4 ms·

what s the role of visa in a world where CBDCs will exist?

by seydor 3y ago

The28thDuck 3y ago
There is value in stable asset management. I don’t foresee a future where credit-based systems are superseded by something else.
MrPatan 3y ago
Credit? It's the (non central)bank accounts what lose meaning, imo
- seydor 3y ago
  visa does not issue the credit (or the cards)
parl_match 3y ago
A bunch: - internetwork payments - interbank payments - fraud prevention and insurance layer - retail consumer debt underwriting - payments infrastructure and endpoint standards, security, and deployment CBDCs do take away a fair amount of responsibility from existing private EFT, and I personally think can be a net positive, but they're a piece of the puzzle.
- josh2600 3y ago
  Hard agree. CBDCs are a substrate. There will always be integrations to the substrate. Ideally protocols are as simple as possible and applications utilize them to build bespoke services. If the protocol itself is too customizable it becomes extremely difficult to interop.
  - parl_match 3y ago
    Another thing that people often get wrong is that they think of these financial systems as "just" services. There's a lot of human work involved.
- seydor 3y ago
  interbank and internetwork are not really needed with Cbdcs right? I assume that banks will take care of fraud prevention , and payments infrastructure will not be cards but an app?
coldcache 3y ago
Do you mean insofar as people will be able to pay without carrying cash or using a credit card? I assume reasons will be similar to why many prefer credit cards to debit cards: cash flow issues, extra fraud protections, creating a credit history for future loans, rewards points, etc. The value of debit cards will be significantly diminished, though.
- seydor 3y ago
  yes that s my point. Also CBDCs will be much easier for micropayments and things that VISA does not allow in their network
notatoad 3y ago
"a world where CBDCs will exist" could also be phrased as "a world where CBDCs do not yet exist".
aidenn0 3y ago
How do CBDCs handle payment disputes? Aside from credit, that's a big value of a card.
- redleader55 3y ago
  One could argue that payment disputes are an artifact of credit cards. Before that there was no way to say "I don't like the product that I got, or it didn't arrive in time, so I'm cancelling the order". Once money changed hands, it was a done deal.
  - aidenn0 3y ago
    There were totally payment disputes with cash. It just might involve either lawyers or a heavy blunt object, or when less contentious a third party might even mediate. "You didn't give me what I paid for" and "You didn't pay me for what I gave you" are fundamental parts of any purchase.
  - dragonwriter 3y ago
    > One could argue that payment disputes are an artifact of credit cards. One could, but one would look very silly doing so, since documented payment disputes (in court records, among other places) are much older than credit cards. > One could argue that payment disputes are an artifact of credit cards. Yes, there was. Contracts, including sales contracts, where payment was in whole or in part conditioned on delivery or other performance long predate credit cards, as do disputes over whether the good delivery or other performance was provided and whether payment must be made. As were, on the other hand, contracts where payment came first, and then later disputes over whether delivery or performance would occur and there would be disputes over whether payment made in advance must be refunded. And, even without payment and delivery being separated in time, you can have payment disputes because whether the goods (or the instruments provided as payment) were as specified may become a dispute after both sides have exchanged and tentatively concluded the trade. The idea that payment disputes didn’t exist before the fairly recent invention of credit cards is…amusing.
    - 3y ago
deleted 3y ago
[deleted]
pbreit 3y ago
Maybe smaller. Maybe larger. But that's a big assumption that CBDCs will exist on a broad basis anytime soon (or ever).
genocidicbunny 3y ago
Begging the question a bit aren't we with the assumption that CBDCs will exist?
- toolz 3y ago
  Yeah, I struggle to see how a government convinces a population that they should switch to a currency where every penny they spend can be traced.
  - Arch485 3y ago
    That's how the current system works unless you use physical cash or something like Monero (but even in those cases, it's not guaranteed to be untraceable). A CBDC just takes all the BS of having many different systems to process payments, manage bank accounts, etc. etc. and unifies it under one system. Implying that "every penny" cannot be traced with the current systems we have is a misnomer.
    - toolz 3y ago
      I'll go further than implying every penny can't be traced in the current system to stating it as a matter of fact. The default for cash is that it isn't traced. There are plenty of nit-picky exceptions, but I know for a fact that I or anyone else can transact in complete privacy with cash if we take the most minimal of precautions. If in fact the current system can trace every penny then our governing officials have a lot of explaining to do as to why human trafficking still happens with USD transactions.
- seydor 3y ago
  it s still a counterfactual question
Etheryte 3y ago
For context, CBDC stands for central bank digital currency, e.g. https://www.dnb.nl/en/innovations-in-payments-and-banking/digital-euro-what-why-and-how/ https://www.dnb.nl/en/innovations-in-payments-and-banking/di...
pbarnes_1 3y ago
Tech is never the hard part in payments.
grantsch 3y ago
Dude do you not have a credit or debit card? Seriously asking
- lmm 3y ago
  From other comments here it sounds like Brazil's central bank offers a system that is replacing credit and debit cards for many use cases. I take that to be their point.
  - brodock 3y ago
    Brazil unbanked population in 2011 was ~41%. Having a bank account was not a straightforward process and included higher costs for the vast majority of the population. Having a bank account would normally means you get a card that could only withdraw money from an ATM. If you wanted a "debit" card that would cost more. Credit card were something out of reach for many. Low income folks alternative for credit were to rely on general stores own credit bureau. With the liberalization in the banking system and the many fintechs that disrupted the market, the unbanked number droped to a single digit in 2021, and with pix, many just skipped the debit card all together. [1]: https://www.statista.com/statistics/1370626/access-to-financial-services-in-brazil/ https://www.statista.com/statistics/1370626/access-to-financ...

what s the role of visa in a world where CBDCs will exist?

by seydor 3y ago

what s the role of visa in a world where CBDCs will exist?

There is value in stable asset management. I don’t foresee a future where credit-based systems are superseded by something else.

MrPatan 3y ago

Credit? It's the (non central)bank accounts what lose meaning, imo

seydor 3y ago
visa does not issue the credit (or the cards)

parl_match 3y ago

A bunch: - internetwork payments - interbank payments - fraud prevention and insurance layer - retail consumer debt underwriting - payments infrastructure and endpoint standards, security, and deployment CBDCs do take away a fair amount of responsibility from existing private EFT, and I personally think can be a net positive, but they're a piece of the puzzle.

josh2600 3y ago
Hard agree. CBDCs are a substrate. There will always be integrations to the substrate. Ideally protocols are as simple as possible and applications utilize them to build bespoke services. If the protocol itself is too customizable it becomes extremely difficult to interop.
- parl_match 3y ago
  Another thing that people often get wrong is that they think of these financial systems as "just" services. There's a lot of human work involved.
seydor 3y ago
interbank and internetwork are not really needed with Cbdcs right? I assume that banks will take care of fraud prevention , and payments infrastructure will not be cards but an app?

coldcache 3y ago

Do you mean insofar as people will be able to pay without carrying cash or using a credit card? I assume reasons will be similar to why many prefer credit cards to debit cards: cash flow issues, extra fraud protections, creating a credit history for future loans, rewards points, etc. The value of debit cards will be significantly diminished, though.

seydor 3y ago
yes that s my point. Also CBDCs will be much easier for micropayments and things that VISA does not allow in their network

notatoad 3y ago

"a world where CBDCs will exist" could also be phrased as "a world where CBDCs do not yet exist".

aidenn0 3y ago

How do CBDCs handle payment disputes? Aside from credit, that's a big value of a card.

redleader55 3y ago
One could argue that payment disputes are an artifact of credit cards. Before that there was no way to say "I don't like the product that I got, or it didn't arrive in time, so I'm cancelling the order". Once money changed hands, it was a done deal.
- aidenn0 3y ago
  There were totally payment disputes with cash. It just might involve either lawyers or a heavy blunt object, or when less contentious a third party might even mediate. "You didn't give me what I paid for" and "You didn't pay me for what I gave you" are fundamental parts of any purchase.
- dragonwriter 3y ago
  > One could argue that payment disputes are an artifact of credit cards. One could, but one would look very silly doing so, since documented payment disputes (in court records, among other places) are much older than credit cards. > One could argue that payment disputes are an artifact of credit cards. Yes, there was. Contracts, including sales contracts, where payment was in whole or in part conditioned on delivery or other performance long predate credit cards, as do disputes over whether the good delivery or other performance was provided and whether payment must be made. As were, on the other hand, contracts where payment came first, and then later disputes over whether delivery or performance would occur and there would be disputes over whether payment made in advance must be refunded. And, even without payment and delivery being separated in time, you can have payment disputes because whether the goods (or the instruments provided as payment) were as specified may become a dispute after both sides have exchanged and tentatively concluded the trade. The idea that payment disputes didn’t exist before the fairly recent invention of credit cards is…amusing.
  - 3y ago

deleted 3y ago

[deleted]

pbreit 3y ago

Maybe smaller. Maybe larger. But that's a big assumption that CBDCs will exist on a broad basis anytime soon (or ever).

genocidicbunny 3y ago

Begging the question a bit aren't we with the assumption that CBDCs will exist?

toolz 3y ago
Yeah, I struggle to see how a government convinces a population that they should switch to a currency where every penny they spend can be traced.
- Arch485 3y ago
  That's how the current system works unless you use physical cash or something like Monero (but even in those cases, it's not guaranteed to be untraceable). A CBDC just takes all the BS of having many different systems to process payments, manage bank accounts, etc. etc. and unifies it under one system. Implying that "every penny" cannot be traced with the current systems we have is a misnomer.
  - toolz 3y ago
    I'll go further than implying every penny can't be traced in the current system to stating it as a matter of fact. The default for cash is that it isn't traced. There are plenty of nit-picky exceptions, but I know for a fact that I or anyone else can transact in complete privacy with cash if we take the most minimal of precautions. If in fact the current system can trace every penny then our governing officials have a lot of explaining to do as to why human trafficking still happens with USD transactions.
seydor 3y ago
it s still a counterfactual question

Etheryte 3y ago

For context, CBDC stands for central bank digital currency, e.g. https://www.dnb.nl/en/innovations-in-payments-and-banking/digital-euro-what-why-and-how/ https://www.dnb.nl/en/innovations-in-payments-and-banking/di...

pbarnes_1 3y ago

Tech is never the hard part in payments.

grantsch 3y ago

Dude do you not have a credit or debit card? Seriously asking

lmm 3y ago
From other comments here it sounds like Brazil's central bank offers a system that is replacing credit and debit cards for many use cases. I take that to be their point.
- brodock 3y ago
  Brazil unbanked population in 2011 was ~41%. Having a bank account was not a straightforward process and included higher costs for the vast majority of the population. Having a bank account would normally means you get a card that could only withdraw money from an ATM. If you wanted a "debit" card that would cost more. Credit card were something out of reach for many. Low income folks alternative for credit were to rely on general stores own credit bureau. With the liberalization in the banking system and the many fintechs that disrupted the market, the unbanked number droped to a single digit in 2021, and with pix, many just skipped the debit card all together. [1]: https://www.statista.com/statistics/1370626/access-to-financial-services-in-brazil/ https://www.statista.com/statistics/1370626/access-to-financ...