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Debit cards are hidden financial infrastructure

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Re: Debit cards are hidden financial infrastructure

#211

Post by clippablematt »

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…

Had five years or so of that awful cycle. It’s interesting when you meet people who haven’t experienced living under the brutality of the banking system. Overdraft, payday loans, high interest credit. They think it’s all fine. Fear of overdraft fees is a real class divider. One thing I really remember is being absolutely broke, and a guy from the bank calling to see if I’d be interested in taking on a credit card “we think it’ll help you out right now”, I’m so glad I didn’t. I think the same people also fail to see the passionate drive it generates, I’ve been working in crypto a few years now and there really is a shared hatred for the big banks, with many people feeling abused by those systems. The result is a lot of politically driven people, who now also have raised funding for the next few years, who’s goal is to make those places irrelevant and create as many other options as possible.

Re: Debit cards are hidden financial infrastructure

#212

Post by lottin »

chrisseaton wrote: post #29
tasogare wrote: post #23

Earlier quoted context omitted.

What? That seems totally backwards. Don't spend money you don't have, which mean using debit. Credit is useful for the single use case of buying a house.

Why spend your own money when someone is willing to loan you money for free, will give you some of your money back, and will also protect you against consumer issues? You’re leaving money and protection on the table by not using them.

Because I don't want a loan, even if it's for free.

Re: Debit cards are hidden financial infrastructure

#213

Post by blitzar »

xdennis wrote: post #167
smabie wrote: post #80

Earlier quoted context omitted.

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)

Why spend money you don't have? If you do have money, why do you need to borrow money you already have?

> Why spend money you don't have?

Classic mistake, using credit or specifically a credit card does not always mean you dont have the money.

> If you do have money, why do you need to borrow money you already have?

Do you have a mortgage? Do you also have any money in a bank account / savings / cash in your wallet? If so "why do you need to borrow money you already have"?

Indeed the mortgage example is even worse, because typically a morgage has interest paid whereas a credit card paid off within the month does not.

Re: Debit cards are hidden financial infrastructure

#214

Post by [deleted] »

dustintrex wrote: post #64
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…

It's also another illustration of how backwards US payments infra is. In the EU, SEPA instant payments are just that: by law it can take a maximum of 10 seconds for the recipient to get paid, including across countries. And, of course, they're free. https://en.wikipedia.org/wiki/Single_Euro_Payments_Area

[deleted]

Re: Debit cards are hidden financial infrastructure

#215

Post by numair »

netcan wrote: post #205
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.

> Patio11's not doing PR or propoganda.

An employee of a multinational financial services company writes a historically revisionist article about an area in which his company has direct regulatory and financial exposure.[1] With only implicit disclosures of conflict of interest. I would say that it is only because of the author’s long-term goodwill in this community that this stuff isn’t looked upon with a very critical eye.

I’ve learned the hard way that someone’s past identity does not necessary correlate with good behavior in a new, more “important” persona. Silicon Valley is filled with examples of exactly this sort of thing.

1: Remember, the former Governor of the Bank of England is on his employer’s board. This isn’t a passionate evangelist for a struggling startup charity case, or someone telling us cool facts about their weird hobby.

Re: Debit cards are hidden financial infrastructure

#216

Post by kgwgk »

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.

If Germany is an outlier, so are France, Italy, Spain, Portugal...

Germany does seem an outlier in charging as well for _incoming_ instant payments though. (I may be wrong!)

Re: Debit cards are hidden financial infrastructure

#217

Post by jmkerr »

brazzy wrote: post #204
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…

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

Because it's not true, check the largest consumer banks:

https://www.postbank.de/dam/postbank/pdf/privatkunden/Postba... https://www.deutsche-bank.de/dam/deutschebank/de/shared/pdf/... https://www.commerzbank.de/portal/media/efw-dokumente/preisa... https://www.hypovereinsbank.de/content/dam/hypovereinsbank/s... https://www.ing.de/girokonto/konditionen/ https://www.diebank.de/content/dam/f0032-0/PDF_neu/preisaush... (Volksbank) https://www.ksklb.de/content/dam/myif/ksk-ludwigsburg/work/d... (LBBW)

In this sample, if overdraft is enabled, you pay up to 15% p.a., if disabled the cancellation fee is up to 2€ for the postal notice, but mostly just porto (0,80€).

Re: Debit cards are hidden financial infrastructure

#218

Post by trinovantes »

avianlyric wrote: post #210
barsonme wrote: post #191

Earlier quoted context omitted.

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 contro…

Unless the merchant is offering discounts for cash payment, it's the customers who are not using credit cards that are paying/subsidizing the fees. Sadly, not using a credit card is just throwing money away in North America

Re: Debit cards are hidden financial infrastructure

#219

Post by Tenoke »

dustintrex wrote: post #64
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…

It's also another illustration of how backwards US payments infra is. In the EU, SEPA instant payments are just that: by law it can take a maximum of 10 seconds for the recipient to get paid, including across countries. And, of course, they're free. https://en.wikipedia.org/wiki/Single_Euro_Payments_Area

I don't know who supports it but I frequently wait days for SEPA transfers without seeing a more instant option in Germany. Occasionally it is instant (e.g. to those using my own bank) but I can never rely on it.

Re: Debit cards are hidden financial infrastructure

#220

Post by throwaway8689 »

8ytecoder wrote: post #157
NikolaNovak wrote: post #118

Earlier quoted context omitted.

I'm going to re learn the lyrics to Oh Canada and sing them joyously and thankfully... Our banking system gets a lot of ire but dear Gawd.

It a uniquely American stupidity that somehow everyone just lives with. The concept of overdraft doesn’t even exist in normal consumer accounts anywhere else in the world. The first thing I do when I open an account here is to disable overdraft - but then you have to pay return cheque charges by whoever was trying to charge your account.

We have exactly this concept in normal consumer accounts in the UK. It is not uniquely American.
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