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Visa to launch pay-by-bank payments, an alternative to credit cards
- petermcneeley 2y agoBitcoin was release 15 years ago. Today Visa is offering a way for you to pay with a bank account to another bank account.
- _heimdall 2y agoBitcoin didn't invent faster transactions, nor does it do a particularly good job of it if your goal is low fees or transfer times on the order of a few minutes or less.
- Brian_K_White 2y agoWasn't the whole point of a bank transfer or check to avoid Visa and their 3% tax on every single transaction in your life?
- pas 2y agoit's much less than 3% in the EU, as far as I understand, around 0.3% https://www.adyen.com/knowledge-hub/interchange-fees-explained https://www.adyen.com/knowledge-hub/interchange-fees-explain...
- tiffanyh 2y agoEU already caps interchange. 0.2% (20bps) for debit 0.3% (30bps) for credit https://ec.europa.eu/commission/presscorner/detail/fr/MEMO_16_2162 https://ec.europa.eu/commission/presscorner/detail/fr/MEMO_1...
- kondro 2y agoAustralia has similar low rates, but also a robust realtime bank-to-bank transfer network.
- adrr 2y agoHow do banks offer credit cards with 0.3% interchange? Do they charge an annual fee? If you have the standard 30 day bill cycle + 30 days to pay, thats is upwards of 60 days for an interest free loan to the customer.
- tiffanyh 2y agoThe same as other parts of the world. The biggest difference is no loyalty points. Someone needs to pay for those 50k airline miles if you sign up for a new card. And when interchange is that low, there’s no margin left for bank to offer (pay for) loyalty points.
- adrr 2y agoThere is a cost of the money and it isn’t 0.3% for two months. Banks have to get that money from somewhere and it costs money.
- codedokode 2y agoProbably they hope that credit card owner forgets to pay in time and will have to pay interest.
- ReaLNero 2y agoMonthly fees for the card
- PaulDavisThe1st 2y agoThat would be true if all credit card customers pay their monthly bills in full, every month. However, that is not the world we live in. Most people carry balances a majority of the time, with interest rates significantly above "the cost of money". Further, the banks (really: card issuers) (in the US, at least), are collecting 0.5-4% of all transactions as fees.
- naming_the_user 2y agoWe have the same caps, and in the UK we have cards with 12+ months interest free. They do sometimes have small annual fees but nothing like the bank rate. My understanding is that it's a bit like bank accounts, it's paid for by people who don't pay their entire bill and take the high APR, leave a large balance after the intro period, etc. Basically, if you do it right, you win, if you do it wrong, you lose and often big.
- Mistletoe 2y agohttps://www.opensecrets.org/federal-lobbying/industries/summary?id=F06 https://www.opensecrets.org/federal-lobbying/industries/summ... The return on investment for this money spent lobbying in the USA is astronomical.
- bobthepanda 2y agoIn the UK followed by the Nordics and Europe. I thought Europe already had easy interbank payments?
- Symbiote 2y agoExactly -- Visa wants a piece of the pie, and are probably worried about these services becoming ever-easier to use (smartphones etc) at the expense of credit/debit cards.
- lxgr 2y agoYes, but there’s no dispute resolution framework for it, so it’s only used between trusted parties. There’s a big gap for ecommerce there: I’d never send money to an unknown merchant because I have no idea if they’re real, they will go bankrupt etc., and a merchant will never accept a direct debit from an unknown customer because they can reverse that with the click of a button without any justification.
- notpushkin 2y ago> it’s only used between trusted parties. Not sure about that. When I was living in Estonia, I paid for half of the things using bank transfer, from mobile phone bills to random online purchases.
- lxgr 2y agoInteresting, do you know how people deal with merchants not delivering goods/services, just ceasing to exist etc.? Anything postpaid, such as mobile phone bills, are usually fine, since the service has already been provided, so the customer is only settling a debt. I also generally have no issues pre-paying money via SEPA credit transfer to a merchant I've already successfully transacted with before, unless it's something bankruptcy-prone such as an airline, a contractor, a small online merchant etc. – many people have been bitten that way.
- notpushkin 2y ago
- skybrian 2y agoIt sounds like this is less about the payments and more about customer service, and in particular getting a refund. Seems fine, but why not use a credit card? I wonder what the fees will be?
- jabroni_salad 2y agoI think it's meant to compete with electronic billpay. If the merchant cost isn't zero I don't see why ebillpay users would go for it.
- lxgr 2y ago“Electronic bill payment” isn’t really a thing in Europe, since (push) credit transfers and (pull) direct debit have been available for many decades.
- SOLAR_FIELDS 2y agoA few interesting takeaways I got from the article, which was also pretty light on details: Europe only for now. Why? Title of HN article says alternative to credit cards. But you click into the article and it says the use case is an alternative to the “traditional direct debit process” as well. Which would make more sense as an alternative than credit cards, which exist in Europe but aren’t nearly as widely used as in the States. How is this different than “direct debit”? The article then outlines one main benefit of this is > The service should help people deal with problems like unauthorized auto-renewals of subscriptions, by making it easier for people to reverse direct debit transactions and get their money back, Visa said. But then immediately thereafter says this won’t apply to arguably the three most problematic and abusive bad actors in this space. Why? > It won’t initially apply its A2A service to things like TV streaming services, gym memberships and food boxes, Visa added, but this is planned for the future. Honestly the article left me with more questions than answers
- dubcanada 2y agoThe first one is pretty easy, it’s because direct bank payments in EU are popular with things like klarna, SEPA, etc. so they are just competing with existing players.
- makeitdouble 2y ago> Europe only for now. Why? IMHO banking infra is very mature, and banking regulation helps these kind of initiatives. Other regions might also have many innovative companies, but there's probably no central rule guaranteeing banks have an API or are interoperable at all.
- FabHK 2y agoIndeed, as the article states: > Visa’s A2A product relies on a technology called open banking, which requires lenders to provide third-party fintechs with access to consumer banking data. > Open banking has gained popularity over the years, especially in Europe, thanks to regulatory reforms to the banking system.
- lxgr 2y agoAccount-to-account payments have been available in Europe for a long time, but what’s missing is a dispute/fraud management framework. (Credit transfers have ~100% sender liability; direct debits have ~100% merchant liability.) If that’s what’s Visa is adding, this could be interesting for some use cases.
- adrr 2y agoWho pays to run the dispute system? Sender or receiver is going to be paying money. For things like rent/mortgage or other large payments, no one is going to pay a fee.
- lxgr 2y agoRent and mortgage payments don't require trust in the way that buying things online at an unknown merchant does. In both cases, the lender/landlord has already taken a risk, and the borrower/tenant defaulting on a payment can't be mitigated via the payment rails by definition.
- tiffanyh 2y agoSince the Nordics was mentioned, I wonder if this will be tied to BankID.
- dyauspitr 2y agoI’m confused. Isn’t this just a debit card?
- solarkraft 2y agoI THINK the plan is to use all that’s good about debit (wide merchant adoption) and kind of internally reduce friction both for merchants and banks. Thats what would make sense to me, anyway.
- deleted 2y ago[deleted]
- Brajeshwar 2y agoFor reference to a working setup that achieves similar end goal, India has the Unified Payments Interface (UPI).[1] It is an instant payment system as well as protocol. It is almost a decade old. The interface facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions. It is used on mobile devices to instantly transfer funds between two bank accounts. The mobile number of the device is required to be registered with the bank. The UPI ID of the recipient can be used to transfer money. It runs as an open source application programming interface (API) on top of the Immediate Payment Service (IMPS),[2] and is regulated by the Reserve Bank of India (RBI).[3] Before UPI, I remember using something from Google called "Tej"[4] which later (I think) became what Google Wallet, then Google Pay using the current UPI protocol. The only thing I remember about the early development of UPI is that I saw an office in Bangalore earmarked for UPI team (must be one of many). I used to consult for a pretty big Indian Brand to help with one of their eCommerce product. That team had an office in that same building, and the UPI team's security was pretty tied. From the talks I hear, I assume they were mostly QA people. This was 2015. 1. https://en.wikipedia.org/wiki/Unified_Payments_Interface https://en.wikipedia.org/wiki/Unified_Payments_Interface 2. https://en.wikipedia.org/wiki/Immediate_Payment_Service https://en.wikipedia.org/wiki/Immediate_Payment_Service 3. https://en.wikipedia.org/wiki/Reserve_Bank_of_India https://en.wikipedia.org/wiki/Reserve_Bank_of_India 4. https://blog.google/around-the-globe/google-asia/introducing-tez/ https://blog.google/around-the-globe/google-asia/introducing...
- altairprime 2y agoThe US technically has FedNow, though I'm not sure anyone has implemented it yet. Given that it's going to absolutely destroy the ACH racket of "we borrow your money for 3-5 business days for each transfer you make", and that the only serious US alternative is debit cards transfers (which Visa profits from today, although at only 0.05%), I assume they're not prepared to kill the golden debit goose until they've got their ACH competitor built out somewhere they aren't making debit money from today.
- PaulDavisThe1st 2y agoAnd yet somehow, certain ACH payments are "almost" instantenous. I have automatic transfer of my PayPal balance (to my bank) set up (most of my income arrives via PayPal). Since I did this, the payment is in my bank account the next day, using the amount in the account within a minute or two of midnight. There's also Zelle, which seems to be slowly spreading (with the emphasis on "slow" - its adoption rate seems far behind Venmo at the same point in Venmo's life).
- bombi 2y agoGood riddance!! In Brazil we've been using the Pix payment system account to account for well over 2 years! India has a similar system in place
- szszrk 2y agoI believe that can be compared to BLIK in Poland, which offers that but already has very wide adoption locally. To the point that you can use it for phone to phone transfers, online payments and even paying directly in card terminals for cashless payments on every store (terminals are very widely adopted here) or ATM withdrawals. I guess Visa could try to be the first one to offer similar but truly worldwide.
- dyauspitr 2y agoIndia’s NPCI helped Brazil build Pix.
- oliwarner 2y agoThe UK already has Faster Payments and much of the EU has SEPA with an "instant" option. There are already processors who will let you leverage these options (eg GoCardless) with very low processing fees and many banks are trying to expose payment endpoints. I don't think we should welcome stepping back to having another middleman involved in the process. What's their value-add? Are they going to be the insurance in fraud, offer chargebacks?
- seba_dos1 2y agoVisa, welcome to the 21th century.
- krick 2y agoSomething that I read between the lines here is that credit/debit card is basically still the only practical way to do transactions in the USA. Is that right? It isn't the same across all of the Europe, but in the most cases you don't have to use a card to make a transaction, there usually already is one or multiple options to pay-by-bank online. So my understanding is Visa is just making an alternative of their own, nothing truly new. For p2p transactions (like, between friends) there are also multiple options, and they usually don't involve a card number (in fact, I don't even really know the mechanics of how such transactions happen, where they happen). Most people living in the same region usually have accounts in the same bank. Probably, the most widespread is Revolut, which will allow you to make a QR code to request a payment, or send money directly, but most "traditional" banks I know are not that far from newer Fintech capabilities, really: you still have an option to make a special URL to request a payment in your banking app, and "sending money to a phone number" is popular option too. Direct bank-to-bank transfers for peers usually have a (fairly low) price tag, but are nearly instant too. So, how do people exchange money in the USA?
- moja99402 2y ago[dead]
- moja99402 2y ago[dead]