Debit cards are hidden financial infrastructure • Hacker News Board

Re: Debit cards are hidden financial infrastructure

#201

Post by simonbarker87 » Sat, Nov 13, 2021, 9:41 AM UTC

barsonme wrote: post #189

simonbarker87 wrote: post #182

Earlier quoted context omitted.

This is a strong US vs the rest of the world difference. In the UK for example most people will do their day to day spending on debit because the rewards we get aren’t worth the faff of paying for things a month later, when you are less “flush” (Americans just seem to have a lot more money sloshing around compared to even well paid Brits and Europeans) it’s much harder to manage that monthly offset from salary paymen…

> most people will do their day to day spending on debit because the rewards we get aren’t worth the faff of paying for things a month later, when you are less “flush” This sort of thinking misses the point that even with credit cards you don’t spend what you don’t have. You (ideally) treat it like a debit card. If I spend $100, then I’ve $100 less in my checking. If you do that, then “flush” never enters the equatio…

Poor choice of word on my part I think. I don’t mean flush in that the following month you have more money but that in general Americans have more money and so are less susceptible to the ramifications of miscalculating. I’ve had a couple of long conversations with Americans about this topic of credit vs debit and the cultural difference is so strong that we inevitably can’t reconcile each others point of view. My debit card will bounce any payment that will take me over drawn, my credit card doesn’t care if I can’t pay it off next month and that’s what the banks hope you forget.

Re: Debit cards are hidden financial infrastructure

#202

Post by xdennis » Sat, Nov 13, 2021, 9:42 AM UTC

barsonme wrote: post #189

simonbarker87 wrote: post #182

Earlier quoted context omitted.

This is a strong US vs the rest of the world difference. In the UK for example most people will do their day to day spending on debit because the rewards we get aren’t worth the faff of paying for things a month later, when you are less “flush” (Americans just seem to have a lot more money sloshing around compared to even well paid Brits and Europeans) it’s much harder to manage that monthly offset from salary paymen…

> most people will do their day to day spending on debit because the rewards we get aren’t worth the faff of paying for things a month later, when you are less “flush” This sort of thinking misses the point that even with credit cards you don’t spend what you don’t have. You (ideally) treat it like a debit card. If I spend $100, then I’ve $100 less in my checking. If you do that, then “flush” never enters the equatio…

The possibility of spending more money than you have means you are more likely to spend more than you have

Re: Debit cards are hidden financial infrastructure

#203

Post by simonbarker87 » Sat, Nov 13, 2021, 9:46 AM UTC

spir wrote: post #190

I'd be interested to know patio11's updated take on the long arc of crypto. As a crypto person, it's cool to see how the benefits he describes-- eg lower transaction costs, embedded finance, and novel items such as bundling reporting and instant settlement-- are also driving much of the product-side interest in crypto and web3.

Lower transaction fees? I moved a few hundred £ into my wallet the other day for some Ethereum and paid like £50 in various fees and gas. The crypto world is full of layers of middle men taking their slice. Even swapping some ENS to ETH cost over $100 in gas

Re: Debit cards are hidden financial infrastructure

#204

Post by brazzy » Sat, Nov 13, 2021, 9:53 AM UTC

rjzzleep wrote: post #81

mherdeg wrote: post #56

Earlier quoted context omitted.

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?

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…

Germany here as well. I have never heard of event-based overdraft fees, only interest-based. Which makes this transaction reordering pointless

Re: Debit cards are hidden financial infrastructure

#205

Post by netcan » Sat, Nov 13, 2021, 9:54 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…

Hoo... Ho. That's a bit much.

"half PR" & "politically inconvenient" are an unnecessary assumption of bad faith. Patio11's not doing PR or propoganda.

Disagree and/or add to the discussion as you see fit, but let's try to be a little more generous... especially to a member with such a history of contribution to the community.

Re: Debit cards are hidden financial infrastructure

#206

Post by Daedren » Sat, Nov 13, 2021, 9:55 AM UTC

dustintrex wrote: post #156

morsch wrote: post #144

Earlier quoted context omitted.

Maybe they're free where you are, but apparently in Germany banks, if they support it at all, charge 0.5 EUR on average. I've never used it.

Technically the regulation says that charging is allowed, it just has to be the same flat fee across the entire SEPA zone, whether it's domestic or international. Most banks found domestic fees unpalatable, so they just made everything free. In this, as many other things when it comes to e-payments, Germany seems to be a bit of an outlier.

I mean, it's the same over here in Portugal as well. SEPA standard transfers are free, but SEPA instant transfers have a flat fee in every bank (Unless you have a sort of premium account)

Perhaps your country's the outlier.

Re: Debit cards are hidden financial infrastructure

#207

Post by simonbarker87 » Sat, Nov 13, 2021, 9:58 AM UTC

xdennis wrote: post #202

barsonme wrote: post #189

Earlier quoted context omitted.

> most people will do their day to day spending on debit because the rewards we get aren’t worth the faff of paying for things a month later, when you are less “flush” This sort of thinking misses the point that even with credit cards you don’t spend what you don’t have. You (ideally) treat it like a debit card. If I spend $100, then I’ve $100 less in my checking. If you do that, then “flush” never enters the equatio…

The possibility of spending more money than you have means you are more likely to spend more than you have

A much more succinct summary than I gave that hits at the heart of the CC issue - the banks want you to spend more than you have.

Re: Debit cards are hidden financial infrastructure

#208

Post by [deleted] » Sat, Nov 13, 2021, 10:00 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…

[deleted]

Re: Debit cards are hidden financial infrastructure

#209

Post by kwhitefoot » Sat, Nov 13, 2021, 10:01 AM UTC

doikor wrote: post #184

dsomers wrote: post #162

Earlier quoted context omitted.

Totally agree, the Canadian banking system is a corrupt cartel the levies it’s own tax on every Canadian. This was made even more clear to me when I moved to the Netherlands and every banking fee was suddenly 1/3 as much as in Canada for the exact same service.

Here in Finland banking fees are a thing only for the poor (and even then we are talking about a total of 20 or 30 euros per year) Basically every bank has some kind of "premium customer" program that you qualify for by having enough investments or loans from that bank and magically all your banking fees go away (obviously they just make their money from the services they provide for your investments/loans)

Banking fees? Never paid any as far as I can tell, not for the ordinary things. My bank here in Norway won't pay a bill if there isn't enough money in the account. It sends me a text and an email to say what happened and doesn't charge me anything.

The only fees I pay are a small percentage for management of mutual funds.

Re: Debit cards are hidden financial infrastructure

#210

Post by avianlyric » Sat, Nov 13, 2021, 10:02 AM UTC

barsonme wrote: post #191

Nursie wrote: post #158

Earlier quoted context omitted.

I find it hilarious that Americans will tell you about the great discount/cashback they get, then in the next post crypto advocates will tell you that crypto currency can avoid the insane credit card fees. It's almost like the two things are related, but few people seem to link them... In Europe and Australia, caps have largely fixed the latter, at the expense of the former. Seems better all around.

Insane credit card fees? What? Most cards do not have a fee. And for those that do, it’s very easy to recoup much more than the fee in rewards. For example, Chase Sapphire is one of (or actually the ) the most expensive cards at $550/year. But even then it’s very easy to recoup much more in rewards.

They’re talking about interchange fees you pay on every transaction. Which is where the money to fund rewards comes from.

In the US you’ll be paying something like 1% on interchanges fees for every transaction, in the EU it’s something like 0.05%. Orders of magnitude less, thus orders of magnitude less rewards, and also fraud, because banks can’t use the interchange to write off fraud and thus implement proper controls.