Debit cards are hidden financial infrastructure • Hacker News Board

Re: Debit cards are hidden financial infrastructure

#261

Post by Symbiote » Sat, Nov 13, 2021, 2:36 PM UTC

thrower123 wrote: post #244

oneplane wrote: post #147

Earlier quoted context omitted.

Wouldn't that be a good item for a government at some level to look in to? Life without a working bank account would seem unreasonably hard to me.

If you cannot manage to get a bank account, then you have problems that the government is not going to be able to fix.

Britain doesn't agree, so there are rules requiring the banks to offer basic accounts to those who would otherwise be ineligible.

https://www.moneyhelper.org.uk/en/everyday-money/banking/bas...

Re: Debit cards are hidden financial infrastructure

#262

Post by sueders101 » Sat, Nov 13, 2021, 2:36 PM UTC

devoutsalsa wrote: post #249

laurent92 wrote: post #185

Earlier quoted context omitted.

In Australia in 2010 I got a debit card for the first time in my life. The card would simply reject transactions. “As should be”, I thought. It was a revolution for me.

Revolut, Simple, and Chime, the three online only banks I have tried, all do (or did) this. It really helped back when I was living paycheck to paycheck.

For what it's worth; I banked with Simple for the better part of 10 years, but then they acquired by BBVA who was then acquired by PNC. That meant that all Simple customers had to go through account migration twice this year, and in the end now have all the typical fees associated with traditional accounts. Ultimately I decided to move to a local credit union.

Re: Debit cards are hidden financial infrastructure

#263

Post by afc » Sat, Nov 13, 2021, 2:38 PM UTC

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…

> 1.5% in 3 days. That's not even an annualized figure. If annualized it would be 1.5%/3*365=122%

Your formula for annualized interest rate is incorrect. Interest compounds.

1.5% in 3 days is 612% annualized, not 122%, a large difference. You can compute this thus:

  pow(1.015, 365.0 / 3)

Re: Debit cards are hidden financial infrastructure

#264

Post by avianlyric » Sat, Nov 13, 2021, 2:39 PM UTC

trinovantes wrote: post #218

avianlyric wrote: post #210

Earlier quoted context omitted.

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

In reality it’s people with poor or non-existent credit that pay. They can’t access cards that offer rewards, so they end up eating the costs. It’s a remarkably good way of transferring wealth from the poor (who are usually deemed not worthy of credit) to the rich (who are worthy of credit). Pile on the other costs like fees for using cheques rather than direct deposit (also common for poor people who aren’t salaried), crazy overdraft fees etc, and becomes pretty clear that the US banking system is paid for by the poorest in society, and only benefits the richest.

Re: Debit cards are hidden financial infrastructure

#265

Post by wara23arish » Sat, Nov 13, 2021, 2:46 PM UTC

thrower123 wrote: post #247

bool3max wrote: post #242

Earlier quoted context omitted.

Is that the only argument for credit over debit?

Again, I'm speaking from a purely US perspective, but there is no good reason to use a debit card instead of a credit card, for the same purchasing patterns. You have better fraud protections, you don't worry about overdrafts or transaction reordering, you get a month interest-free loan if you pay back your balance every month. You get cash back or reward points or etc. And if some emergency comes up, you have credit…

I think the argument you mentioned is actually worth it for some people.

Credit card interest rates are really high and people are better off getting charged a one time overdraft fee rather than buying stuff they cant afford and get saddled with high interest credit card debt.

Re: Debit cards are hidden financial infrastructure

#266

Post by simonh » Sat, Nov 13, 2021, 2:47 PM UTC

capableweb wrote: post #245

simonh wrote: post #243

Earlier quoted context omitted.

If cryptocurrencies were actually being used significantly as currencies, you might have a point. My skepticism of cryptocurrencies has nothing to do with how they replace banks, because they flat out don't replace banks at all. Or rather, the extent to which they do so is trivial. I mean, if they were taking significant business from banks, wouldn't you think the banks would be lobbying to have it banned? But no, in…

The invention of cryptocurrencies (specifically Bitcoin at least) is not to replace banks, but to replace the way transactions happens. A normal bank transfer involves contracts and processes to make sure everyone that handles the transaction is honest. You basically put your trust on contracts that the transaction will actually go through. Bitcoin replaces this need of trust in the contracts with need of trust in th…

I know how cryptocurrencies work.

The restrictions on crypto are coming from regulators, not the banks, and the reason regulators aren't happy is due to the volume of criminal transactions, tax avoidance and scams enabled by crypto.

The reason the banks don't care is because at both ends of most crypto transactions you will find, er, a bank account. Crypto is only useful to the extent that it has real currency value, those Nigerian scammers and many others using crypto for transfers are just using cyrpto as an intermediate step to avoid pesky laws. That's fine as far as the banks are concerned because that's more money flowing into their systems.

Re: Debit cards are hidden financial infrastructure

#267

Post by wara23arish » Sat, Nov 13, 2021, 2:49 PM UTC

capableweb wrote: post #229

starwind wrote: post #128

Earlier quoted context omitted.

What limits are you talking about?

Have you tried sending $10,000 or more between two "high risk" countries, like from Nigeria to Ecuador? There are so many limits for most people using banking today, where your money gets stuck in multiple places before you "verify" this and that, and then transfers take multiple days if they even get approved in the end.

Bankrupt governments also control what money you can receive.

Example is Lebanon where if you send someone US Dollars, they’ll receive it in the local currency which is under hyperinflation.

The central bank governor (government too) there is pure evil and is a US political pawn. I know it sounds outlandish, but if you look into it, you almost wont believe its real.

Re: Debit cards are hidden financial infrastructure

#268

Post by BorgHunter » Sat, Nov 13, 2021, 2:51 PM UTC

capableweb wrote: post #245

simonh wrote: post #243

Earlier quoted context omitted.

If cryptocurrencies were actually being used significantly as currencies, you might have a point. My skepticism of cryptocurrencies has nothing to do with how they replace banks, because they flat out don't replace banks at all. Or rather, the extent to which they do so is trivial. I mean, if they were taking significant business from banks, wouldn't you think the banks would be lobbying to have it banned? But no, in…

The invention of cryptocurrencies (specifically Bitcoin at least) is not to replace banks, but to replace the way transactions happens. A normal bank transfer involves contracts and processes to make sure everyone that handles the transaction is honest. You basically put your trust on contracts that the transaction will actually go through. Bitcoin replaces this need of trust in the contracts with need of trust in th…

> The invention of cryptocurrencies (specifically Bitcoin at least) is not to replace banks, but to replace the way transactions happens.

This is a wonderful hypothetical in much the same way as spherical cows, but in the real world today, crypto is treated as a (quite volatile) speculative asset, not a way to transact everyday business. The world does desperately need fast payment processing that doesn't involve companies like Visa or MasterCard skimming off the top every time to enrich themselves and dictating one-sided terms to others (hello, OnlyFans), but I'm not seeing any evidence that crypto is poised to handle that. It's too risky. And the compatibility layer with legacy currency is too unwieldy: Every time you convert to regular currency you generate a taxable event, which is fine if you treat crypto as akin to a stock, but it'll make tax time hell if you're buying groceries and lattes and gas with it. It's not impossible to pass laws to make the best-case for crypto happen, but that would require a lot of political will that I just don't see happening; too many people benefit from the current system.

If there's a cryptocurrency that solves those problems, please let me know, I'd be interested to hear about it. But the current players all just seem like speculative bubbles for wealthy techbros to play around with. Many of which are driving electricity consumption for mining, which has, shall we say, some environmental downsides.

Re: Debit cards are hidden financial infrastructure

#269

Post by GordonS » Sat, Nov 13, 2021, 2:55 PM 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…

This is what I do as well. Monthly bills are all direct debit, but almost all other spending goes on my credit card, and, without exception, I paying it off completely at the end of the month. I've done this for decades, and never paid a penny in interest - the key is to not spend money you don't have.

I get some small amount of Amazon vouchers every month for doing this (£10/m or something like that), but really I do this for the fraud and chargeback protection.

I feel like this works well for us, but you have to be able to budget - if you're not capable of budgeting or find credit too alluring, then you're better off using a debit card.

Re: Debit cards are hidden financial infrastructure

#270

Post by loeg » Sat, Nov 13, 2021, 2:58 PM UTC

tehabe wrote: post #188

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…

I'm really confused about those overdraft fees (or rather overdraft interests). My bank has also charges overdraft interests, they are currently 6.99% p.a. So if I get into overdraft due to one payment but money comes in on the very same day it shouldn't be that much interest I have to pay to the bank. For an overdraft of 100 euros it should be like 2 cents for a day.

In the US they were often flat charges on the order of $30.