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Make an order that any service which holds your money for spending with them (starbucks app, giftcards, ez-pass) has to pay you interest at the benchmark rate (
by Workaccount2 9mo ago
Make an order that any service which holds your money for spending with them (starbucks app, giftcards, ez-pass) has to pay you interest at the benchmark rate (or BM - 0.25%, something small).
It's such a money maker but no one complains because they either don't know it's happening or don't care enough to say something. But 1 million people with $10 in their account will generate $1,000/day in free money for the holder.
- gruez 9mo ago>has to pay you interest at the benchmark rate (or BM - 0.25%, something small). Deposit accounts at most banks pay you less than that, so it's unclear why you'd want gift cards to pay that much. Not to mention that turning gift cards into essentially bank accounts is going to create even more issues. Remember how we have to remind people how paypal isn't a bank? Or how would you calculate income taxes from the interest?
- moooo99 9mo ago> Not to mention that turning gift cards into essentially bank accounts is going to create even more issues. Remember how we have to remind people how paypal isn't a bank? I would have thought the intention with such regulation as proposed by the original commenter would be that apps specifically stop offering such functionality?
- gruez 9mo agoThen why not just ban gift cards outright?
- mulmen 9mo agoBecause they’re useful and well liked by consumers?
- lxgr 9mo agoWho actually likes gift cards, as in, would still use them despite better alternatives existing? If giving/receiving cash wasn't already illegal or socially unacceptable, gift card issuers would have started lobbying for that yesterday. Other than that original use case, many people use them as a form of poorly functional digital cash (since it's not fungible across issuers) that really ought to exist natively in a currency these days.
- deleted 9mo ago[deleted]
- compsciphd 9mo agoI regularly got dunkin donuts, starbucks and the like gift cards for less the face value (sometimes half of face) and therefore strongly preferred using them when I shopped at those stores (at least when I had a balance).
- NewJazz 9mo agoBanks provide services that people want. Gift cards are for people who think it is tacky to gift cash/check but for some reason find plastic less tacky than paper. Income taxes are easy. 1099-INT. Your bank gives you one, your brokerage gives you one, and your escrow account gives you one.
- gruez 9mo ago>Income taxes are easy. 1099-INT. You think people are going to diligently collect all the 1099-INT forms for all the cards scattered around the house? If you forgot about a gift card, are you suddenly a tax evader?
- dsr_ 9mo agoOther direction: the entity giving you the income is responsible for supplying the 1099-INT statement in January. That said, they could be required to supply a copy electronically directly to the IRS and the IRS could calculate your taxes for you. Change the responsibility for correctness from the taxpayer to the government, and offer an incentive to catch a mistake.
- gruez 9mo ago>Other direction: the entity giving you the income is responsible for supplying the 1099-INT statement in January. How does that work when gift cards aren't registered to anybody, and can be transferred between people without the issuer knowing about it?
- NewJazz 9mo agoOK fair enough
- Workaccount2 9mo agoThe goal is to kill those payment schemes which mostly exist for exactly the reason I laid out. Sell a product for $7 but only allow "recharge" in $5 increments. It pretty much guarantees that you will have tons of accounts with random dollar amounts laying around in them, never to be used. Even for regular gift cards, the counter party would be beholden to honoring them at their full value, as they should. Besides, nothing it stopping you from rolling monthly treasuries and using those as a bank. Something people with enough money to exploit this proposed "gift card bank" would almost surely already be aware of.
- stouset 9mo agoWouldn’t it be better to try to kill those payment schemes directly?
- lxgr 9mo agoOn the other hand, microtransactions are horrendously expensive due to fixed per-transaction fees (at least using credit and debit cards), so some business models are simply not viable without stored value cards or accounts.
- Workaccount2 9mo agoIt's totally viable and trivially possible to just payout earned interest to these accounts. You can still issue giftcards, it's just no longer passively profitable to do so.
- lxgr 9mo agoIt's probably nontrivial anywhere interest income is taxed, but even more so in the US with its non-flat interest tax scheme (it's taxed as ordinary income at the federal level, with an income-dependent rate).
- wbshaw 9mo agoI don't understand why you couldn't just use up the balance and then pay the balance due via another method. I do it all the time. I believe the real scheme is how many gift cards never get redeemed at all.
- samrus 9mo agoIts not supposed to generate revenue, its supposed to shift the cost to the corporarions that are abusing this loophole, and hopefully lead to them not abusing it in the future. Like how high taxes on cigarettes arent meant to make money, theyre meant make smokers pay for burdening the healthcare system and society with their vice, and hopefully make it prohibitively expensive for them to continie doing it, or for someone new to start
- fooker 9mo agoThe amount of government effort wasted in implementing this will be more than what users will get out of it in current savings interest rates.
- mulmen 9mo agoDon’t limit yourself to first order thinking. The proposed interest payment disincentivizes companies from seeking carried balances. Companies will implement refund mechanisms and streamline dark patterns at their own expense to avoid paying the interest.
- fooker 9mo agoI'd stick to first order thinking, thanks. It's easy to get things wrong trying to do second order thinking, or just make things up. There's no reason to believe companies would do as you say. There are several other options, including choosing different financial vehicles to store the users money, implementing even more dark patterns to store N% more money so they are even, or can improve their returns over the status quo.
- mulmen 9mo agoYour entire second paragraph is second order. You can’t just ignore consequences in a policy debate.
- fooker 9mo agoyes, my second paragraph is second order to explain how there can be many many possibilities, not the one you wish would happen. > You can’t just ignore consequences in a policy debate. Consequences of consequences though, you can route almost any argument to any conclusion you want :)
- HDThoreaun 9mo agoThis sounds simple but in reality creates a huge regulatory burden so that people can have an extra 10 cents a year. In chicago we passed a law that says landlords have to pay interest on security deposits. Guess what happened? Every single landlord moved to move in fees instead. Now instead of getting your deposit back renters just have to pay thousands of dollars to move. This law without a doubt made life worse for basically every renter in the city
- kklisura 9mo ago> This law without a doubt made life worse for basically every renter in the city Let me fix this for you: LANDLORDS made life worse for basically every renter in the city
- tptacek 9mo agoEverybody responds to incentives, so, no, this is an instance where lawmakers also share responsibility for outcomes.
- tptacek 9mo agoI don't know, I can tell a story about how fixed move-in fees are better than security deposits, even though you always pay the fee and sometimes get the deposit back. The fixed fee is part of the price of the apartment, and has to react to market conditions. The security deposit is basically a lie told to renters.
- baby 9mo agoI'm not sure what's the problem here. There are two things that could be impacted by your proposal: 1. Gift cards. Users want gift cards so it doesn't make sense to penalize companies for that (by forcing them to complexify their codebase and finances) 2. Top-up cards. I haven't really seen dark patterns here. You're usually not forced to use these as far as I've seen, and are usually rewarded if you do (accumulate points, get free stuff)
- z2 9mo agoMaybe draw a distinction between gift cards that users purchased, versus ones that the user didn't actually want, like credits from refunds that really should have come back as cash. And given the gift card balances going unused and eventually recognized as profits, paying interest across the board seems financially feasible and perhaps even more optimal.
- baby 9mo agoI don't think any of these are targeted by Mamdani (and I don't think they should)
- lxgr 9mo agoDo people really want (to receive) gift cards? I find them incredibly annoying. They're thinly veiled, unergonomic cash.
- fragmede 9mo agoIt's a cultural thing. Giving someone cash is seen as a lazy gift, but if I take a second and buy you a gift card to a store that my stereotype of you in my head shops at, I'm thoughtful.
- lxgr 9mo agoYeah, I realize it's a cultural thing, but I still think it sucks. I find receiving a Starbucks gift card much less thoughtful than a greetings card, with or without a banknote included. The worst are these Visa/Mastercard gift cards that are popular in the US: Often horrendously expensive to the buyer and cash-equivalent to the receiver at best, and broken or scammed and causing them further frustration and possibly monetary losses at worst.
- gadders 9mo agoAnd if the gift card expires, the funds get returned to the original purchaser or it goes into escheat.
- compsciphd 9mo agothe vast majority of gift card schemes allow you to get money into those systems at much less then the face value of the cards. This would kill that. the only gift cards that sell for basically face value are walmart and amazon. Almost every other card type I've regularly seen significant discounts for.