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The world you described exists, and it’s called Alipay (in China), TNG (in Malaysia), Pix (Brazil), etc (that's why I listed them in my original comment). Alipa

The world you described exists, and it’s called Alipay (in China), TNG (in Malaysia), Pix (Brazil), etc (that's why I listed them in my original comment). Alipay and Wechatpay is the standard in China, a country with a population triple that of the US, and only charges 55-60bps, a quarter that of the US. So yes, I do believe that we can gain efficiency by switching. Also note that interchange is capped in the EU at 30bps, and they seem to do just fine without 2% cashback on every purchase. One might start to think that we can do with something similar here in the US.

AmericanChopper 3y ago
I use several such systems, including TNG, and they have all of the same fee structures as credit cards. The TNG cash back program: https://fintechnews.my/33848/e-wallets-malaysia/fave-offers-cashback-loyalty-programme-for-18-million-touch-n-go-ewallet-users/ https://fintechnews.my/33848/e-wallets-malaysia/fave-offers-... The TNG loyalty program: https://www.touchngo.com.my/promotion/redeem-your-points/ https://www.touchngo.com.my/promotion/redeem-your-points/ The TNG cardholder fees: https://www.touchngo.com.my/policies/touch-n-go-card-fees-and-charges/ https://www.touchngo.com.my/policies/touch-n-go-card-fees-an... There’s also merchant fees (which are confidential). All of these systems are just reinvented credit cards. They often try to compete with credit cards on merchant fees, but you’re still paying for exactly the same thing. This “alternative” is just the same thing with a different name. You might find a few base points difference in merchant fees here and there (especially during the growth phase of these technologies), but the alternative isn’t to eliminate the premium charged for processing credit cards, it’s simply to allocate it to a different service provider.
- kalleboo 3y ago
  This is the relevant number here: https://merchantsupport.tngdigital.com.my/hc/en-us/articles/15599664399385-How-much-is-the-MDR- https://merchantsupport.tngdigital.com.my/hc/en-us/articles/... Merchants are charged 0.5%. Compared to 2-3% in the US credit card scheme.
  - AmericanChopper 3y ago
    That’s a promo rate, and only available to certain merchants. Wait until it becomes profitable in “3 to 4 years”. The only real opportunity these systems have to increase efficiency is to not offer consumer fraud protections, which is obviously of questionable value to the consumers.
    - kalleboo 3y ago
      EU interchange rates are regulated to 0.2% for debit and 0.3% for credit and they offer fraud protection just fine

AmericanChopper 3y ago

I use several such systems, including TNG, and they have all of the same fee structures as credit cards. The TNG cash back program: https://fintechnews.my/33848/e-wallets-malaysia/fave-offers-cashback-loyalty-programme-for-18-million-touch-n-go-ewallet-users/ https://fintechnews.my/33848/e-wallets-malaysia/fave-offers-... The TNG loyalty program: https://www.touchngo.com.my/promotion/redeem-your-points/ https://www.touchngo.com.my/promotion/redeem-your-points/ The TNG cardholder fees: https://www.touchngo.com.my/policies/touch-n-go-card-fees-and-charges/ https://www.touchngo.com.my/policies/touch-n-go-card-fees-an... There’s also merchant fees (which are confidential). All of these systems are just reinvented credit cards. They often try to compete with credit cards on merchant fees, but you’re still paying for exactly the same thing. This “alternative” is just the same thing with a different name. You might find a few base points difference in merchant fees here and there (especially during the growth phase of these technologies), but the alternative isn’t to eliminate the premium charged for processing credit cards, it’s simply to allocate it to a different service provider.

kalleboo 3y ago
This is the relevant number here: https://merchantsupport.tngdigital.com.my/hc/en-us/articles/15599664399385-How-much-is-the-MDR- https://merchantsupport.tngdigital.com.my/hc/en-us/articles/... Merchants are charged 0.5%. Compared to 2-3% in the US credit card scheme.
- AmericanChopper 3y ago
  That’s a promo rate, and only available to certain merchants. Wait until it becomes profitable in “3 to 4 years”. The only real opportunity these systems have to increase efficiency is to not offer consumer fraud protections, which is obviously of questionable value to the consumers.
  - kalleboo 3y ago
    EU interchange rates are regulated to 0.2% for debit and 0.3% for credit and they offer fraud protection just fine