Debit cards are hidden financial infrastructure • Hacker News Board

Re: Debit cards are hidden financial infrastructure

#71

Post by numair » Sat, Nov 13, 2021, 3:02 AM UTC

mherdeg wrote: post #56

numair wrote: post #43

The beginning of this article is a fairy tale that ignores what used to be one of the biggest drivers of revenue for banks: overdraft fees. Maybe the HN crowd has never been in a situation where they were auto-billed into a negative balance, which then caused an overdraft fee that then further drove their balance into negative territory, but this was a weekly/monthly fiasco for millions of Americans. I was once in a…

It's not just overdraft fees right? It's overdraft fees plus transaction reordering which makes the magic happen. I'm still kind of mesmerized on this one, it felt like regulatory action almost happened, the most lucrative of the overdraft practices got limited circa 2009/2010, and then banks voluntarily toned it down and the regulators mostly looked the other way on things like reordering?

Thanks for reminding me about reordering. There were (are?) just so many dirty tricks. It’s been a couple years since I’ve lived in the US, so I am not aware of what things look like now — hopefully others can comment.

Re: Debit cards are hidden financial infrastructure

#72

Post by numair » Sat, Nov 13, 2021, 3:03 AM UTC

DaiPlusPlus wrote: post #65

numair wrote: post #43

The beginning of this article is a fairy tale that ignores what used to be one of the biggest drivers of revenue for banks: overdraft fees. Maybe the HN crowd has never been in a situation where they were auto-billed into a negative balance, which then caused an overdraft fee that then further drove their balance into negative territory, but this was a weekly/monthly fiasco for millions of Americans. I was once in a…

> “doing a service for the community” Go on then... what was their argument?

There is Congressional testimony somewhere on this topic that provides their talking points. They were scolded without being actually punished, if I remember correctly.

Re: Debit cards are hidden financial infrastructure

#73

Post by dukeyukey » Sat, Nov 13, 2021, 3:05 AM UTC

kingcharles wrote: post #13

chrisseaton wrote: post #7

Earlier quoted context omitted.

> a check cashing place taking 3% of people's paychecks You have to pay to deposit your pay in the US?

If it is a physical check (cheque), then often, yes.

Damn

Re: Debit cards are hidden financial infrastructure

#74

Post by TingPing » Sat, Nov 13, 2021, 3:05 AM UTC

toomuchtodo wrote: post #24

kingcharles wrote: post #17

Earlier quoted context omitted.

Absolutely, but there are so many people in the USA that are excluded from the ability to obtain a credit card - even a secured one - that debit cards are a god send to us. Both Cash App and Venmo sent me debit cards without requiring any ID.

Even though you didn’t provide ID, I assume you provided a name, address, and other info they could use to perform KYC (Know your customer), no?

Name and address, yes. Kinda needed to send a card anyway.

Re: Debit cards are hidden financial infrastructure

#75

Post by raegis » Sat, Nov 13, 2021, 3:06 AM UTC

Spooky23 wrote: post #57

Lammy wrote: post #46

Earlier quoted context omitted.

My credit score goes down unless I carry some revolving balance.

No, that’s not how it works.

It's a little complicated. My credit score has been consistently higher than my wife's score, and but she has never carried a credit card balance in her life. You get high credit score marks for making banks money, but not borrowing so much that they get nervous.

Re: Debit cards are hidden financial infrastructure

#76

Post by eyelidlessness » Sat, Nov 13, 2021, 3:08 AM UTC

numair wrote: post #43

The beginning of this article is a fairy tale that ignores what used to be one of the biggest drivers of revenue for banks: overdraft fees. Maybe the HN crowd has never been in a situation where they were auto-billed into a negative balance, which then caused an overdraft fee that then further drove their balance into negative territory, but this was a weekly/monthly fiasco for millions of Americans. I was once in a…

Overdrafts were the second thing that came to mind, a decade into clawing my way out of poverty and just plain being broke.

The first was the scam of debit cards and secured credit cards being treated fundamentally differently. They both operate basically the same way for customers (you’re only spending your own money, it’s not credit in the lending sense), but debit cards are a profit center with no credit reporting for the customer and secured credit cards can be recommended or not in any discriminatory way anyone wants (which they are).

Re: Debit cards are hidden financial infrastructure

#77

Post by latchkey » Sat, Nov 13, 2021, 3:11 AM UTC

In Vietnam, even the 'credit cards' are 'debt cards'. There is no concept of a credit score there (or a legal way to really make people pay up a debt), so they came up with this work around. To get a credit card, you have to carry the total amount of 'credit' as a time deposit in your account that you can't touch.

Re: Debit cards are hidden financial infrastructure

#78

Post by rp1 » Sat, Nov 13, 2021, 3:11 AM UTC

eyelidlessness wrote: post #76

numair wrote: post #43

The beginning of this article is a fairy tale that ignores what used to be one of the biggest drivers of revenue for banks: overdraft fees. Maybe the HN crowd has never been in a situation where they were auto-billed into a negative balance, which then caused an overdraft fee that then further drove their balance into negative territory, but this was a weekly/monthly fiasco for millions of Americans. I was once in a…

Overdrafts were the second thing that came to mind, a decade into clawing my way out of poverty and just plain being broke. The first was the scam of debit cards and secured credit cards being treated fundamentally differently. They both operate basically the same way for customers (you’re only spending your own money, it’s not credit in the lending sense), but debit cards are a profit center with no credit reporting…

What do you mean by secured credit cards can be recommended is any discriminatory way? I definitely think the nation should prioritize financial literacy in the education system, but I'm not sure you should be trusting any information you get from a bank regarding what to do with your money.

Re: Debit cards are hidden financial infrastructure

#79

Post by victor106 » Sat, Nov 13, 2021, 3:13 AM UTC

> The government’s current target is 40% of the payments mix, about double the current amount, which would put it on parity with the present state of play in the U.S. (and behind Asian peer nations, at around 50%)

It’s shocking that still about 50% is cash based.(if I am reading that right)

Re: Debit cards are hidden financial infrastructure

#80

Post by smabie » Sat, Nov 13, 2021, 3:13 AM UTC

p2t2p wrote: post #48

aynyc wrote: post #4

Use credit card, it’s the card issuers that are on the hook for fraud. It’ll help you build credit. Use debit when you don’t have the means or credit history.

Australian here. Don’t use credit card, setup a separate account for bills, direct debit everything from there, don’t keep anything big on your debit card and use it with Apple Pay everywhere. No fraud, no fees, no complex things and rules to remember.

Why would you ever not want to put something on a cc? It's quite literally free money (rewards/points + you can delay payments for a month and pay no interest)