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The challenger to these will solve for a different problem. Not every transaction needs complex fraud detection or being able for the customer do to chargebacks

The challenger to these will solve for a different problem. Not every transaction needs complex fraud detection or being able for the customer do to chargebacks. For a 3% discount, would customers agree to use something that worked just like cash, where the transfer was instant and couldn't be undone? Then you don't have to worry about fraud, chargebacks, etc.

rfw300 2y ago
This is the purpose of Zelle, Venmo, money wires, and checks. But there are many problems they don’t solve, that customers and sellers prefer to be solved and are willing to pay for.
BeetleB 2y ago
> For a 3% discount, It is fantasy to think they'd get a 3% discount. The goods in stores that take only cash do not tend to be cheaper than those that do. They know what people are willing to pay and will charge the price. If they see people are willing to pay $99 with a credit card, then they'll be willing to pay that with cash.
- jnordwick 2y ago
  > The goods in stores that take only cash do not tend to be cheaper than those that do. In NYC they most definitely do. A lot of the corner stores will change you less with cash. I'm not sure it is a the card payment or that they are keeping the sale off the books, but something that might cost me $18.50, I'll pay $18 for.
  - jtc331 2y ago
    Yes, cheaper in the same store, but not usually compared to other stores that don’t have cash discounts.
  - BeetleB 2y ago
    When I wrote that comment I knew someone would come out and use New York City as a counterexample. The reality is except for a few of the really major cities those types of stores are usually more expensive than their larger counterparts in virtually all other cities in the US. In my city I'm not going to get cheaper groceries by going to the smaller stores. They are more expensive regardless of whether they support credit cards or not. They may be superior and certain other aspects but price is not one of them. My guess is the opposite may be true only in places where owning a car is expensive or inconvenient.
- crtasm 2y ago
  Handling cash has its own significant cost, it's not a direct comparison to a low-fee digital payment.
- devman0 2y ago
  I think the issue here is who is paying the fee and where is the fee surfaced. A free market solution would work here, but it requires some regulating to create the transparency required. Everyone pays their own credit card fee as a line item on the receipt, merchants are required to print it on the receipt. If customers actually had to pay their own fee's on each swipe you'd see a lot less people reaching for the Platinum card and instead for the no frills local bank credit card. You'd also see immense downward market pressure on swipe fees as now card issuers have to compete against each other.
  - BeetleB 2y ago
    Technically the merchant is paying the fee, and he perhaps is passing some or all of it to you. The reason merchants might not pass it all to you if that they get a lot more sales volume when they support credit cards, so they can still be more profitable while paying for some of those fees. I know I'm going to get hated for saying this, but the businesses that charge extra for credit card use under $10 are trying to extract as much out of you - they're aiming to get the best of both worlds. The price of their goods are still such that they're assuming you'll pay with a card. At the end of the day a business has several costs. Rent, cost of shipping, utilities, etc. When these go up so do the costs of goods. Credit card fees are no different in that regard. If they hated it that much they wouldn't support credit card payments. They do support it because then know it'll bring in more revenue than without - and will easily pay for itself and more.
    - Panzer04 2y ago
      The issue is there's a huge disparity in the fees for certain payment methods. Some cards cost merchants much more than others, but they are contractually forbidden from differentiating their prices based on that. It's anticompetitive. Lots of "buy now pay later" schemes work similarly, when afterpay was (or is) a big thing they charge 7% and forbid the merchant from including that cost in their prices. If the consumer had to bear the cost of their payment choice, no problem, but the reality is consumers with low fee payments are paying slightly more than they should for everything and those with high fee payments pay less than they should for everything.
- jakub_g 2y ago
  In Poland, the default way for computer shops in 2000-2010s was to offer 2% discount when paying in cash. (The prices displayed were assuming cash, so if you paid by card, you'd pay more.) I didn't see this anywhere else though. It probably made sense for computer shops because most transactions one would do there would be sporadic, big, and planned. (Since then, the Mastercard/Visa fees went down to 0.2-0.3% due to EU rules, so probably those discounts are less popular now).
  - BeetleB 2y ago
    > I didn't see this anywhere else though. In the US offering different prices when paying by cash vs card was a violation of the agreement with Visa, as is putting a minimum price threshold for card usage. It's still fairly widespread though, and occasionally makes the news. Might explain why you didn't see it often.
    - jkaplowitz 2y ago
      I believe the Visa merchant agreement never forbade cash discounts, only credit card surcharges. I'm not sure, but the current rules are different due to a legal settlement. In the US, not only does Visa now allow cash discounts and minimum price thresholds up to US$10, but they also allow, in most states, credit card surcharges (sometimes subject to specific state-law legal requirements). Visa still officially disallows minimum price thresholds outside the US and certain related territories like Guam, and credit card surcharges outside the US - but I nevertheless see them plenty often here in Germany in small shops. I think the permission to offer cash discounts is global.
    - mrastro 2y ago
      Do gas stations have a special deal with the card processors then? Basically all of them have a lower cash price.
  - drstewart 2y ago
    >In Poland, the default way for computer shops in 2000-2010s was to offer 2% discount when paying in cash Yes, being able to illegally evade taxes is an easy way for businesses to lower prices slightly.
tqwhite 2y ago
I would use my debit card even if it behaved exactly like cash, ie, when the recipient got the money, my only way of getting it back is to sue them or call the police. Obviously any electronic payment system needs to be secure internally but society lasted a long time and made fine progress when having your wallet stolen meant losing your money. It would be fine to require a person to charge their debit card with a finite amount rather than have it be funded up to the limit of the supporting account and that would solve the last problem compared to cash.
- margalabargala 2y ago
  I understand that Europe is more secure with chip+pin, but in the US, debit cards do exactly what you describe. If fraud happens, you are out money until it is resolved. The key difference from cash, in the US, is the ability to abuse cards at a later date without the physical card. For someone to steal your wallet, they have to be colocated with you and can only steal as much as you're walking around with. As long as debit cards have a magnetic stripe and have their full number printed on them, and that information is useful, this problem remains.
  - Deathmax 2y ago
    > As long as debit cards have a magnetic stripe and have their full number printed on them, and that information is useful, this problem remains. Which the EEA/UK has also (partially) solved by enforcing Strong Customer Authentication (SCA) that mandates that (most) transactions require MFA.
    - margalabargala 2y ago
      Yeah, Europe is ahead on this; I hedged my earlier statements heavily. It's not a difficult technological problem to solve. A card's chip should be able to guarantee that the card is physically present for any transaction. Obviously online payments would pose a problem, people would need to either own USB card chip readers or banks would need to do something new and special.
multjoy 2y ago
>Not every transaction needs complex fraud detection or being able for the customer do to chargebacks. Fraud is an industrial level enterprise. You absolutely need fraud detection if you're accepting payment that isn't cash.
- snotrockets 2y ago
  You also need it for cash, but there fraud takes different form, and need different mitigations.
stefan_ 2y ago
EU caps interchange fees at 0.3%, which is probably still too much. The 3% is mostly to finance the various gimmick programs that make naive people think they are "gaming the system" with their 20th card in wallet (and because they can, of course).
tonyarkles 2y ago
There's an issue that you're not addressing: what happens when someone who isn't me spends my money? I think people would be happy for the theoretical 3% discount until their account is drained and sent to North Korea with no recourse.
alberth 2y ago
You just described debit cards. And there fees are 1/10 of that of credit cards, as a result of giving up these benefits.
- nazcan 2y ago
  But at least in Canada, only have low fees if they are in person - not online.
ta_1138 2y ago
You are missing the opposite side of the fraud picture: Where it's not the business scamming you, but someone taking your credentials and spending up to the limit in a store that deals with no chargebacks. This is, if anything, the larger size of the fraud losses for the Stripes of the world. Fake businesses that use the cards either for testing if the creds are good, or where the owners charge cards that they obtained from some other malicious actor. So it's not that I get 3% off by not supporting chargebacks, but whether I want to have a dollar under a payment system that supports someone emptying me out without recourse.... and the answer is often no.
- grogenaut 2y ago
  Or further abusing your weak password on a site and then racking up a ton of charges to a product that they're capable of laundering in some way into money for them at any ratio.
- d0gsg0w00f 2y ago
  But fraudsters can steal your cash too. The difference is that you don't call the bank when someone takes your cash, you call the cops.
crazygringo 2y ago
> Not every transaction needs complex fraud detection or being able for the customer do to chargebacks. Well, not until you get hacked. We might be happy with instant, no-undo transactions until our device gets hacked and our bank account with many thousands of dollars gets drained, through no fault of our own. Then suddenly, complex fraud detection and transaction reversals seems like an awfully good idea. Because the issue here isn't about chargebacks where you genuinely made the transaction but the business failed to deliver, and maybe you lose a couple hundred dollars. The issue here is about when you never authorized transactions at all, and you lose all your savings.
fuzzer371 2y ago
This has been done with Zelle and people are crying because they're dumb enough to fall victim to obvious scams.
- Yeul 2y ago
  The idea of buying stuff from a dodgy website just seems strange to me. One of the most fundamental basics of trading has always been trust.
  - com 2y ago
    Wait until you hear about German SME e-commerce and “open invoice” billing. So much trust from the vendor!
grogenaut 2y ago
Lol If you have an unprotected vector fraudsters will find and exploit it. They're literally paid to do so. I've seen fraudsters that are ridiculously persistent to make $2,000 in a year. But they just keep poking at it at a certain point you're able to ramp that up to $80,000 in a month I know they're good it was completely worth it to him for several years. How I've seen people spend hundreds of hours to generate a few hundred dollars worth of in-game currency or on-site reward points.
immibis 2y ago
Would the customer still agree to that 3% discount, after their computer got infected with a virus and 100% of their money was irrevocably gone?

rfw300 2y ago

This is the purpose of Zelle, Venmo, money wires, and checks. But there are many problems they don’t solve, that customers and sellers prefer to be solved and are willing to pay for.

BeetleB 2y ago

> For a 3% discount, It is fantasy to think they'd get a 3% discount. The goods in stores that take only cash do not tend to be cheaper than those that do. They know what people are willing to pay and will charge the price. If they see people are willing to pay $99 with a credit card, then they'll be willing to pay that with cash.

jnordwick 2y ago
> The goods in stores that take only cash do not tend to be cheaper than those that do. In NYC they most definitely do. A lot of the corner stores will change you less with cash. I'm not sure it is a the card payment or that they are keeping the sale off the books, but something that might cost me $18.50, I'll pay $18 for.
- jtc331 2y ago
  Yes, cheaper in the same store, but not usually compared to other stores that don’t have cash discounts.
- BeetleB 2y ago
  When I wrote that comment I knew someone would come out and use New York City as a counterexample. The reality is except for a few of the really major cities those types of stores are usually more expensive than their larger counterparts in virtually all other cities in the US. In my city I'm not going to get cheaper groceries by going to the smaller stores. They are more expensive regardless of whether they support credit cards or not. They may be superior and certain other aspects but price is not one of them. My guess is the opposite may be true only in places where owning a car is expensive or inconvenient.
crtasm 2y ago
Handling cash has its own significant cost, it's not a direct comparison to a low-fee digital payment.
devman0 2y ago
I think the issue here is who is paying the fee and where is the fee surfaced. A free market solution would work here, but it requires some regulating to create the transparency required. Everyone pays their own credit card fee as a line item on the receipt, merchants are required to print it on the receipt. If customers actually had to pay their own fee's on each swipe you'd see a lot less people reaching for the Platinum card and instead for the no frills local bank credit card. You'd also see immense downward market pressure on swipe fees as now card issuers have to compete against each other.
- BeetleB 2y ago
  Technically the merchant is paying the fee, and he perhaps is passing some or all of it to you. The reason merchants might not pass it all to you if that they get a lot more sales volume when they support credit cards, so they can still be more profitable while paying for some of those fees. I know I'm going to get hated for saying this, but the businesses that charge extra for credit card use under $10 are trying to extract as much out of you - they're aiming to get the best of both worlds. The price of their goods are still such that they're assuming you'll pay with a card. At the end of the day a business has several costs. Rent, cost of shipping, utilities, etc. When these go up so do the costs of goods. Credit card fees are no different in that regard. If they hated it that much they wouldn't support credit card payments. They do support it because then know it'll bring in more revenue than without - and will easily pay for itself and more.
  - Panzer04 2y ago
    The issue is there's a huge disparity in the fees for certain payment methods. Some cards cost merchants much more than others, but they are contractually forbidden from differentiating their prices based on that. It's anticompetitive. Lots of "buy now pay later" schemes work similarly, when afterpay was (or is) a big thing they charge 7% and forbid the merchant from including that cost in their prices. If the consumer had to bear the cost of their payment choice, no problem, but the reality is consumers with low fee payments are paying slightly more than they should for everything and those with high fee payments pay less than they should for everything.
jakub_g 2y ago
In Poland, the default way for computer shops in 2000-2010s was to offer 2% discount when paying in cash. (The prices displayed were assuming cash, so if you paid by card, you'd pay more.) I didn't see this anywhere else though. It probably made sense for computer shops because most transactions one would do there would be sporadic, big, and planned. (Since then, the Mastercard/Visa fees went down to 0.2-0.3% due to EU rules, so probably those discounts are less popular now).
- BeetleB 2y ago
  > I didn't see this anywhere else though. In the US offering different prices when paying by cash vs card was a violation of the agreement with Visa, as is putting a minimum price threshold for card usage. It's still fairly widespread though, and occasionally makes the news. Might explain why you didn't see it often.
  - jkaplowitz 2y ago
    I believe the Visa merchant agreement never forbade cash discounts, only credit card surcharges. I'm not sure, but the current rules are different due to a legal settlement. In the US, not only does Visa now allow cash discounts and minimum price thresholds up to US$10, but they also allow, in most states, credit card surcharges (sometimes subject to specific state-law legal requirements). Visa still officially disallows minimum price thresholds outside the US and certain related territories like Guam, and credit card surcharges outside the US - but I nevertheless see them plenty often here in Germany in small shops. I think the permission to offer cash discounts is global.
  - mrastro 2y ago
    Do gas stations have a special deal with the card processors then? Basically all of them have a lower cash price.
- drstewart 2y ago
  >In Poland, the default way for computer shops in 2000-2010s was to offer 2% discount when paying in cash Yes, being able to illegally evade taxes is an easy way for businesses to lower prices slightly.

tqwhite 2y ago

I would use my debit card even if it behaved exactly like cash, ie, when the recipient got the money, my only way of getting it back is to sue them or call the police. Obviously any electronic payment system needs to be secure internally but society lasted a long time and made fine progress when having your wallet stolen meant losing your money. It would be fine to require a person to charge their debit card with a finite amount rather than have it be funded up to the limit of the supporting account and that would solve the last problem compared to cash.

margalabargala 2y ago
I understand that Europe is more secure with chip+pin, but in the US, debit cards do exactly what you describe. If fraud happens, you are out money until it is resolved. The key difference from cash, in the US, is the ability to abuse cards at a later date without the physical card. For someone to steal your wallet, they have to be colocated with you and can only steal as much as you're walking around with. As long as debit cards have a magnetic stripe and have their full number printed on them, and that information is useful, this problem remains.
- Deathmax 2y ago
  > As long as debit cards have a magnetic stripe and have their full number printed on them, and that information is useful, this problem remains. Which the EEA/UK has also (partially) solved by enforcing Strong Customer Authentication (SCA) that mandates that (most) transactions require MFA.
  - margalabargala 2y ago
    Yeah, Europe is ahead on this; I hedged my earlier statements heavily. It's not a difficult technological problem to solve. A card's chip should be able to guarantee that the card is physically present for any transaction. Obviously online payments would pose a problem, people would need to either own USB card chip readers or banks would need to do something new and special.

multjoy 2y ago

>Not every transaction needs complex fraud detection or being able for the customer do to chargebacks. Fraud is an industrial level enterprise. You absolutely need fraud detection if you're accepting payment that isn't cash.

snotrockets 2y ago
You also need it for cash, but there fraud takes different form, and need different mitigations.

stefan_ 2y ago

EU caps interchange fees at 0.3%, which is probably still too much. The 3% is mostly to finance the various gimmick programs that make naive people think they are "gaming the system" with their 20th card in wallet (and because they can, of course).

tonyarkles 2y ago

There's an issue that you're not addressing: what happens when someone who isn't me spends my money? I think people would be happy for the theoretical 3% discount until their account is drained and sent to North Korea with no recourse.

alberth 2y ago

You just described debit cards. And there fees are 1/10 of that of credit cards, as a result of giving up these benefits.

nazcan 2y ago
But at least in Canada, only have low fees if they are in person - not online.

ta_1138 2y ago

You are missing the opposite side of the fraud picture: Where it's not the business scamming you, but someone taking your credentials and spending up to the limit in a store that deals with no chargebacks. This is, if anything, the larger size of the fraud losses for the Stripes of the world. Fake businesses that use the cards either for testing if the creds are good, or where the owners charge cards that they obtained from some other malicious actor. So it's not that I get 3% off by not supporting chargebacks, but whether I want to have a dollar under a payment system that supports someone emptying me out without recourse.... and the answer is often no.

grogenaut 2y ago
Or further abusing your weak password on a site and then racking up a ton of charges to a product that they're capable of laundering in some way into money for them at any ratio.
d0gsg0w00f 2y ago
But fraudsters can steal your cash too. The difference is that you don't call the bank when someone takes your cash, you call the cops.

crazygringo 2y ago

> Not every transaction needs complex fraud detection or being able for the customer do to chargebacks. Well, not until you get hacked. We might be happy with instant, no-undo transactions until our device gets hacked and our bank account with many thousands of dollars gets drained, through no fault of our own. Then suddenly, complex fraud detection and transaction reversals seems like an awfully good idea. Because the issue here isn't about chargebacks where you genuinely made the transaction but the business failed to deliver, and maybe you lose a couple hundred dollars. The issue here is about when you never authorized transactions at all, and you lose all your savings.

fuzzer371 2y ago

This has been done with Zelle and people are crying because they're dumb enough to fall victim to obvious scams.

Yeul 2y ago
The idea of buying stuff from a dodgy website just seems strange to me. One of the most fundamental basics of trading has always been trust.
- com 2y ago
  Wait until you hear about German SME e-commerce and “open invoice” billing. So much trust from the vendor!

grogenaut 2y ago

Lol If you have an unprotected vector fraudsters will find and exploit it. They're literally paid to do so. I've seen fraudsters that are ridiculously persistent to make $2,000 in a year. But they just keep poking at it at a certain point you're able to ramp that up to $80,000 in a month I know they're good it was completely worth it to him for several years. How I've seen people spend hundreds of hours to generate a few hundred dollars worth of in-game currency or on-site reward points.

immibis 2y ago

Would the customer still agree to that 3% discount, after their computer got infected with a virus and 100% of their money was irrevocably gone?