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Online, you require a second factor and in person, you require a pin or a fingerprint or Face ID. This, plus reasonable limit that require special checks to be

Online, you require a second factor and in person, you require a pin or a fingerprint or Face ID. This, plus reasonable limit that require special checks to be lifted, brings cost of fraud to almost 0. Oh, and there is no credit risk, you just check the account balance, and only process the payment after blocking the amount on the account. No credit risk. Completely insane to take 3% for that.

ExoticPearTree 2y ago
In the US things are very different than what you're used to in Europe, which I assume you are since you're talking about this and debit. 3D Secure and other technologies are pretty inexistent because people pay with credit cards and not debit cards. Credit cards have a very simple process of disputing transactions, fraud insurance and other things, and by moving the risk to the bank/merchant, they eliminate the friction that comes with using 3D Secure and other multi-factor authentication solutions. Win for the customer.
- rat9988 2y ago
  I'd rather not have to dispute it and use 3d secure.
  - ExoticPearTree 2y ago
    Here's the rub: if you use a debit card, the burden of proof is on you to prove you did not make the transaction. With credit cards, you shift it to the merchant/bank.
    - franga2000 2y ago
      Firstly, that's just conceptually stupid, but ok, whatever, it's the US. More practically: this is still a dispute process. You still have to fill in forms, you still temporarily don't have your money, you still might not get it back. Why take that risk when you could just have a popup on your phone that you click "allow" on? 15 seconds max.
      - ExoticPearTree 2y ago
        You don't fill out forms or what you imagine. And because it is a credit card, you don't lose your money. Regarding your last question, about the 15 seconds friction, you should work for a bit in online commerce to see how fast people give up paying if there's even a little inconvenience in the checkout process and go somewhere else they perceive it makes their shopping experience easier. The biggest drop in conversion rates happens at the checkout stage.
        franga2000 2y ago
        Where else would they go? The 3DS process depends on your issuer, not the merchant, so the process is the same no matter where you shop.
    - lxgr 2y ago
      That’s a common myth, but is simply not true; neither practically, nor legally. Both chargebacks and zero liability are practically available on effectively all US debit cards. Legal protections might be a bit less than for credit cards, but still far from “you have the burden of proof”.
      - stvltvs 2y ago
        But your money is held in limbo until the dispute is resolved, right?
        lxgr 2y ago
        I believe only until the bank does some initial plausibility checks at first. Actual dispute resolution can take quite long and you’re not even directly dependent on the outcome. For example, if you lose a card and it gets used in a physical store fraudulently, your bank will most likely not be able to win a dispute, but they’ll usually still have to reimburse you. The thing that matters to you as the cardholder is only fraud liability; if and how your bank is made whole by the merchant is their concern. That’s the same across credit and debit.
- barrkel 2y ago
  Credit cards generally use multi-factor auth in Europe for unusual transactions, typically an app, sometimes SMS.
- oblio 2y ago
  I'm fairly sure you can have 3D secure for credit cards. > 3-D Secure is a protocol designed to be an additional security layer for online credit and debit card transactions. https://en.wikipedia.org/wiki/3-D_Secure https://en.wikipedia.org/wiki/3-D_Secure
  - ExoticPearTree 2y ago
    But it is a burden on the customer to use it. And in the US at least, you want to let people pay you as easy as possible, not have them jump through hoops like it is in the EU with a second factor authentication. Different approaches.
    - oblio 2y ago
      You've moved the goal posts, I saw your other replies in the subthreads.
    - lxgr 2y ago
      Having to dispute transactions or beg my bank to please let through a given payment, yes it’s really me (because they only have antiquated and often very insecure ways of establishing my identity) isn’t thrilling either. 3DS on every transaction would definitely be frustrating (and not even EU banks/merchants do it); 3DS on no transaction just shifts the friction elsewhere.
    - CaptainZapp 2y ago
      Burden? Not really. I get a popup on my phone via the issuers app CONFIRM DENY And after clicking CONFIRM the transaction goes through. Adds maybe 3 seconds to the process. This is online only. On site payments of ca. 100$ or less are tap and done. For higher value transactions a PIN is required.
- dagw 2y ago
  3D Secure and other technologies are pretty inexistent because people pay with credit cards and not debit cards. In Europe, 3D Secure (when it is used) is used when you pay with both credit and debit card. From a transactions point of view there is no difference between a credit and debit card.
  - ExoticPearTree 2y ago
    The article referenced is about how the US system works and I was referring to that. And also, in the US it is very important for your wellbeing to have a good credit score and the only way to build that is to use credit cards. From a technical perspective you are right - it is a transaction, but from a dispute perspective it matters a whole lot, so it is actually more convenient for Americans to use a credit card with no second factor authentication than go through the hassle of being asked for a code or whatever second factor the bank decides to use.
- pjc50 2y ago
  I believe EU now mandates some sort of additional factor for card-not-present transactions whether they're credit or debit. (probably somewhere in https://en.wikipedia.org/wiki/Payment_Services_Directive https://en.wikipedia.org/wiki/Payment_Services_Directive )
  - CaptainZapp 2y ago
    I think you're right. That's usually handled with an app on your phone and is pretty much frictionless.
- konschubert 2y ago
  I am aware of this. I’m saying it because it’s one of the few things where I believe the US can learn from Europe, just like Europe can learn from the Us. This is not a win for the customer, btw, because the credit card fees get baked into the prices.
  - ExoticPearTree 2y ago
    It is a win friction-wise. I am pretty sure Visa/Mastercard have negligible costs when processing a transaction, and that 3% is what I guess they think is the upper boundary of what merchants are willing to pay before there's an incentive for a competitor with lower fees to appear.
    - konschubert 2y ago
      Visa/Mastercard are a duopoly, which means they can extract rents. Yes, I’m willing to pay $100 for a liter of water if you’re the only one selling it. I get a lot of value out of it! In a competitive market, competition eventually drives down prices to a price that somewhat approaches the cost of providing the service. This isn’t happening in payment, due to insurmountable network effects.
- franga2000 2y ago
  I fail to see how "there is no security, but once your money does get stolen your bank might give it back" is a win for the consumer. 3DS usually means clicking yes on a popup on your phone or at worst typing a 6-digit code you got via SMS. It adds maybe 15 seconds to your payment, which when totalled over a year of payments doesn't even get close to having to call or go to your bank and deal with chargebacks and/or insurance.
  - stvltvs 2y ago
    With credit cards, it's the bank's money which is one reason Americans overwhelmingly use them over debit cards.
- lxgr 2y ago
  And a big win for fraudsters. Who do you think ends up paying for the fraud in the end?
  - ExoticPearTree 2y ago
    Merchants/banks pay for it. It sucks, but with good tools you can lower it significantly, so that its a nuisance.
    - lxgr 2y ago
      And who pays the merchants and banks?
AmericanChopper 2y ago
The card companies and associated infrastructure providers have created a system that connects basically every bank in the world to basically every other bank in the world, and to any merchant in the world who wants to participate. Imagine how difficult it is to complete one big enterprise integration like that, especially one that involves systems like core banking. Now do that thousands of times over, across hundreds of countries, integrating with millions of merchants, processing tens of thousands of transactions per second, and almost never going down. The payment card system is a miracle of system design and global commerce. I also want to see processing costs come down over time, but 3% is a bargain for the value you’re getting, and if you wanted to stifle any further innovation out of the industry, then regulating the profit out of it would be a good start.
- konschubert 2y ago
  So is email, yet email is free
  - AmericanChopper 2y ago
    Putting aside the fact that email is not free, if you think the complexity of a system that sends an email is comparable to the complexity of a system that processes real time payments, then you're kinda showing how little you understand payment systems (but I suspect this was just a flippant comment). Email doesn't require a globally consistent state to be maintained, it doesn't require cross-border settlement, there is no financial liability if an email is lost, it doesn't require a different set of KYC/AML/reporting regulations to be followed in every jurisdiction, or many other things that payment systems do.
    - konschubert 2y ago
      You say all this. And yet, fees are 0.3% in Europe, and VISA, Mastercard and Amex are still happy to do business here. And customers can STILL pay with a single FaceID with Apple Pay. So maybe all 0.3% of trillions of Euros moved is still enough to do all this.
akira2501 2y ago
Charge backs. Price matching. Product insurance. Consumer credit scores can go down, which reduces the maximum balance, which may be under the current balance, which may become a total loss of the account. There are plenty of risks for an _issuer_. Which are separate entities from the _network_.

ExoticPearTree 2y ago

In the US things are very different than what you're used to in Europe, which I assume you are since you're talking about this and debit. 3D Secure and other technologies are pretty inexistent because people pay with credit cards and not debit cards. Credit cards have a very simple process of disputing transactions, fraud insurance and other things, and by moving the risk to the bank/merchant, they eliminate the friction that comes with using 3D Secure and other multi-factor authentication solutions. Win for the customer.

rat9988 2y ago
I'd rather not have to dispute it and use 3d secure.
- ExoticPearTree 2y ago
  Here's the rub: if you use a debit card, the burden of proof is on you to prove you did not make the transaction. With credit cards, you shift it to the merchant/bank.
  - franga2000 2y ago
    Firstly, that's just conceptually stupid, but ok, whatever, it's the US. More practically: this is still a dispute process. You still have to fill in forms, you still temporarily don't have your money, you still might not get it back. Why take that risk when you could just have a popup on your phone that you click "allow" on? 15 seconds max.
    - ExoticPearTree 2y ago
      You don't fill out forms or what you imagine. And because it is a credit card, you don't lose your money. Regarding your last question, about the 15 seconds friction, you should work for a bit in online commerce to see how fast people give up paying if there's even a little inconvenience in the checkout process and go somewhere else they perceive it makes their shopping experience easier. The biggest drop in conversion rates happens at the checkout stage.
      - franga2000 2y ago
        Where else would they go? The 3DS process depends on your issuer, not the merchant, so the process is the same no matter where you shop.
  - lxgr 2y ago
    That’s a common myth, but is simply not true; neither practically, nor legally. Both chargebacks and zero liability are practically available on effectively all US debit cards. Legal protections might be a bit less than for credit cards, but still far from “you have the burden of proof”.
    - stvltvs 2y ago
      But your money is held in limbo until the dispute is resolved, right?
      - lxgr 2y ago
        I believe only until the bank does some initial plausibility checks at first. Actual dispute resolution can take quite long and you’re not even directly dependent on the outcome. For example, if you lose a card and it gets used in a physical store fraudulently, your bank will most likely not be able to win a dispute, but they’ll usually still have to reimburse you. The thing that matters to you as the cardholder is only fraud liability; if and how your bank is made whole by the merchant is their concern. That’s the same across credit and debit.
barrkel 2y ago
Credit cards generally use multi-factor auth in Europe for unusual transactions, typically an app, sometimes SMS.
oblio 2y ago
I'm fairly sure you can have 3D secure for credit cards. > 3-D Secure is a protocol designed to be an additional security layer for online credit and debit card transactions. https://en.wikipedia.org/wiki/3-D_Secure https://en.wikipedia.org/wiki/3-D_Secure
- ExoticPearTree 2y ago
  But it is a burden on the customer to use it. And in the US at least, you want to let people pay you as easy as possible, not have them jump through hoops like it is in the EU with a second factor authentication. Different approaches.
  - oblio 2y ago
    You've moved the goal posts, I saw your other replies in the subthreads.
  - lxgr 2y ago
    Having to dispute transactions or beg my bank to please let through a given payment, yes it’s really me (because they only have antiquated and often very insecure ways of establishing my identity) isn’t thrilling either. 3DS on every transaction would definitely be frustrating (and not even EU banks/merchants do it); 3DS on no transaction just shifts the friction elsewhere.
  - CaptainZapp 2y ago
    Burden? Not really. I get a popup on my phone via the issuers app CONFIRM DENY And after clicking CONFIRM the transaction goes through. Adds maybe 3 seconds to the process. This is online only. On site payments of ca. 100$ or less are tap and done. For higher value transactions a PIN is required.
dagw 2y ago
3D Secure and other technologies are pretty inexistent because people pay with credit cards and not debit cards. In Europe, 3D Secure (when it is used) is used when you pay with both credit and debit card. From a transactions point of view there is no difference between a credit and debit card.
- ExoticPearTree 2y ago
  The article referenced is about how the US system works and I was referring to that. And also, in the US it is very important for your wellbeing to have a good credit score and the only way to build that is to use credit cards. From a technical perspective you are right - it is a transaction, but from a dispute perspective it matters a whole lot, so it is actually more convenient for Americans to use a credit card with no second factor authentication than go through the hassle of being asked for a code or whatever second factor the bank decides to use.
pjc50 2y ago
I believe EU now mandates some sort of additional factor for card-not-present transactions whether they're credit or debit. (probably somewhere in https://en.wikipedia.org/wiki/Payment_Services_Directive https://en.wikipedia.org/wiki/Payment_Services_Directive )
- CaptainZapp 2y ago
  I think you're right. That's usually handled with an app on your phone and is pretty much frictionless.
konschubert 2y ago
I am aware of this. I’m saying it because it’s one of the few things where I believe the US can learn from Europe, just like Europe can learn from the Us. This is not a win for the customer, btw, because the credit card fees get baked into the prices.
- ExoticPearTree 2y ago
  It is a win friction-wise. I am pretty sure Visa/Mastercard have negligible costs when processing a transaction, and that 3% is what I guess they think is the upper boundary of what merchants are willing to pay before there's an incentive for a competitor with lower fees to appear.
  - konschubert 2y ago
    Visa/Mastercard are a duopoly, which means they can extract rents. Yes, I’m willing to pay $100 for a liter of water if you’re the only one selling it. I get a lot of value out of it! In a competitive market, competition eventually drives down prices to a price that somewhat approaches the cost of providing the service. This isn’t happening in payment, due to insurmountable network effects.
franga2000 2y ago
I fail to see how "there is no security, but once your money does get stolen your bank might give it back" is a win for the consumer. 3DS usually means clicking yes on a popup on your phone or at worst typing a 6-digit code you got via SMS. It adds maybe 15 seconds to your payment, which when totalled over a year of payments doesn't even get close to having to call or go to your bank and deal with chargebacks and/or insurance.
- stvltvs 2y ago
  With credit cards, it's the bank's money which is one reason Americans overwhelmingly use them over debit cards.
lxgr 2y ago
And a big win for fraudsters. Who do you think ends up paying for the fraud in the end?
- ExoticPearTree 2y ago
  Merchants/banks pay for it. It sucks, but with good tools you can lower it significantly, so that its a nuisance.
  - lxgr 2y ago
    And who pays the merchants and banks?

AmericanChopper 2y ago

The card companies and associated infrastructure providers have created a system that connects basically every bank in the world to basically every other bank in the world, and to any merchant in the world who wants to participate. Imagine how difficult it is to complete one big enterprise integration like that, especially one that involves systems like core banking. Now do that thousands of times over, across hundreds of countries, integrating with millions of merchants, processing tens of thousands of transactions per second, and almost never going down. The payment card system is a miracle of system design and global commerce. I also want to see processing costs come down over time, but 3% is a bargain for the value you’re getting, and if you wanted to stifle any further innovation out of the industry, then regulating the profit out of it would be a good start.

konschubert 2y ago
So is email, yet email is free
- AmericanChopper 2y ago
  Putting aside the fact that email is not free, if you think the complexity of a system that sends an email is comparable to the complexity of a system that processes real time payments, then you're kinda showing how little you understand payment systems (but I suspect this was just a flippant comment). Email doesn't require a globally consistent state to be maintained, it doesn't require cross-border settlement, there is no financial liability if an email is lost, it doesn't require a different set of KYC/AML/reporting regulations to be followed in every jurisdiction, or many other things that payment systems do.
  - konschubert 2y ago
    You say all this. And yet, fees are 0.3% in Europe, and VISA, Mastercard and Amex are still happy to do business here. And customers can STILL pay with a single FaceID with Apple Pay. So maybe all 0.3% of trillions of Euros moved is still enough to do all this.

akira2501 2y ago

Charge backs. Price matching. Product insurance. Consumer credit scores can go down, which reduces the maximum balance, which may be under the current balance, which may become a total loss of the account. There are plenty of risks for an _issuer_. Which are separate entities from the _network_.