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Something needs to change in the digital payments sector. 1.5% is ok-ish but 3.25% to accept foreign cards in the EU is a lot of money! I understand that costs

Something needs to change in the digital payments sector. 1.5% is ok-ish but 3.25% to accept foreign cards in the EU is a lot of money! I understand that costs are higher when using credit cards because of the credit part that introduces risk, but in my case for example I have a debit card that runs also over Mastercard, so either I have the money or I don't. Why should a merchant be charged the same fee of using a real credit card if the risk is highly reduced? I still don't understand why it is so hard to break the Visa/Mastercard duopoly on card payments. Why isn't there a standard for payments that banks can implement? Why are Visa/Mastercard/Amex required? SEPA in EU is already something but it is taking ages for it to become an actual payment platform in everyday's life.

ptman 4y ago
https://www.epicompany.eu/ https://www.epicompany.eu/ https://nordicpayments.eu/ https://nordicpayments.eu/
pifm_guy 4y ago
It's the chicken and egg problem... If you started a new card provider today, you'd need to get consumers onboard, banks onboard, merchants onboard, and every card machine in the world replaced to accept your new card type. The closest we get to that is loyalty cards and gift cards that only work in one shop. Some of those have managed to be compatible with a few shops, but nowhere near what would be needed for a consumer to consider it a replacement for visa.
- 01acheru 4y ago
  I totally understand you and you are perfectly right IMHO. This is why I don't understand why isn't there a payment standard, we are in 2023 already, the economic burden of keeping fattening those "old-school" card networks is absurd, it is billions and billions of dollars each year. Lobbying is the only reason I see that keeps a payment standard from being implemented.
  - carlosjobim 4y ago
    There is no standard because there are different currencies in different empires and different rulers of those empires. Asking why there isn't a unified standard is the same as asking why there isn't a one world government. The economic burden of the "old-school" payment networks Visa and Mastercard is very low for both merchants and customers for what these networks provide. The economic burden and other burdens of a one world government would be immense in comparison. Please remember that most people use other methods to transact larger amounts, so the fees are mostly for the convenience of small remote transactions.
  - Aeolun 4y ago
    Would you want to work on a payment standard and then try to convince the rest of the world to use it? I dunno, that just sounds too soul destroying to me.
    - 01acheru 4y ago
      It would be nice to work on a payment standard IMHO, it is something really world changing, but it isn't something that you or I can simply create in mama's basement and then post on medium to cater some attention.
- account42 4y ago
  If the EU were interested in doing something about this they wouldn't have that problem at all - they could simply mandate interopability.
- neodypsis 4y ago
  What you're describing is called "network effect": https://en.wikipedia.org/wiki/Network_effect#Credit_cards https://en.wikipedia.org/wiki/Network_effect#Credit_cards
lotsofpulp 4y ago
> SEPA in EU is already something but it is taking ages for it to become an actual payment platform in everyday's life. Is there anything stopping merchants from offering different prices to people based on different payment methods? I assume the reason merchants do not list a discount for paying via SEPA or ACH or debit card or whatever local non credit card (and non Visa/Amex/MC) option, is because merchants benefit from the higher prices that people are willing to pay when using credit cards (compared to the cost of accepting credit cards). In the US, Target is the only big retailer I know that discounts for using ACH (debiting directly from bank account). They give 5% off.
- extraduder_ire 4y ago
  > Is there anything stopping merchants from offering different prices to people based on different payment methods? I think there's an EU rule about that. I've seen a business (justeat) charge a card-processing fee for cash-on-delivery orders.
- orangepanda 4y ago
  > Traders in the EU are not allowed to charge you extra for using your credit or debit card. https://europa.eu/youreurope/citizens/consumers/shopping/pricing-payments/index_en.htm https://europa.eu/youreurope/citizens/consumers/shopping/pri...
  - lotsofpulp 4y ago
    Interesting. So foreign cards have to be accepted at the same price? I know credit card fees are capped in EU, so this might be a reasonable policy, but if merchants and domestic customers have to eat costs due to foreign card costs via higher prices for everyone, that does not seem fair.
    - justincormack 4y ago
      Some expensive cards (historically mainly Amex) are just not accepted widely.
    - 4y ago
superzamp 4y ago
The problem with SEPA payment, is that it's great for the merchant and a net loss for the user, especially individual consumers. From a UX perspective today, it will always be more cumbersome to initiate a SEPA transfer to the merchant. Some integrations offer a semblance of interactivity with your banking app in an attempt to streamline it, but nothing beats the simplicity entering your cards details or just showing your face to Apple pay. Then from a consumer protection perspective, if something wrong happen with your order or the merchant goes bust, you have no recourse if you initiated a SEPA CT. Card payments on the other hand give you a nice chain of large entities exposing themselves to the merchant's credit risk in front of you. It can probably work in specific situations (e.g. if you have a niche website with a sophisticated audience ready to overcome the hurdles to acquire your widgets), but for these reasons alone I just can't see SEPA payments going anywhere near even a ridicule fraction of the market share held by legacy card networks yet.
- disruptiveink 4y ago
  This. I would never do a SEPA payment vs a credit card transaction unless there's a significant advantage to me as a user to go with SEPA. And the merchant can't give me a discount for using a specific payment which is not allowed under EU rules, so there's not much the merchant can do there.
  - thesimon 4y ago
    > And the merchant can't give me a discount for using a specific payment which is not allowed under EU rules Charging a fee is not allowed, but giving discounts for specific payment methods are AFAIK.
- Ekaros 4y ago
  In Finland with my fairly large bank the barrier is pretty much same if the card isn't already saved. Actually SEPA is easier as I only need to log in and confirm instead of having to provide CC details and log in to confirm the transfer.
  - 4y ago
account42 4y ago
One funny thing is that some card transactions (e.g. contactless payments without PIN entry over 100€ for at least one payment processor, needs to be enabled by the merchant) actually don't go trough Visa/Mastercard but are already done via SEPA.
deleted 4y ago
[deleted]
hanniabu 4y ago
> Something needs to change in the digital payments sector Ethereum solves this, just use stablecoins
searchableguy 4y ago
India built rupay, an alternative to visa and mastercard which has 0 charge to merchants. It is expanding internationally and works in neighboring countries. Aside from this, most local payments happen over UPI so they cost 0 as well. Visa and mastercard usage is declining in India since a few years despite rapid increase in digital adoption. Government banned master card, diners, express, etc issuance for not complying with local data storage rules for over a year and it did not impact much. I think the solution is to run payment infrastructure at public level like many countries have done in Asia.
- 01acheru 4y ago
  This is exactly what I mean and what I would like to see in the EU. I think the digital Euro is meant to be something similar but it is still vaporware ATM. Thanks for sharing!
  - lmz 4y ago
    Don't you guys have SCT Inst? Finding a tech provider / bank who can wrap that into a nice UX and API is the challenge.

ptman 4y ago

https://www.epicompany.eu/ https://www.epicompany.eu/ https://nordicpayments.eu/ https://nordicpayments.eu/

pifm_guy 4y ago

It's the chicken and egg problem... If you started a new card provider today, you'd need to get consumers onboard, banks onboard, merchants onboard, and every card machine in the world replaced to accept your new card type. The closest we get to that is loyalty cards and gift cards that only work in one shop. Some of those have managed to be compatible with a few shops, but nowhere near what would be needed for a consumer to consider it a replacement for visa.

01acheru 4y ago
I totally understand you and you are perfectly right IMHO. This is why I don't understand why isn't there a payment standard, we are in 2023 already, the economic burden of keeping fattening those "old-school" card networks is absurd, it is billions and billions of dollars each year. Lobbying is the only reason I see that keeps a payment standard from being implemented.
- carlosjobim 4y ago
  There is no standard because there are different currencies in different empires and different rulers of those empires. Asking why there isn't a unified standard is the same as asking why there isn't a one world government. The economic burden of the "old-school" payment networks Visa and Mastercard is very low for both merchants and customers for what these networks provide. The economic burden and other burdens of a one world government would be immense in comparison. Please remember that most people use other methods to transact larger amounts, so the fees are mostly for the convenience of small remote transactions.
- Aeolun 4y ago
  Would you want to work on a payment standard and then try to convince the rest of the world to use it? I dunno, that just sounds too soul destroying to me.
  - 01acheru 4y ago
    It would be nice to work on a payment standard IMHO, it is something really world changing, but it isn't something that you or I can simply create in mama's basement and then post on medium to cater some attention.
account42 4y ago
If the EU were interested in doing something about this they wouldn't have that problem at all - they could simply mandate interopability.
neodypsis 4y ago
What you're describing is called "network effect": https://en.wikipedia.org/wiki/Network_effect#Credit_cards https://en.wikipedia.org/wiki/Network_effect#Credit_cards

lotsofpulp 4y ago

> SEPA in EU is already something but it is taking ages for it to become an actual payment platform in everyday's life. Is there anything stopping merchants from offering different prices to people based on different payment methods? I assume the reason merchants do not list a discount for paying via SEPA or ACH or debit card or whatever local non credit card (and non Visa/Amex/MC) option, is because merchants benefit from the higher prices that people are willing to pay when using credit cards (compared to the cost of accepting credit cards). In the US, Target is the only big retailer I know that discounts for using ACH (debiting directly from bank account). They give 5% off.

extraduder_ire 4y ago
> Is there anything stopping merchants from offering different prices to people based on different payment methods? I think there's an EU rule about that. I've seen a business (justeat) charge a card-processing fee for cash-on-delivery orders.
orangepanda 4y ago
> Traders in the EU are not allowed to charge you extra for using your credit or debit card. https://europa.eu/youreurope/citizens/consumers/shopping/pricing-payments/index_en.htm https://europa.eu/youreurope/citizens/consumers/shopping/pri...
- lotsofpulp 4y ago
  Interesting. So foreign cards have to be accepted at the same price? I know credit card fees are capped in EU, so this might be a reasonable policy, but if merchants and domestic customers have to eat costs due to foreign card costs via higher prices for everyone, that does not seem fair.
  - justincormack 4y ago
    Some expensive cards (historically mainly Amex) are just not accepted widely.
  - 4y ago

superzamp 4y ago

The problem with SEPA payment, is that it's great for the merchant and a net loss for the user, especially individual consumers. From a UX perspective today, it will always be more cumbersome to initiate a SEPA transfer to the merchant. Some integrations offer a semblance of interactivity with your banking app in an attempt to streamline it, but nothing beats the simplicity entering your cards details or just showing your face to Apple pay. Then from a consumer protection perspective, if something wrong happen with your order or the merchant goes bust, you have no recourse if you initiated a SEPA CT. Card payments on the other hand give you a nice chain of large entities exposing themselves to the merchant's credit risk in front of you. It can probably work in specific situations (e.g. if you have a niche website with a sophisticated audience ready to overcome the hurdles to acquire your widgets), but for these reasons alone I just can't see SEPA payments going anywhere near even a ridicule fraction of the market share held by legacy card networks yet.

disruptiveink 4y ago
This. I would never do a SEPA payment vs a credit card transaction unless there's a significant advantage to me as a user to go with SEPA. And the merchant can't give me a discount for using a specific payment which is not allowed under EU rules, so there's not much the merchant can do there.
- thesimon 4y ago
  > And the merchant can't give me a discount for using a specific payment which is not allowed under EU rules Charging a fee is not allowed, but giving discounts for specific payment methods are AFAIK.
Ekaros 4y ago
In Finland with my fairly large bank the barrier is pretty much same if the card isn't already saved. Actually SEPA is easier as I only need to log in and confirm instead of having to provide CC details and log in to confirm the transfer.
- 4y ago

account42 4y ago

One funny thing is that some card transactions (e.g. contactless payments without PIN entry over 100€ for at least one payment processor, needs to be enabled by the merchant) actually don't go trough Visa/Mastercard but are already done via SEPA.

deleted 4y ago

[deleted]

hanniabu 4y ago

> Something needs to change in the digital payments sector Ethereum solves this, just use stablecoins

searchableguy 4y ago

India built rupay, an alternative to visa and mastercard which has 0 charge to merchants. It is expanding internationally and works in neighboring countries. Aside from this, most local payments happen over UPI so they cost 0 as well. Visa and mastercard usage is declining in India since a few years despite rapid increase in digital adoption. Government banned master card, diners, express, etc issuance for not complying with local data storage rules for over a year and it did not impact much. I think the solution is to run payment infrastructure at public level like many countries have done in Asia.

01acheru 4y ago
This is exactly what I mean and what I would like to see in the EU. I think the digital Euro is meant to be something similar but it is still vaporware ATM. Thanks for sharing!
- lmz 4y ago
  Don't you guys have SCT Inst? Finding a tech provider / bank who can wrap that into a nice UX and API is the challenge.