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Yea, I don't want to defend Visa, but a lot of their dominance came from network effects. Merchants want to accept Visa because it's what people have in their w

by mdasen 2y ago

Yea, I don't want to defend Visa, but a lot of their dominance came from network effects. Merchants want to accept Visa because it's what people have in their wallet. Customers want Visa because it's what merchants accept. That cycle keeps reinforcing itself. That's not to say that Visa hasn't worked toward favorable regulations, but the biggest problem with alternative payment networks (to Visa/MC/Discover/AMEX) is that most retailers don't take them which means most customers don't want to set them up. If most customers don't have those payment methods, there's little incentive for a merchant to setup those payment methods. With OpenAI, there isn't the same network effect. I don't care what LLM you're using or what LLM Walmart or anyone else is using. If Anthropic or Google start offering better/cheaper LLMs, companies can simply switch over. Maybe some integrations will need to be rewritten, but that's a lot easier than getting hundreds of millions of customers to sign up for something new. Plus, companies like Google are simply implementing the OpenAI API so that integrations don't have to be rewritten. By contrast, if another company launches a payment network, it isn't enough just to convince a company to switch. You need to convince millions of consumers to switch - which would require convincing enough companies to switch.

lesuorac 2y ago
> but the biggest problem with alternative payment networks (to Visa/MC/Discover/AMEX) is that most retailers don't take them Who? I thought it was just like Costco that didn't take Discover/Amex/MC due to Visa contract. Aren't all the credit card terminals pretty much from 3p vendors who support everything including Apple Pay + Square + etc?
- em500 2y ago
  In most of Europe and several large Asian cities I visited, AMEX and Discover acceptance is far lower than Visa/MC (which charge lower fees to merchants).
  - messe 2y ago
    AMEX/Discover is virtually unknown in most of Europe. Outside of US-defaultism, why in the world would anyone expect it to be accepted here?
    - gusgus01 2y ago
      Diner's Club is equivalent to Discover card and is at least somewhat present in European countries. I don't know official numbers but I've seen it often enough and have used it once or twice.
    - petesergeant 2y ago
      “Amex is virtually unknown in most of Europe” doesn’t match my experience. Most major European economies have AmEx and AmEx issues many local cards to them
    - lmz 2y ago
      Doesn't Discover have agreements with UnionPay and JCB?
    - awad 2y ago
      Fun fact: AMEX has been involved in international payments in one way or another for more than a 100 years and the AMEX card was the first international charge card, launched the same year as the original BofA Visa Card.
- SllX 2y ago
  Plenty of places don't take American Express or Discover even now, but most will usually take VISA and Mastercard. Costco's a weird one though because they resisted credit cards for a long time until they had their Amex contract with the dual-branded Costco Amex card, but then dropped them for a dual-branded VISA card in 2016.
delusional 2y ago
> Yea, I don't want to defend Visa, but a lot of their dominance came from network effects. I think it's worth noting that VISA is also really doing a pretty good job. Like the cards work. Here in Europe they seem eager to adopt emerging technology and are willing to invest to maintain their dominance. There's a ton of not so consumer friendly backroom deals with kickbacks for the banks and stuff, but the core product is roughly what consumers desire. A card that works almost 100% of the time without any difficulty. While simultaneously implementing and adopting whatever weird regulations get passed into law. They are, in my opinion, doing a decent job.
- rqtwteye 2y ago
  They aren't very vendor friendly and their fees are way too high. Little bit like Amazon. they are are consumer friendly at the expense of their vendors.
  - AlexandrB 2y ago
    > they are are consumer friendly at the expense of their vendors. Isn't this a winning formula because the consumer is the one spending the money? Imagine an opposite approach that was vendor-friendly at the expense of the consumer. I don't think most people would willingly use that. Back before Amazon, WalMart did the same thing[1] by squeezing their vendors to lower prices and passing (some of) the savings onto shoppers. [1] https://popularresistance.org/walmart-creates-a-race-to-the-bottom-throughout-the-supplyline/ https://popularresistance.org/walmart-creates-a-race-to-the-...
    - hattmall 2y ago
      They aren't mutually exclusive. They used to be merchant friendly.
  - fakedang 2y ago
    Compared to Stripe which charges 2-3% roughly, Visa/Mastercard gateways charge 0.3-0.5%. Not sure where the high fees argument comes from, or I'm misconstruing something here. Like an aforementioned comment stated above, their dominance is all about consumer convenience reinforcing vendor adoption. If you have an equally smooth payment process to compete against that, it will crumble. Case in point, India and UPI. Credit cards are largely used by the most affluent today, simply because UPI has become so prevalent for general transactions. UPI are actually a much easier way to carry out payments than credits cards are. But of course, American banking is ages away with even FedNow not having been implemented in any strong form whatsoever.

by mdasen 2y ago

lesuorac 2y ago

> but the biggest problem with alternative payment networks (to Visa/MC/Discover/AMEX) is that most retailers don't take them Who? I thought it was just like Costco that didn't take Discover/Amex/MC due to Visa contract. Aren't all the credit card terminals pretty much from 3p vendors who support everything including Apple Pay + Square + etc?

em500 2y ago
In most of Europe and several large Asian cities I visited, AMEX and Discover acceptance is far lower than Visa/MC (which charge lower fees to merchants).
- messe 2y ago
  AMEX/Discover is virtually unknown in most of Europe. Outside of US-defaultism, why in the world would anyone expect it to be accepted here?
  - gusgus01 2y ago
    Diner's Club is equivalent to Discover card and is at least somewhat present in European countries. I don't know official numbers but I've seen it often enough and have used it once or twice.
  - petesergeant 2y ago
    “Amex is virtually unknown in most of Europe” doesn’t match my experience. Most major European economies have AmEx and AmEx issues many local cards to them
  - lmz 2y ago
    Doesn't Discover have agreements with UnionPay and JCB?
  - awad 2y ago
    Fun fact: AMEX has been involved in international payments in one way or another for more than a 100 years and the AMEX card was the first international charge card, launched the same year as the original BofA Visa Card.
SllX 2y ago
Plenty of places don't take American Express or Discover even now, but most will usually take VISA and Mastercard. Costco's a weird one though because they resisted credit cards for a long time until they had their Amex contract with the dual-branded Costco Amex card, but then dropped them for a dual-branded VISA card in 2016.

delusional 2y ago

> Yea, I don't want to defend Visa, but a lot of their dominance came from network effects. I think it's worth noting that VISA is also really doing a pretty good job. Like the cards work. Here in Europe they seem eager to adopt emerging technology and are willing to invest to maintain their dominance. There's a ton of not so consumer friendly backroom deals with kickbacks for the banks and stuff, but the core product is roughly what consumers desire. A card that works almost 100% of the time without any difficulty. While simultaneously implementing and adopting whatever weird regulations get passed into law. They are, in my opinion, doing a decent job.

rqtwteye 2y ago
They aren't very vendor friendly and their fees are way too high. Little bit like Amazon. they are are consumer friendly at the expense of their vendors.
- AlexandrB 2y ago
  > they are are consumer friendly at the expense of their vendors. Isn't this a winning formula because the consumer is the one spending the money? Imagine an opposite approach that was vendor-friendly at the expense of the consumer. I don't think most people would willingly use that. Back before Amazon, WalMart did the same thing[1] by squeezing their vendors to lower prices and passing (some of) the savings onto shoppers. [1] https://popularresistance.org/walmart-creates-a-race-to-the-bottom-throughout-the-supplyline/ https://popularresistance.org/walmart-creates-a-race-to-the-...
  - hattmall 2y ago
    They aren't mutually exclusive. They used to be merchant friendly.
- fakedang 2y ago
  Compared to Stripe which charges 2-3% roughly, Visa/Mastercard gateways charge 0.3-0.5%. Not sure where the high fees argument comes from, or I'm misconstruing something here. Like an aforementioned comment stated above, their dominance is all about consumer convenience reinforcing vendor adoption. If you have an equally smooth payment process to compete against that, it will crumble. Case in point, India and UPI. Credit cards are largely used by the most affluent today, simply because UPI has become so prevalent for general transactions. UPI are actually a much easier way to carry out payments than credits cards are. But of course, American banking is ages away with even FedNow not having been implemented in any strong form whatsoever.