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Nice analysis on competitive dynamics of semiconductor industry vs. space industry in the 2000s. > I'm not aware of any other industries which are quite as far

Nice analysis on competitive dynamics of semiconductor industry vs. space industry in the 2000s. > I'm not aware of any other industries which are quite as far "behind" today as space launch systems were in 2010. But if anyone else is, please mention those industries here! Digital payments may be in a similar situation. Visa's 2% fee may seem low but from a scale and competitive standpoint it is fairly absurd - they are making 80% gross margins on $30b of revenue to do what boils down to a few API calls and some fraud repayment. I doubt that they need to do much innovation to keep that moat either (in contrast to say Apple and their 30% cut of App Store revenues - they need to constantly stay ahead of Android and Windows). Curious to hear your take on what other industries at least come close to the space dynamics in 2010.

ska 2y ago
From what i can see as an admitted outsider, payment rails are more complicated than they look, and most of the crypto partisans arguments to "replace" functionality are a mix of 'ignoring that part', or 'we don't want that part anyway' + a few API calls. Problem is, the world consuming these things mostly seems to want those parts, and can't ignore those other parts. Which seems to explain relatively low uptake.
- amluto 2y ago
  Those rails involve an amazing amount of complexity that boils down to the entire system being nonsensical. Payments are pulled instead of pushed; the underlying credit card numbers lack even a semblance of security; there is all kinds of mis-design due to the way that restaurant tips work; it all started when credit card imprints/readers were all assumed to be offline; etc.
  - beAbU 2y ago
    What do you mean "it all started..." ? One of my earliest memories is my mum paying for groceries using her credit card in the 90/00s, where the machine used was completely mechanical/manual. It copied the card number (that was embossed on the plastic) by literally taking a carbon paper rubbing of the card. The system was designed to be offline, because back then there was no "online".
    - amluto 2y ago
      That would be one of the credit card imprinters I referenced, which is offline… I also recall the occasional business writing down credit card details, in person, with a pen, on a form they had for the purpose.
      - sroussey 2y ago
        > I also recall the occasional business writing down credit card details, in person, with a pen, on a form they had for the purpose. Sadly, I still see this...
    - hakfoo 2y ago
      You could argue the problem was that it took a system that more-or-less worked offline, and tried to hammer it into working online. A "built for online first" payment paradigm would look different, but it would have an enormous chicken-egg or installed-base problem, unless you had something with government-level muscle enforcing it.
- dvdkon 2y ago
  Most Czech banks offer free domestic instant payments, and many small businesses who were previously cash-only now take them as an option. I heard there's also a SEPA equivalent. If the electronic retail payment industry hadn't already been captured by VISA and MasterCard, I could very well see something like this, a much cheaper and simpler system, being what everybody uses. There's countries (India?) where debit/credit card adoption was slow and now these simpler solutions have significant market share.
  - astrange 2y ago
    It takes (at least) two people to want to adopt a payment system. The reason American customers use credit cards is that they like them; they're very safe for customers and they have reward points. You could pay with cash or debit if you wanted to, but then you can't chargeback the business.
  - mnau 2y ago
    Sweeden has a Swish and I am pretty sure many countries have very similar free option. We just need a non-profit integrator to do it worldwide... Use credit card as a fallback if everything else fails.
lotsofpulp 2y ago
>Visa's 2% fee may seem low but from a scale and competitive standpoint it is fairly absurd - they are making 80% gross margins on $30b of revenue to do what boils down to a few API calls and some fraud repayment. The banks issuing Visa cards do fraud repayment. Visa gets paid for their network, and specifically their network of higher income spenders who want to play the rewards game. Also, note that Visa does not earn 2% of transaction totals. A signification portion of total card processing fees goes to the card issuing banks to pay for rewards and fraud repayment.
- blasphemers 2y ago
  Exactly, the interchange fee is split between the issuing bank(largest cut), acquiring bank, and the network(smallest cut). Yet everybody acts like visa is just skimming 2% from every transaction without them getting anything in return while they have created entire lifestyles and communities around hacking credit card offers.
cvadict 2y ago
> to do what boils down to a few API calls LOL @ anyone who believes that global financial processing is primarily a technical problem vs. the regulatory / bureacratic dystopia it actually is.

ska 2y ago

From what i can see as an admitted outsider, payment rails are more complicated than they look, and most of the crypto partisans arguments to "replace" functionality are a mix of 'ignoring that part', or 'we don't want that part anyway' + a few API calls. Problem is, the world consuming these things mostly seems to want those parts, and can't ignore those other parts. Which seems to explain relatively low uptake.

amluto 2y ago
Those rails involve an amazing amount of complexity that boils down to the entire system being nonsensical. Payments are pulled instead of pushed; the underlying credit card numbers lack even a semblance of security; there is all kinds of mis-design due to the way that restaurant tips work; it all started when credit card imprints/readers were all assumed to be offline; etc.
- beAbU 2y ago
  What do you mean "it all started..." ? One of my earliest memories is my mum paying for groceries using her credit card in the 90/00s, where the machine used was completely mechanical/manual. It copied the card number (that was embossed on the plastic) by literally taking a carbon paper rubbing of the card. The system was designed to be offline, because back then there was no "online".
  - amluto 2y ago
    That would be one of the credit card imprinters I referenced, which is offline… I also recall the occasional business writing down credit card details, in person, with a pen, on a form they had for the purpose.
    - sroussey 2y ago
      > I also recall the occasional business writing down credit card details, in person, with a pen, on a form they had for the purpose. Sadly, I still see this...
  - hakfoo 2y ago
    You could argue the problem was that it took a system that more-or-less worked offline, and tried to hammer it into working online. A "built for online first" payment paradigm would look different, but it would have an enormous chicken-egg or installed-base problem, unless you had something with government-level muscle enforcing it.
dvdkon 2y ago
Most Czech banks offer free domestic instant payments, and many small businesses who were previously cash-only now take them as an option. I heard there's also a SEPA equivalent. If the electronic retail payment industry hadn't already been captured by VISA and MasterCard, I could very well see something like this, a much cheaper and simpler system, being what everybody uses. There's countries (India?) where debit/credit card adoption was slow and now these simpler solutions have significant market share.
- astrange 2y ago
  It takes (at least) two people to want to adopt a payment system. The reason American customers use credit cards is that they like them; they're very safe for customers and they have reward points. You could pay with cash or debit if you wanted to, but then you can't chargeback the business.
- mnau 2y ago
  Sweeden has a Swish and I am pretty sure many countries have very similar free option. We just need a non-profit integrator to do it worldwide... Use credit card as a fallback if everything else fails.

lotsofpulp 2y ago

>Visa's 2% fee may seem low but from a scale and competitive standpoint it is fairly absurd - they are making 80% gross margins on $30b of revenue to do what boils down to a few API calls and some fraud repayment. The banks issuing Visa cards do fraud repayment. Visa gets paid for their network, and specifically their network of higher income spenders who want to play the rewards game. Also, note that Visa does not earn 2% of transaction totals. A signification portion of total card processing fees goes to the card issuing banks to pay for rewards and fraud repayment.

blasphemers 2y ago
Exactly, the interchange fee is split between the issuing bank(largest cut), acquiring bank, and the network(smallest cut). Yet everybody acts like visa is just skimming 2% from every transaction without them getting anything in return while they have created entire lifestyles and communities around hacking credit card offers.

cvadict 2y ago

> to do what boils down to a few API calls LOL @ anyone who believes that global financial processing is primarily a technical problem vs. the regulatory / bureacratic dystopia it actually is.