7 ms·

Surprisingly small contract. It's interesting to see that a full government contract for a payment provider is a fraction of a US mid-size company's cloud bill.

by arjie 5mo ago

Surprisingly small contract. It's interesting to see that a full government contract for a payment provider is a fraction of a US mid-size company's cloud bill. I am constantly surprised by things like this. Here's another: there are more foreigners in Taiwan (total pop. 25 m) than in China (total pop. 1.4 b).

toomuchtodo 5mo ago
Brazil's central bank operates their instant payment network Pix [1] [2] [3] for ~$10M/year [4]. Its not that these are small contracts, but that large, inefficient, unnecessary contracts have become the norm (I argue). Similar example from India's UPI payment system [5]. The US has FedNow to move instant payments for pennies, but banking and payment system participants in the US ecosystem are avoiding it to continue to private payment system rake [6] (cc networks, Zelle commercial bank network, private wallets, etc). The evidence is clear you don't need to skim 3% off of an economy to provide instant payment capabilities. The enterprise value of US payment companies is a function of how long they hold onto this volume for, when competition is ramping up. You're just pushing ISO 20022 XML messages around a bus. [1] https://en.wikipedia.org/wiki/Pix_(payment_system) https://en.wikipedia.org/wiki/Pix_(payment_system) [2] https://frontierfintech.substack.com/p/55-send-pix-brazils-instant-payment https://frontierfintech.substack.com/p/55-send-pix-brazils-i... [3] https://brazilstockguide.com/behind-the-lines/the-cost-of-pix/ https://brazilstockguide.com/behind-the-lines/the-cost-of-pi... > This makes the American dispute more sophisticated than it may first appear. Pix certainly puts pressure on private payment models, card networks and acquirers. It also reduces friction for consumers, small businesses and person-to-person transfers. But its deeper effect is institutional. It turns the bank deposit into an even more efficient payment instrument — and, by doing so, changes the role of banks in liquidity intermediation. > There is an irony here. For decades, the United States built the narrative of private financial innovation. Brazil, through a public, interoperable and massively adopted system, produced one of the world’s most efficient payment infrastructures. The study notes how unusual Pix adoption was: more than 150 million users in its first year, use by nine out of ten small businesses, and daily volumes capable of reaching about 1% of annual GDP on a single peak day. > The reading should not be triumphalist. Pix is a powerful innovation, but it is not cost-free for the financial system. It improves the user experience, reduces transaction costs and increases competition in payments. At the same time, it requires banks to hold more liquidity and may reduce the transformation of deposits into credit. For the United States, Pix appears as a digital-trade issue. For Brazil, it is a question of financial sovereignty. For banks, it is a question of liquidity. Pix began as a button inside an app. It became a piece of financial policy — and now, of geopolitics. [4] https://news.ycombinator.com/item?id=44753626 https://news.ycombinator.com/item?id=44753626 [5] https://en.wikipedia.org/wiki/Unified_Payments_Interface https://en.wikipedia.org/wiki/Unified_Payments_Interface [6] https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=fednow&sort=byDate&type=story https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
- actapp80 5mo ago
  don't centralized payment systems like this reduce the overall resilience of the ecosystem and prevent future innovation? You hint on those lines with the possible future transformation of deposits into credit. Why doesn't the US private ecosystem manage to lower costs similarly? (Zelle comes to mind). It is interesting that this has happened in more highly regulated countries where the free market likely could not have come up with a cheaper solution on their own due to the same overbearing system that effectively forces adoption of this centralized solution.
  - toomuchtodo 5mo ago
    All payment systems are centralized. Zelle is owned by the largest US commercial banks ("Early Warning Services"), Congress directed the Federal Reserve to build and offer FedNow as a utility so smaller banks would not be excluded from offering instant payments. It costs $~30/month (last I checked the rate sheet) to plug into it. The instant payments are the utility, your opportunity to innovate is using this as a component of your user experience. Propose some innovation here, I am interested, as someone adjacent to payments in financial services. Besides instant payments, the most we've seen is closed wallets (Venmo, Cash App) no longer needed with broad instant payment access from most demand deposit accounts and Buy Now Pay Later (BNPL) (and I argue BNPL is simply dressing revolving credit card debt up as innovation). > Why doesn't the US private ecosystem manage to lower costs similarly? (Zelle comes to mind). It is interesting that this has happened in more highly regulated countries where the free market likely could not have come up with a cheaper solution on their own due to the same overbearing system that effectively forces adoption of this centralized solution. Because it is a grift ("regulatory capture") [1] [2]. The "overbearing system" is the result of regulation to bring the consumer excess of cheap payments to an entire country's financial user population. Why does Jamie Dimon not like stablecoin yield [3]? Because JPMC makes almost $100B/year in interest income taking customer deposits and lending against them, which stablecoins would compete against by operating as a form of narrow bank, parking the underlying deposits in risk free US Treasuries [4]. As a US financial services consumer, it is hard for you to avoid the rake of the machine built to skim off of you as you hold onto fiat or move it, but the rest of the world can avoid being captured by it (as this piece demonstrates). Also, Europe can't regulate Stripe as easily as they can Adyen. You don't have to be the biggest or the greatest, it just has to work "good enough". [1] https://www.thebignewsletter.com/p/the-109-billion-bank-hustle https://www.thebignewsletter.com/p/the-109-billion-bank-hust... [2] https://www.thebignewsletter.com/p/the-cantillon-effect-and-credit-cards https://www.thebignewsletter.com/p/the-cantillon-effect-and-... [3] https://www.politico.com/news/2026/05/29/dimon-jpmorgan-crypto-banks-coinbase-armstrong-00942998 https://www.politico.com/news/2026/05/29/dimon-jpmorgan-cryp... [4] https://news.ycombinator.com/item?id=48331082 https://news.ycombinator.com/item?id=48331082
testfrequency 5mo ago
Why bring up Taiwan and China? This feels incredibly cherry picked? If you know Taiwan’s history, and you understand China - there’s no surprise to be..
- arjie 5mo ago
  Well, obviously it’s cherry-picked. It’s an example of something that challenges my intuition. Most things align with my intuition because I’m in my late 30s and have seen enough of the world to have a fairly good idea of the rough numbers. Here’s another one: the London Underground is older than the telephone. There’s a light board game called Timeline where you have stuff like this and there are so many surprises. Temporal stuff is hard to reason about and the game catches that. But with large numbers one loses intuition easily: NYC’s subway vs. all domestic and international US air travel is closer in total passengers than one would think. The median American did not fly last year. Stuff like this. It’s just Gladwell-fodder but numerically fun.
  - testfrequency 5mo ago
    I misinterpreted your intent here, and that’s on me. Thank you for explaining, you clearly picked the sample as a comparison of fact, not as narrative. Apologies
- chrncirurp 5mo ago
  > Why bring up Taiwan and China? This feels incredibly cherry picked? It’s because many times the obvious intuition is incorrect He could’ve compared Singapore and China too
morog 5mo ago
[dead]
colechristensen 5mo ago
Payment processing costs are a scam. They're 10x as expensive as they need to be to fund rewards programs and fund the financial system. EU max credit card transaction fees are 0.3%, in the US they can be up to 4%. It just doesn't cost 4% of a transaction to handle the exchange of funds. Just wealth transfer to finance people and the upper class who take advantage of credit card perks.
- fragmede 5mo ago
  Except in the US, it does. Depending on the card, it can cost as much as 4.5% (or more!) to run the card. You can argue that it shouldn't, but that's a different statement than it doesn't.
  - colechristensen 5mo ago
    uh, I'm including the card issuers as participants in this multi-party scam
    - bijowo1676 5mo ago
      it is illegal for Merchants to charge credit card processing fees by law, they have to absorb these fees and cannot display them to the customer. This naturally protects the artificial oligopoly of visa/mc/discover systems. The moment you allow Merchants to charge cc fees (even 2-3%) and allow customer to choose low processing option (ACH/debit card/cash), the whole scheme falls apart and Visa/MC will slowly go bankrupt
      - colechristensen 5mo ago
        >it is illegal for Merchants to charge credit card processing fees by law, This is only true in 4 states.
        bijowo1676 5mo ago
        the typical Merchant<->bank agreements all have clauses forcing them to absorb these fees and explicitly barring them from separately charging customer CC fee. and most small/med businesses dont have clout to protest that, so they have to accept these terms in order to earn money
matt-p 5mo ago
Interchange average in the UK was about 0.2% last time I looked (which was a few years ago), it't not much anyway. Also the government doesn't really do card transactions. I imagine this is for fairly rare things like renewing your passport, booking a driving test or buying a title copy. Oh and visa fees maybe? Small beer anyway, it's not like people are paying taxes via card.
- harvey9 5mo ago
  Road fund licence aka car tax is probably the most common thing that lots of people pay for regularly.
  - ndsipa_pomu 5mo ago
    In the UK, the so-called car tax is an emissions tax (i.e. electric vehicles pay £0) and doesn't pay for road maintenance etc. Roads are paid for out of general taxation (e.g. income tax). Actual road tax ended in 1937. I feel this is worth correcting as "don't bloody pay road tax" is a common form of abuse aimed at cyclists which is wrong on a number of levels. A lot of cyclists also drive a car and non-driving cyclists would fund roads if they pay tax. Another way to think about it is that the emissions tax for cycles would be zero anyway.
    - elFarto 5mo ago
      The tax for electric cars is normally £200 after the first year or £20 for electric cars older than 2017.
      - ndsipa_pomu 5mo ago
        Ah yes - looks like they changed it in 2025.
- TreeInBuxton 5mo ago
  Depends on the tax - I pay my vehicle tax through the gov.uk website!
Magnets 5mo ago
If £8m/year is a fraction of a mid-size company cloud budget, I don't think you can class them as "mid-size"
- ExoticPearTree 5mo ago
  Mid-size in the US is comparable to a large european company, so yeah... mid-size. I'm with a rather small company (~ 250 people) in the US and we pay about $1,2mm-1,4mm yearly on GCP alone.
  - zipy124 5mo ago
    Note that in the EU and UK mid-size has a definition: "fewer than 250 employees and a turnover of under €50 million (or a balance sheet total below €43 million)" Thus by definition that company wouldn't be mid-sized over here anyway. edit: in-fact after checking even in the US, the IRS for example declares a large business as one with more than 10 million in assets, though there is no set rule like in the EU to be used by other gov orgs.

by arjie 5mo ago

toomuchtodo 5mo ago

Brazil's central bank operates their instant payment network Pix [1] [2] [3] for ~$10M/year [4]. Its not that these are small contracts, but that large, inefficient, unnecessary contracts have become the norm (I argue). Similar example from India's UPI payment system [5]. The US has FedNow to move instant payments for pennies, but banking and payment system participants in the US ecosystem are avoiding it to continue to private payment system rake [6] (cc networks, Zelle commercial bank network, private wallets, etc). The evidence is clear you don't need to skim 3% off of an economy to provide instant payment capabilities. The enterprise value of US payment companies is a function of how long they hold onto this volume for, when competition is ramping up. You're just pushing ISO 20022 XML messages around a bus. [1] https://en.wikipedia.org/wiki/Pix_(payment_system) https://en.wikipedia.org/wiki/Pix_(payment_system) [2] https://frontierfintech.substack.com/p/55-send-pix-brazils-instant-payment https://frontierfintech.substack.com/p/55-send-pix-brazils-i... [3] https://brazilstockguide.com/behind-the-lines/the-cost-of-pix/ https://brazilstockguide.com/behind-the-lines/the-cost-of-pi... > This makes the American dispute more sophisticated than it may first appear. Pix certainly puts pressure on private payment models, card networks and acquirers. It also reduces friction for consumers, small businesses and person-to-person transfers. But its deeper effect is institutional. It turns the bank deposit into an even more efficient payment instrument — and, by doing so, changes the role of banks in liquidity intermediation. > There is an irony here. For decades, the United States built the narrative of private financial innovation. Brazil, through a public, interoperable and massively adopted system, produced one of the world’s most efficient payment infrastructures. The study notes how unusual Pix adoption was: more than 150 million users in its first year, use by nine out of ten small businesses, and daily volumes capable of reaching about 1% of annual GDP on a single peak day. > The reading should not be triumphalist. Pix is a powerful innovation, but it is not cost-free for the financial system. It improves the user experience, reduces transaction costs and increases competition in payments. At the same time, it requires banks to hold more liquidity and may reduce the transformation of deposits into credit. For the United States, Pix appears as a digital-trade issue. For Brazil, it is a question of financial sovereignty. For banks, it is a question of liquidity. Pix began as a button inside an app. It became a piece of financial policy — and now, of geopolitics. [4] https://news.ycombinator.com/item?id=44753626 https://news.ycombinator.com/item?id=44753626 [5] https://en.wikipedia.org/wiki/Unified_Payments_Interface https://en.wikipedia.org/wiki/Unified_Payments_Interface [6] https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=fednow&sort=byDate&type=story https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...

actapp80 5mo ago
don't centralized payment systems like this reduce the overall resilience of the ecosystem and prevent future innovation? You hint on those lines with the possible future transformation of deposits into credit. Why doesn't the US private ecosystem manage to lower costs similarly? (Zelle comes to mind). It is interesting that this has happened in more highly regulated countries where the free market likely could not have come up with a cheaper solution on their own due to the same overbearing system that effectively forces adoption of this centralized solution.
- toomuchtodo 5mo ago
  All payment systems are centralized. Zelle is owned by the largest US commercial banks ("Early Warning Services"), Congress directed the Federal Reserve to build and offer FedNow as a utility so smaller banks would not be excluded from offering instant payments. It costs $~30/month (last I checked the rate sheet) to plug into it. The instant payments are the utility, your opportunity to innovate is using this as a component of your user experience. Propose some innovation here, I am interested, as someone adjacent to payments in financial services. Besides instant payments, the most we've seen is closed wallets (Venmo, Cash App) no longer needed with broad instant payment access from most demand deposit accounts and Buy Now Pay Later (BNPL) (and I argue BNPL is simply dressing revolving credit card debt up as innovation). > Why doesn't the US private ecosystem manage to lower costs similarly? (Zelle comes to mind). It is interesting that this has happened in more highly regulated countries where the free market likely could not have come up with a cheaper solution on their own due to the same overbearing system that effectively forces adoption of this centralized solution. Because it is a grift ("regulatory capture") [1] [2]. The "overbearing system" is the result of regulation to bring the consumer excess of cheap payments to an entire country's financial user population. Why does Jamie Dimon not like stablecoin yield [3]? Because JPMC makes almost $100B/year in interest income taking customer deposits and lending against them, which stablecoins would compete against by operating as a form of narrow bank, parking the underlying deposits in risk free US Treasuries [4]. As a US financial services consumer, it is hard for you to avoid the rake of the machine built to skim off of you as you hold onto fiat or move it, but the rest of the world can avoid being captured by it (as this piece demonstrates). Also, Europe can't regulate Stripe as easily as they can Adyen. You don't have to be the biggest or the greatest, it just has to work "good enough". [1] https://www.thebignewsletter.com/p/the-109-billion-bank-hustle https://www.thebignewsletter.com/p/the-109-billion-bank-hust... [2] https://www.thebignewsletter.com/p/the-cantillon-effect-and-credit-cards https://www.thebignewsletter.com/p/the-cantillon-effect-and-... [3] https://www.politico.com/news/2026/05/29/dimon-jpmorgan-crypto-banks-coinbase-armstrong-00942998 https://www.politico.com/news/2026/05/29/dimon-jpmorgan-cryp... [4] https://news.ycombinator.com/item?id=48331082 https://news.ycombinator.com/item?id=48331082

testfrequency 5mo ago

Why bring up Taiwan and China? This feels incredibly cherry picked? If you know Taiwan’s history, and you understand China - there’s no surprise to be..

arjie 5mo ago
Well, obviously it’s cherry-picked. It’s an example of something that challenges my intuition. Most things align with my intuition because I’m in my late 30s and have seen enough of the world to have a fairly good idea of the rough numbers. Here’s another one: the London Underground is older than the telephone. There’s a light board game called Timeline where you have stuff like this and there are so many surprises. Temporal stuff is hard to reason about and the game catches that. But with large numbers one loses intuition easily: NYC’s subway vs. all domestic and international US air travel is closer in total passengers than one would think. The median American did not fly last year. Stuff like this. It’s just Gladwell-fodder but numerically fun.
- testfrequency 5mo ago
  I misinterpreted your intent here, and that’s on me. Thank you for explaining, you clearly picked the sample as a comparison of fact, not as narrative. Apologies
chrncirurp 5mo ago
> Why bring up Taiwan and China? This feels incredibly cherry picked? It’s because many times the obvious intuition is incorrect He could’ve compared Singapore and China too

morog 5mo ago

[dead]

colechristensen 5mo ago

Payment processing costs are a scam. They're 10x as expensive as they need to be to fund rewards programs and fund the financial system. EU max credit card transaction fees are 0.3%, in the US they can be up to 4%. It just doesn't cost 4% of a transaction to handle the exchange of funds. Just wealth transfer to finance people and the upper class who take advantage of credit card perks.

fragmede 5mo ago
Except in the US, it does. Depending on the card, it can cost as much as 4.5% (or more!) to run the card. You can argue that it shouldn't, but that's a different statement than it doesn't.
- colechristensen 5mo ago
  uh, I'm including the card issuers as participants in this multi-party scam
  - bijowo1676 5mo ago
    it is illegal for Merchants to charge credit card processing fees by law, they have to absorb these fees and cannot display them to the customer. This naturally protects the artificial oligopoly of visa/mc/discover systems. The moment you allow Merchants to charge cc fees (even 2-3%) and allow customer to choose low processing option (ACH/debit card/cash), the whole scheme falls apart and Visa/MC will slowly go bankrupt
    - colechristensen 5mo ago
      >it is illegal for Merchants to charge credit card processing fees by law, This is only true in 4 states.
      - bijowo1676 5mo ago
        the typical Merchant<->bank agreements all have clauses forcing them to absorb these fees and explicitly barring them from separately charging customer CC fee. and most small/med businesses dont have clout to protest that, so they have to accept these terms in order to earn money

matt-p 5mo ago

Interchange average in the UK was about 0.2% last time I looked (which was a few years ago), it't not much anyway. Also the government doesn't really do card transactions. I imagine this is for fairly rare things like renewing your passport, booking a driving test or buying a title copy. Oh and visa fees maybe? Small beer anyway, it's not like people are paying taxes via card.

harvey9 5mo ago
Road fund licence aka car tax is probably the most common thing that lots of people pay for regularly.
- ndsipa_pomu 5mo ago
  In the UK, the so-called car tax is an emissions tax (i.e. electric vehicles pay £0) and doesn't pay for road maintenance etc. Roads are paid for out of general taxation (e.g. income tax). Actual road tax ended in 1937. I feel this is worth correcting as "don't bloody pay road tax" is a common form of abuse aimed at cyclists which is wrong on a number of levels. A lot of cyclists also drive a car and non-driving cyclists would fund roads if they pay tax. Another way to think about it is that the emissions tax for cycles would be zero anyway.
  - elFarto 5mo ago
    The tax for electric cars is normally £200 after the first year or £20 for electric cars older than 2017.
    - ndsipa_pomu 5mo ago
      Ah yes - looks like they changed it in 2025.
TreeInBuxton 5mo ago
Depends on the tax - I pay my vehicle tax through the gov.uk website!

Magnets 5mo ago

If £8m/year is a fraction of a mid-size company cloud budget, I don't think you can class them as "mid-size"

ExoticPearTree 5mo ago
Mid-size in the US is comparable to a large european company, so yeah... mid-size. I'm with a rather small company (~ 250 people) in the US and we pay about $1,2mm-1,4mm yearly on GCP alone.
- zipy124 5mo ago
  Note that in the EU and UK mid-size has a definition: "fewer than 250 employees and a turnover of under €50 million (or a balance sheet total below €43 million)" Thus by definition that company wouldn't be mid-sized over here anyway. edit: in-fact after checking even in the US, the IRS for example declares a large business as one with more than 10 million in assets, though there is no set rule like in the EU to be used by other gov orgs.