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I'll take this opportunity to advocate for 'payment network neutrality' - given their importance in the economy, I agree payment processors should be required t
by arcticbull 3y ago
I'll take this opportunity to advocate for 'payment network neutrality' - given their importance in the economy, I agree payment processors should be required to process all lawful transactions, by law. We should require this of any national payments processor in the US at the federal level - or state, I'm looking at you, CA and NY.
- whimsicalism 3y agoCan't co-exist with chargebacks IMO and chargebacks are the entire reason we have credit.
- powera 3y agoAny proposal that requires companies to ignore signs of fraud is Dead-On-Arrival.
- arcticbull 3y agoI literally said 'lawful' transactions. Fraud is not lawful.
- nordsieck 3y ago> I literally said 'lawful' transactions. Fraud is not lawful. The problem is, it's almost all allegedly fraud. No one has the time or money to prosecute all of the attempted fraud in the system.
- arcticbull 3y agoSame exact process as now, except you have a guaranteed right to appeal.
- novok 3y agoAnd your effectively at the same spot again
- arcticbull 3y agoHow so? Currently if your transaction isn't permitted there's nothing you can do. Networks aren't required to process any transaction they don't want to process, or any kind of transaction they don't want to process.
- novok 3y agoYou can appeal and talk to payment processors today, and they essentially tell you that your category of transactions has high fraud rates or exposes them to legal risk until you do XYZ impossible or arduous things to mitigate the liability or risk. They will use the same motte that they use now to justify their bailey reality.
- deleted 3y ago[deleted]
- fineIllregister 3y agoThen it wouldn't have protected Pornhub. The payment processors pulled out due to CSAM, revenge porn, and copyright infringement, none of which are legal.
- arcticbull 3y agoAre you saying that's a bad thing?
- fineIllregister 3y agoNot sure how you got that from my comment. I'm not the one arguing for "payment nuetrality". I'm just saying that such a provision wouldn't apply in the Pornhub case if it allowed for a suspected illegality escape hatch.
- anigbrowl 3y agoThat's a cop-out, fraudsters don't announce themselves so naturally retail businesses look for proxy markers from which to draw inferences. There's an entire money-laundering industry that aims to handle this issue for organized criminals. If you don't engage with this fact than you're just handwaving away the problem, undermining any pro-cash advocacy you engage in.
- nateabele 3y agoThe real cop-out is that HSBC and friends launder more money for terrorists and human traffickers on a bad day than your typical local racket does in a year, and they only ever receive a token fine and slap on the wrist.
- onionisafruit 3y agoI would go further and remove the "lawful" from that. If you pay me $50 it shouldn't matter to the payment processor whether I gave you a painting or a blow job in return.
- smilespray 3y agoThat went from lawful to mouthful pretty quickly.
- hgsgm 3y agoHow would you handle chargeback claims? Should all users of the system share in the fraud risk?
- jaxrtech 3y agoI never can tell if chargebacks are truly a feature or a bug.
- arcticbull 3y agoSame way it's handled now, you charge a higher processing fee proportional to the chargeback risk in the industry. My only argument is that networks shouldn't be able to capriciously deny transactions that are legal, even if I disagree with them. I don't believe in the 2nd amendment, but to the extent it is lawful to buy a gun, you should be able to buy it with your Visa card, imo, and a lot of payment acquirers do not permit it. Similarly, legal drugs.
- nickff 3y agoThe reason the networks started denying service to firearms dealers is that the (Obama-era) Department of Justice pressured them to. They also went after pornography and marijuana dealers. https://en.wikipedia.org/wiki/Operation_Choke_Point https://en.wikipedia.org/wiki/Operation_Choke_Point
- arcticbull 3y ago
- syngrog66 3y ago"lawful" is doing a lot of work there "lawful" is the rub not all laws equal and not all nations are democracies, or equally moral or enlightened I do agree we should have less "meta-crimes".
- deleted 3y ago[deleted]
- 542458 3y agoI understand the pitch here, but different industries (and organizations within industries) pose dramatically different fraud risks. There are "anything flies" payment processors today, but the fee premium you pay is massive due to the risks involved. For example, CCBill specializes in high-risk transactions and will handle anything legal, but the fees can be as high as 14.5%!
- kelnos 3y agoSo why doesn't Visa and MC also allow high-risk transactions, and similarly charge 14.5% (or whatever they need to keep their profit margins where they'd like) for the privilege? Nearly everyone with a credit or debit card will have one with one of the major payment networks (that just all happen to disallow these sorts of high-risk businesses). No one has the ability to pay with CCBill unless they've run into a high-risk business and have decided that's a (possibly pretty big) hurdle that they're willing to jump. And many people won't want to sign up with CCBill... the end result is that these high-risk businesses are less viable. Maybe they should be less viable, but I don't think unaccountable corporations should be making that decision for us.
- 542458 3y agoBecause a) Visa/MC’s core competency isn’t navigating the fraud-ridden waters of high risk transactions and b) Visa/MC are scared of possible legal consequences of engaging with these businesses. It’s just not predicted to be profitable for them. Visa/MC are relentlessly profit-oriented. If they’re not engaging with entire market sectors it’s because they don’t predict it to be profitable. I’m a bit confused by your second paragraph. You can still transact with CCBill from MC/Visa. CCBill is like Stripe for high risk orgs.
- lost_tourist 3y agoI personally feel if the business is legal, then CC issuers should have to process it. If they want to be the top 3 or 4 gate keepers, they absolutely need to be completely neutral as long as the payment is legal.
- MBCook 3y agoWhile I understand that, how do you square that with one category of business causing way more chargebacks than average? Do they just have to eat it? Or can they charge higher fees to those merchants? If the latter they could quickly use that to discriminate. $100/tx fee would kill most any normal business. Perhaps the problem is the government doesn’t provide a non-cash lowest common denominator, so people are basically forced to use Visa/MC?
- edgyquant 3y agoMaybe they should have to account for that in a general fee
- nulbyte 3y agoI'll preface this by stating that I work for a large bank, and the opinions I express herein are my own. > ... how do you square that with one category of business causing way more chargebacks than average? Simple: Liability shift. The liability shift is what spurred merchants in the U.S. to finally, albeit begrudgingly, modernize by upgrading their terminals to take chips and NFC. They did so because the cost of not doing so was too high. Some hold outs exist, but they are quickly realizing their error in calculation. Liability for card-not-present transactions and your typical our-word-against-theirs dispute has always been entirely on the merchant. The card issuing bank just facilitates the dispute resolution. Banks pocket the interchange fees either way, so who cares about the rest? About as neutral as you can be, setting aside the fact that the cardholder is the bank's customer (because they are also the merchant's customer). Liability for fraudulent in-person (card-present) transactions was on the bank, which is why banks make such a big deal about fraud detection. There's no liability for a transaction that is denied. However, since the liability shift, fraud liability for card-present transactions is only on the bank if the merchant is using a new chip or NFC terminal when the customer presents a chip- or NFC-capable card. Swipe a chip card, and it's back on the merchant. In the end, theoretically, you have merchants and banks both interested in quality of service and fraud prevention.
- kazinator 3y agoPayment processors must not be arbiters of what is lawful.
- refurb 3y agoThen remove all liability for payment processors. There are numerous examples of companies doing something legal, that later blows up and they become the scapegoat for letting it happen. As long as that happens, payment processors are going to protect themselves by avoiding certain industries.
- kelnos 3y agoSort of like a Section 230 for payment processors -- fine by me.
- refurb 3y agoThe problem is that the government loves cracking down on crime through the financial system - terrorism, drugs, IP issues, firearms, etc, etc. It's the one tool they've used again and again...because it works. So they'll never give financial institution carte blanche immunity, because they rely on them to choke off the money for illegal activities. And even if they did give immunity, you know they'll turn around a say "well, we didn't mean you could just ignore blatantly illegal activity" and the banks will fall into line.
- kazinator 3y agoThe meta-problem is that both liberal and conservative politicians are on board with with cracking down through the financial system for one reason or another. If you see comments calling for payment processors to be dumb money pipes free of liability, those are likely coming from libertarians. :)
- kazinator 3y ago> Then remove all liability for payment processors. Yep. If you make me liable on some legal matter involving some third parties that use me as a service, I have no choice but to brush up on law and defend myself the best I can.
- thesz 3y agoDefine law and lawful transaction. For one example, law is a changing thing and rapidly changing one. What was pretty legal activity at Canada for pretty long time was changed at the hands of the government into illegal activity quite quickly and, what is mostly concerning to me, that law even has a retroactive nature - accounts can be frozen based on the activities prior to the date law enacted. In my not so humble opinion, payment processors should be transaction-blind - they should process any transaction and all transactions.
- neom 3y agoWhat Canadian law are you referring to?
- thesz 3y agoInvoction of Emergencies Act during and after protest convoy and related banking regulation changes.
- neom 3y agoThat's hardly "changing the law" - that was invoking an existing law in the face of a valid national security risk. Granted law makers voted to extend the law slightly, never the less, the law has always existed in Canada. I would never want to live in a Canada where payment processors are blind to transactions and the government couldn't freeze accounts of extremists/terrorists.
- thesz 3y agoDefine extremists/terrorists, again. Be sure to define it in such a way that you can't be labeled as such in any cicumstances.
- neom 3y agoWhy would I be sure to define it in such a way that I can't be labeled as such in any circumstance? I'm not afraid to work against my own self interest in the name of a better situation for the collective. What happened in Ottawa as a bunch of self-centered ego maniacs with extreme views terrorizing the people of that city. Never mind the bank accounts: they should have been jailed for life.