridge 4y ago
  Then you won't ever use raw bitcoin. You'll continue using a service that obfuscates their use of bitcoin and lightning, like you do now with services that obfuscate their use of Fedwire and SWIFT. They'll provide you with consumer protection services, either for a fee or in exchange for harvesting and selling your data, like they do now. I'm not suggesting that everyone is going to use raw bitcoin and have to manage their own keys. I'm suggesting that nation states and corporations (and many individuals) will all rebase their money operations on an open network, digital protocol. Bitcoin.
  - alxhill 4y ago
    So there's a bunch of existing intermediaries, which is bad, and to fix that we're going to add the exact same set of intermediaries, but on top of bitcoin, which means its good?
    - snotrockets 4y ago

avianlyric 4y ago

> That's it folks. The market has been cornered by a couple guys and it seems the regulatory barriers have been lifted high enough that nobody can enter again. Remember when MasterCard/Visa used to send these cards for free without any KYC whatsoever? It’s a fundamentally hard market for anyone else to enter because Mastercard and Visa basically have natural monopolies. The value that both Mastercard and Visa bring to the table is: 1) if you’re a bank, most merchants accept their cards 2) if you’re a merchant, most banks provide a card from one of them. So any new network has the classic chicken and egg problem. How do you convince merchants to accept your card (and potentially additional payment processing terminals) when none of the merchants customers have the card. And in the inverse, how you get a bank to invest in integrating with your network, when no merchants accept your card? The EU tried to force a fox on this issue by creating EuroPay. Which ultimately failed and was bought by… Mastercard. But on the upside, part of the purchase deal require that Mastercard provide “at-cost” access to its network for a new card network to piggy back off, to help solve the above chicken and egg problem. But atlas’s, even that doesn’t reduce the barrier to entry enough, especially when coupled with the EU rules capping maximum interchange fees.

MikePlacid 4y ago
> How do you convince merchants to accept your card (and potentially additional payment processing terminals) when none of the merchants customers have the card. And in the inverse, how you get a bank to invest in integrating with your network, when no merchants accept your card? In Russia banks and merchants were convinced to use the national payment system basically overnight.
- cuteboy19 4y ago
  In India, RuPay (Rupee+Pay not Russia+Pay) was essentially adopted through a combination of incentives and penalities. Though not overnight, they did manage to get a sizable share of the domestic market in a few years
rieTohgh6 4y ago
> How do you convince merchants to accept your card (and potentially additional payment processing terminals) when none of the merchants customers have the card. Well, at least at the national scale, it can and is done. You start with terminal providers or select the niche that doesn't use them at all (online payments). Then you need top 5 banks to support your new method in their mobile apps/transaction systems. All is left is massive advertising campaign, and if it is successful, other banks will join. https://en.wikipedia.org/wiki/Mobile_payment https://en.wikipedia.org/wiki/Mobile_payment contains a huge list of attempts that worked out (or not). It is going international where things get very tricky. Even Paypal and Stripe had to be based on Visa/MC, there are no other worldwide options than credit cards. It is a bit better if you want to only cover EU(thanks to PSD2 banks had to provide APIs), but that is all. Google's and Apple's payment systems could become independent from Visa/MC but people just don't want to top up some weird accounts when they can just "connect" a card instead.

jjoonathan 4y ago

> regulatory barriers Because markets are never anti-competitive on their own, oligopolies are only ever due to big bad regulators, right? Uh-huh. Some alternate ideas about why the CC payment processors are an oligopoly: 1. They have a card in every wallet and a reader in every aisle. 2. They can force merchants to hide the fees they charge. 3. They don't just process payments, they arbitrate disputes. (1) could be addressed by standardization (see: Europe). (2) could be outlawed. (3) could be replaced with better consumer protections or smoother small-claims process. Most markets have a substantial undergrowth of perverse incentives and anti-competitive strategies. Killing the gardener doesn't make the weeds disappear.

anamax 4y ago
> (3) could be replaced with better consumer protections or smoother small-claims process. Doing that doesn't actually depend on eliminating Visa/MC, so the fact that it hasn't been done suggests that there are other barriers. If you want to argue that eliminating Visa/MC will also eliminate those barriers, some details would be nice.

isaac-sway 4y ago

> All fintech relies on two things: A bank and a payment network Actually, one of those two isn't necessary – the payment network. It's possible to build a payment platform _just_ on top of banks. We're doing exactly this at Sway. In Europe this is driven by Open Banking initiatives. In the US, this will land next year with the FedNow service. In other parts of the world, like China, Brazil, and India, instant (and free) payment networks have existed for a long while. https://sway.money https://sway.money https://standards.openbanking.org.uk/customer-experience-guidelines/payment-initiation-services/latest/ https://standards.openbanking.org.uk/customer-experience-gui... https://www.frbservices.org/financial-services/fednow/about.html https://www.frbservices.org/financial-services/fednow/about....

bel_marinaio 4y ago

Completely disagree. I have tried 3 fintechs. I still use two as my primary "banks". They got rid of all the fees and BS the banks had been abusing me with for decades. There have been a few times traditional banking was better so I used a credit union I kept open. All my other traditional bank accounts have been closed for years.

nerdyadventurer 4y ago
May I know the names of those fintechs, please?