4 ms·

It would be an absurd amount for a payment system, yes, because we already have a secure worldwide communications network that we pay to maintain and there's no

by kibwen 2y ago

It would be an absurd amount for a payment system, yes, because we already have a secure worldwide communications network that we pay to maintain and there's nothing special about Visa's encrypted bits. The value that credits cards provide isn't the network, it's the insurance (chargebacks). And while I appreciate payment insurance when I'm paying for an expensive object from halfway around the world, it's unnecessary overhead when I'm buying a bagel in a cafe.

carlosjobim 2y ago
So if we lived in a perfect hacker paradise where there are no company profits or private property, what would be reasonable operating costs for maintaining an instant planetary payment system – including fraud insurance? Assuming the same amount of transactions as today?
- poincaredisk 2y ago
  I don't know, but in Europe the visa/mastercard charges are capped at 0.2% for debit cards and 0.3% for credit cards. This seems to be enough for them to continue operating.
  - ThunderSizzle 2y ago
    Are there any European-based credit cards that have entered and competed in the American market, with it supposedly being so lucrative compared to Europe? I'd assume someone would've made that jump?
    - BobbyJo 2y ago
      I can't imagine Visa would continue to operate in Europe if it wasn't profitable, and I'm not surprised that there are no European competitors considering Visa has the highly profitable U.S. market to buoy their position in Europe.
      - ywvcbk 2y ago
        Building a new network from scratch would be extremely expensive with limited chance of success. Visa can certainly remain profitable even with the fee caps but I find it hard to imagine that they would try to enter the EU market if they had no presence in it and there were already several established competitors there these days.
      - nolok 2y ago
        I cannot speak for other country but VISA bought the Carte Bleue system in France un exchange of following all regulation and not upping the fees. For two decade before that and since then, all carte bleue are visa and vice versa. Mastercard exists here as a premium level card giving you tons of bonus, and usually fee with your account. Eg my bank account online is free and almost no fee for anything (I pay 9e for extra phone and wallet insurance and next day replacement), and as long as I keep more than 24k in the various accounts and give me a Gold+ visa card and a mastercard with 1% cashback.
    - ywvcbk 2y ago
      > any European-based credit cards Are/were there any in Europe to begin with? Eurocard made a deal with Mastercard in the 60s which made it impossible for them to enter the US market. Barclaycard, was as the name implies limited to a single bank. The were a few other systems that were mostly national and didn’t even expand into other European countries.
philwelch 2y ago
So carry cash then.
- kibwen 2y ago
  I do, in fact. Unfortunately, the push for cashlessness has made this impractical in many places, and as mentioned elsewhere in this thread the cost of handling cash isn't zero, which means that direct transfers via a FedNow-like mechanism have the opportunity to reduce costs for everyone involved.
kelnos 2y ago
> It would be an absurd amount for a payment system, yes, because we already have a secure worldwide communications network that we pay to maintain and there's nothing special about Visa's encrypted bits. Sure there is. Someone had to build the all the software that deals with those encrypted bits. Someone had to scale it up to handling tens (hundreds?) of billions of transactions per year, each one approved or declined within a few seconds. If you think it costs zero dollars and we can just say "the internet is our payments system" and call it a day... well, I don't know what to tell you. Your expectations are so far from reality that I'm not sure we're going to have a productive discussion.
- cubefox 2y ago
  The maintenance costs are probably closer to zero than to the current profit margins of the credit card companies. FedNow transfers are almost free after all. $0.043 per transaction according to Wikipedia.
  - carlosjobim 2y ago
    Visa's operating costs in 2023 were $10-$11 billion, compared to their profit of $17-$18 billion. This is on a revenue of $32 billion.
    - cubefox 2y ago
      FedNow's operating cost must be multiple orders of magnitude lower.
      - carlosjobim 2y ago
        Would they be if FedNow had a planetary instant payment system with the same amount and value of transactions as Visa, including fraud protection?
- kibwen 2y ago
  > If you think it costs zero dollars and we can just say "the internet is our payments system" and call it a day... well, I don't know what to tell you. If you can somehow manage draw this conclusion after reading my comment, then I'm not sure we're going to have a productive discussion.

by kibwen 2y ago

carlosjobim 2y ago

So if we lived in a perfect hacker paradise where there are no company profits or private property, what would be reasonable operating costs for maintaining an instant planetary payment system – including fraud insurance? Assuming the same amount of transactions as today?

poincaredisk 2y ago
I don't know, but in Europe the visa/mastercard charges are capped at 0.2% for debit cards and 0.3% for credit cards. This seems to be enough for them to continue operating.
- ThunderSizzle 2y ago
  Are there any European-based credit cards that have entered and competed in the American market, with it supposedly being so lucrative compared to Europe? I'd assume someone would've made that jump?
  - BobbyJo 2y ago
    I can't imagine Visa would continue to operate in Europe if it wasn't profitable, and I'm not surprised that there are no European competitors considering Visa has the highly profitable U.S. market to buoy their position in Europe.
    - ywvcbk 2y ago
      Building a new network from scratch would be extremely expensive with limited chance of success. Visa can certainly remain profitable even with the fee caps but I find it hard to imagine that they would try to enter the EU market if they had no presence in it and there were already several established competitors there these days.
    - nolok 2y ago
      I cannot speak for other country but VISA bought the Carte Bleue system in France un exchange of following all regulation and not upping the fees. For two decade before that and since then, all carte bleue are visa and vice versa. Mastercard exists here as a premium level card giving you tons of bonus, and usually fee with your account. Eg my bank account online is free and almost no fee for anything (I pay 9e for extra phone and wallet insurance and next day replacement), and as long as I keep more than 24k in the various accounts and give me a Gold+ visa card and a mastercard with 1% cashback.
  - ywvcbk 2y ago
    > any European-based credit cards Are/were there any in Europe to begin with? Eurocard made a deal with Mastercard in the 60s which made it impossible for them to enter the US market. Barclaycard, was as the name implies limited to a single bank. The were a few other systems that were mostly national and didn’t even expand into other European countries.

philwelch 2y ago

So carry cash then.

kibwen 2y ago
I do, in fact. Unfortunately, the push for cashlessness has made this impractical in many places, and as mentioned elsewhere in this thread the cost of handling cash isn't zero, which means that direct transfers via a FedNow-like mechanism have the opportunity to reduce costs for everyone involved.

kelnos 2y ago

> It would be an absurd amount for a payment system, yes, because we already have a secure worldwide communications network that we pay to maintain and there's nothing special about Visa's encrypted bits. Sure there is. Someone had to build the all the software that deals with those encrypted bits. Someone had to scale it up to handling tens (hundreds?) of billions of transactions per year, each one approved or declined within a few seconds. If you think it costs zero dollars and we can just say "the internet is our payments system" and call it a day... well, I don't know what to tell you. Your expectations are so far from reality that I'm not sure we're going to have a productive discussion.

cubefox 2y ago
The maintenance costs are probably closer to zero than to the current profit margins of the credit card companies. FedNow transfers are almost free after all. $0.043 per transaction according to Wikipedia.
- carlosjobim 2y ago
  Visa's operating costs in 2023 were $10-$11 billion, compared to their profit of $17-$18 billion. This is on a revenue of $32 billion.
  - cubefox 2y ago
    FedNow's operating cost must be multiple orders of magnitude lower.
    - carlosjobim 2y ago
      Would they be if FedNow had a planetary instant payment system with the same amount and value of transactions as Visa, including fraud protection?
kibwen 2y ago
> If you think it costs zero dollars and we can just say "the internet is our payments system" and call it a day... well, I don't know what to tell you. If you can somehow manage draw this conclusion after reading my comment, then I'm not sure we're going to have a productive discussion.