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> Out of sight, out of mind. You don't see it but Visa and Mastercard consume up to 3% of the transaction amount. Over the course of a year, this amounts to $50
by hocuspocus 4y ago
> Out of sight, out of mind. You don't see it but Visa and Mastercard consume up to 3% of the transaction amount. Over the course of a year, this amounts to $50 billion removed from the economy. The merchant pays this --- and passes the cost along to you in terms of higher prices.
Visa and MC get only a fraction of the PSP fees. You can regulate this space and bring the fees down (like the EU did). But fundamentally, an electronic payment system isn't as simple as moving money from one bank account to another in an immutable way: that is extremely cheap already and further gains from using CDBCs would be marginal at best.
> The money transfer system that deposits your check is old and slow and involves human labor. Unless you pay additional fees (banks love fees), it takes at least 24 hours for the deposit to be made and the system only operates during "banker hours" --- 8-5 on weekdays; no weekends, holidays or nights.
> A CDBC will be fully electronic/automated with instant results and operate 24/7/365 at insignificant cost. Basically, it will speed up and put billions of dollars back into the economy.
No need for a CBDC to fix that. You just need to bring your banking infrastructure to the 21st century.
- jqpabc123 4y agoYou just need to bring your banking infrastructure to the 21th century. ACH is the central component of the banking infrastructure that needs to be brought into the 21st century. And a CBDC is how you do it.
- hocuspocus 4y agoIt's just one way to do it. One unproven way at that, and with pretty serious ramifications.
- jqpabc123 4y agoI'd love to see an alternative that doesn't look a whole lot like a CBDC. The "serious ramifications" are all things that are not being proposed. No one is suggesting to make cash illegal.
- hocuspocus 4y agoUK's Faster Payments, EU's SCT Inst, Brazil's Pix, India's UPI, ... Shifting retail banking to the central bank brings a lot more questions than just worry about what happens to cash.
- jqpabc123 4y agoEU's SCT Inst SCT Inst stands for SEPA Instant Credit Transfer scheme. It was introduced by the Euro Retail Payments Board (ERPB) in order to enable rapid electronic payments within the eurozone. In a nutshell, SCT Inst facilitates an instant or near-instant clearing of a transaction between originator and beneficiary. Potato, po-tat-o. ERPB = Central Bank Credit Transfer Scheme = Digital Currency Put them together and what do you get --- effectively a CBDC system denominated in Euros instead of Dollars --- minus all the hyperbola, misinformation and doomsday prophecy attached to CBDC on this side of the pond. Shifting retail banking to the central bank Nothing is being shifted. The existing system (ACH) is being modernized. No banks will be killed in the production of a CBDC.
- hocuspocus 4y agoWhat you want is instant interbank settlements that have existed for 20+ years in some places. The scope of CBDCs is way broader than that. If no commercial bank is impacted by a CBDC then it wouldn't be a central bank digital currency, just a digital currency, and that's already the case for most of the money supply. If you use the term CBDC you're implying that the central bank would oversee a much bigger part of the money creation.
- jqpabc123 4y agoIf no commercial bank is impacted by a CBDC Commercial banks will be impacted --- in a good way. Interbank transactions will take place instantly 24/7/365 at zero cost. Consumers will be impacted too --- in a good way. They'll be able to transfer money from their bank account to merchants, friends and family instantly 24/7/365 at zero cost --- no delays, no fees, no processors, no paper forms, no middlemen --- something that never existed before --- at least not in the USA. Basically, a CBDC will make it possible to add digital wallet functionality to all bank accounts. Like it or not, a CBDC is coming. The financial case for it is overwhelming.