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Forget Google, time to end the Visa-MasterCard duopoly

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Re: Forget Google, time to end the Visa-MasterCard duopoly

#481

Post by matthewdgreen »

DevKoala wrote: post #372
dingaling wrote: post #337

Earlier quoted context omitted.

It's not financial responsibility or learning lessons, it's the fact that you consider earning cashback to be a reward for the ordeal you endured. By participating in the cashback scheme you're putting more people through that ordeal by means of higher fees. The only way to win is not to play.

I don't consider earning cash back to be a reward, but I see the credit card as a product that lends money based on a risk evaluation. At that moment in my life, the risk on lending me money was high and therefore the product I could access was limited. There was little incentive for the bank to risk lending me money, so I needed to purchase my way into rebuilding my credit. As the risk in lending me money decreased,…

The problem is that the credit card "lending money" function is not what transaction fees pay for, and these fees are paid by all market participants -- including cash customers. People should be able to separate the payment function of a credit card (which is what merchants pay transaction fees for) from the "line of credit" function that banks make money on. However, this scenario would be less profitable for the industry, and so a small cartel of payment card networks and operators have worked hard to jam the two functions together. As a result, everyone (including cash customers) is heavily penalized for merely participating in the economy, unless they also purchase a profitable and risky line of credit.

It's frankly a brilliant scam, and the fact that people don't think it's a scam is its most brilliant aspect.

Re: Forget Google, time to end the Visa-MasterCard duopoly

#482

Post by puszczyk »

cactus2093 wrote: post #471

You can’t talk about credit cards in isolation without considering the rest of the consumer finance sector in the US. A big part of the reasons credit cards rose to such prominence is that the banking and payment rails are so incredibly stupidly designed. The check system and ACH which is the highest volume way that money is sent between people with different banks requires you to give out the secret key every time y…

In Poland there’s really nice pay-by-link (you’re being redirected to your bank website, log-in, they display the merchants data and amount and you confirm it) and basically all the merchants support it. There’s also BLIK, which is a payment app started by a few banks which is gaining traction. This all is super convenient and easy to use.

However, I still prefer to use a credit card, because of the chargeback — the legal protections with credit cards are still higher.

—-

Edit: about “you’re paying the fees” — maybe, but most of the merchants don’t show different price or don’t charge extra for credit card payment. So why not use the IMHO better option if it costs me the same.

Re: Forget Google, time to end the Visa-MasterCard duopoly

#483

Post by matthewdgreen »

briandear wrote: post #237
matthewdgreen wrote: post #154

Earlier quoted context omitted.

In a properly competitive market the merchant doesn’t really get to keep it. Presumably they set their prices to a value that is X% higher than where they would normally set their prices without the need to pay transaction fees. If exactly half their business is paid in cash/debit and half in credit, then X might be set to something like half of the excess CC transaction fee. Then the credit card customers get to spl…

So get a rewards card. Some percentage of the sales taxes go to support programs I don’t agree with or use. And I can’t escape that. However, one could start a cash-only store if one wanted. You are also ignoring the cost of cash. Theft and cash handling isn’t a zero cost. Why should I, as a credit card user, be forced to subsidize losses due to cash handling? We could also talk shoplifting as well; policies that don…

You shouldn't be forced to subsidize anything. That's the whole point. At a minimum: the government should recognize the market power imbalance between card processors and small businesses, and ensure that the stores can set their own prices appropriately. If cash or debit is genuinely more expensive, let stores reflect that fact in their prices offered to consumers -- rather than prohibiting it via a contract they can't say "no" to.

Re: Forget Google, time to end the Visa-MasterCard duopoly

#484

Post by namdnay »

lmz wrote: post #435
hadrien01 wrote: post #428

Earlier quoted context omitted.

Why would renting agencies refuse debit cards? You get your money, just like credit cards...

My guess would be single message (debit) vs dual message systems. They probably want to hold / authorize a large amount first as insurance.

What's strange is that you can authorise on debit cards (at least french ones)...

Re: Forget Google, time to end the Visa-MasterCard duopoly

#485

Post by mediascreen »

paranoidrobot wrote: post #439
mediascreen wrote: post #377

Earlier quoted context omitted.

I think it differs a great deal between countries in the EU. I'm Swedish and I have an Amex card and most of my friends and colleagues use Amex as well. I use it for about 85% of my spending each month. The only places in Stockholm that don't accept it are smaller coffee shops, restaurants that don't get that many tourists and mom and pop stores. You could probably get by here with just an Amex card and cash, but I k…

Odd. I'd given up trying to use it by the time I got to Sweden. Your neighbours (Norway and Denmark) were unwilling to accept it. I forget which supermarkets I tried it in in both of those countries, but three large chains all had their card terminals reject it and the staff looked at it like I'd tried to use a hotel keycard or something.

The big adoption driver in Sweden is the Amex SAS Eurobonus card which lets you collect air miles with the card. It's one of the few cards in Sweden that lets you "game" a points system slightly.

Re: Forget Google, time to end the Visa-MasterCard duopoly

#486

Post by johnflan »

ballenf wrote: post #287
vxNsr wrote: post #284

Earlier quoted context omitted.

It’s also a fake one. As the other commenter said, the credit card system came about bec cash was very expensive to use for stores. They were passing along those costs to consumers, the fact that that’s now inverted by some stores (cash discounts) is only doable bec of the prevalence of credit cards. Stores need to accept cash regardless, so there’s still some minimal added costs to using cash, but even with the offe…

Germany is still way more cash-based and you see less consolidation of businesses into large chains than in the US. I'm not sure I buy "drowning in the same costs". I think there's something more akin to a prisoner's dilemma here.

The change in Ireland has been significant, it's made contactless be the default way to pay. I think it has removed the idea that something like a cup of coffee was too small to pay for via card/contactless. I don't think I have actually used cash in a number of months.

Before COVID one of the main banks AIB was to introduce some extra charges but they stopped that charge increase https://www.irishtimes.com/business/retail-and-services/aib-...

Re: Forget Google, time to end the Visa-MasterCard duopoly

#487

Post by [deleted] »

imtringued wrote: post #353
SenoraRaton wrote: post #269

Earlier quoted context omitted.

“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boot…

I have read the book when I was a child but seeing it everywhere on HN is starting to get on my nerves. There is a shorter way to get the idea across. "If you buy cheap you buy twice."

[deleted]

Re: Forget Google, time to end the Visa-MasterCard duopoly

#488

Post by fsckboy »

jedberg wrote: post #136
fsckboy wrote: post #66

Earlier quoted context omitted.

if you owe a business money, you can pay the debt in cash.

Yes, but you don't owe them any money if you want to buy something. From the link: "There is, however, no Federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services"

but if you are going to quibble and point out myths and misconceptions, why not just tell the whole story instead of half of it. If you eat in a restaurant, and they tell you "cards only", you owe them money, and your cash is good. "good for all debts, public and private" has a meaning that is not vitiated by a "no cash" policy.

Re: Forget Google, time to end the Visa-MasterCard duopoly

#489

Post by bitreality »

A major issue here is that payment processors literally choose which industries, and which players will succeed. If your industry is deemed high risk by payment processors, you are fighting a brutal battle to accept customer payments. If you can't process payments, you don't have a business. Conversions will drop off a cliff if you try to switch them to niche payment methods like crypto currency, or even something like Skrill.

Even worse, the payment processors do not apply their own ToS unilaterally. You'll find some websites will retain processing, while you lose it, even though the reason is that your business model is high risk. PayPal is notorious for this. Their ToS will only be enforced in certain countries, leaving companies in places like China with PayPal processing while your company is permanently banned from the platform.

It becomes impossible to compete if you are banned from Stripe & PayPal while your competitors are not. If their own rules are not applied equally across your industry, they effectively pick the winners. Their platform also favors long-standing merchants in many ways.

First by providing them an account manager, second by essentially grandfathering in certain accounts. You'll find it very difficult to process payments in certain industries on PayPal, likely not even being successful in on-boarding, while sites operating in the exact same business have functioning PayPal accounts.

It's incredibly anti-competitive. These processors run such a large scale monopoly; there are so few comparable alternatives, I've seen so many people go out of business purely by losing their PayPal.

Re: Forget Google, time to end the Visa-MasterCard duopoly

#490

Post by h91wka »

tappio wrote: post #462
h91wka wrote: post #456

Earlier quoted context omitted.

In Sweden they issue regular credit cards (my friend has one). Also, AFAIK, in Nordics they offer virtual card payments to merchants who don't integrate with them directly.

Sure, they have plenty of collaboration with both major card schemas. AFAIK, they do both acquiring and issuing. I don't think collaboration means that you can't compete with each other? Their most successful products in the EU are not using card tracks.

> I don't think collaboration means that you can't compete with each other?

I just don't think there's much room for competition when one party gently keeps another in a chokehold. Klarna depends on Visa, but not vice versa.

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