Debit cards are hidden financial infrastructure

Post by okwubodu » Sat, Nov 13, 2021, 3:49 AM UTC

lotsofpulp wrote: post #86

kccqzy wrote: post #59

> Typically, the apps offer their users a choice: payouts at the speed of banking, for free, or payouts at the speed of the Internet, for a small convenience fee. Cash App charges 1.5% with a minimum of a quarter. This is just another way the financial system (including fintech startups) preys on the poor. If you are well off, you wouldn't want to pay any convenience fee for the privilege of receiving money from a bu…

> This is just another way the financial system (including fintech startups) prey on the poor. This is the way a government preys on the poor by not making electronic transfer of money a utility. The businesses are just doing business, no one sets out and says I want to screw the poor. The prices simply reflect the risks to the business. If society wants to subsidize those risks for the poor, then it should by creati…

Post by Aerroon » Sat, Nov 13, 2021, 3:51 AM UTC

klipt wrote: post #102

rjzzleep wrote: post #81

Earlier quoted context omitted.

What's transaction reordering? 1. have $10 in your checking 2. pay $9 for steak 3. fill account with $500 4. buy sausage for $2 bank reorders it as 1. have $10 in your checking 2. pay $9 for steak 3. buy sausage for $2 4. charge overdraft 5. count $500 deposit Is that what banks would do? I faintly remember that really old accounts I had in Germany had overdraft capability, but for all newer(last decade or so) accoun…

Yes they reordered transactions to maximize their money. E.g. you have $495 in the account, and you spend: -$5: $490 left -$5: $485 left -$5: $480 left -$500: -$20 left, overdraft fee of $40, $-60 left. They will reorder it as: -$500: -$5 left, overdraft fee of $40, $-45 left. -$5: -$50 left, overdraft fee of $40, $-90 left. -$5: -$95 left, overdraft fee of $40, $-135 left. -$5: -$140 left, overdraft fee of $40, $-18…

Post by NikolaNovak » Sat, Nov 13, 2021, 3:54 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…

Post by iskander » Sat, Nov 13, 2021, 3:55 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?

Post by DJBunnies » Sat, Nov 13, 2021, 4:02 AM UTC

iratewizard wrote: post #47

DJBunnies wrote: post #36

Earlier quoted context omitted.

Can want.

With or without a credit card it's still spending what you don't have. The credit card just makes it easier to ignore the fact that you're in dire financial straights.