Debit cards are hidden financial infrastructure • Hacker News Board

Re: Debit cards are hidden financial infrastructure

#321

Post by eyelidlessness » Sat, Nov 13, 2021, 5:11 PM UTC

mdp2021 wrote: post #200

eyelidlessness wrote: post #135

Earlier quoted context omitted.

Oh since I’m naming names. The bank before that, Wells Fargo, honored a check I wrote > 2 years earlier. Sure, I wrote it and I was good for it at the time. I forgot about it. Maybe I could’ve left that money in limbo but at a certain point I assumed my moderately wealthy aunt wasn’t gonna cash it. Well it doesn’t matter what I assumed, the law said the check was no longer valid. When Wells Fargo honored it and overd…

Again (to other cases in this page, ref. reordered transactions): should not this be a case for legal action? A contract has a time limit, one part arbitrarily extends it and claims rights: this is completely absurd.

I’m sure it could have made a case. But I wasn’t exactly in a financial position to hire a lawyer.

Re: Debit cards are hidden financial infrastructure

#322

Post by mdorazio » Sat, Nov 13, 2021, 5:11 PM UTC

unicornmama wrote: post #256

smallerfish wrote: post #32

I took a look through glassdoor reviews of stripe as a result of his pitch at the end - lots of complaints about work-life balance / being overworked. Any stripe engineers want to weigh in on that? Are there areas of the company that are better than others?

I mean it’s a hyper growth startup. Expect to haul ass.

Stripe is 12 years old, has ~4,000 employees, and does several billion in revenue each year. It’s not a startup anymore. Although I do agree with your general sentiment that if you want real work-life balance, an actual startup is probably not for you.

Re: Debit cards are hidden financial infrastructure

#323

Post by chasebank » Sat, Nov 13, 2021, 5:15 PM UTC

Ozzie_osman wrote: post #283

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?

Yea. For people who aren't familiar with this, the bank will reorder your transactions and batch them to do the biggest one first. Then you get charged an overdraft fee per transaction after that. If they did the small ones first, you may not go into overdraft until the last big one... So you'd pay one fee. Do the largest first, then each small one causes a fee. Highway robbery.

In 2004 I was traveling around Europe as a 20 year old. Spent my debit account down to my last $20. I had a flight from Barcelona back to Boise and the airline had supposedly issued a paper ticket, not an e-ticket. Long story short, if I couldn’t produce the paper ticket, my flight was going to leave without me. I didn’t have a credit card and I knew I was out of money but I said what the hell, try my debit card to purchase a new flight. Lo and behold, it went through! I came home and a week later my account was -$5,500. Wells Fargo had taken the last charge, the $900 flight, reordered it and I accumulated $4,600 in overdraft fees. I’ve never been so angry in my life. They did not fix the charges, and I got bailed out by my mom. I plead my case over and over but everyone, including my mom, just drew it up as an non-responsible college kid.

Every time I tell this story it makes my blood boil.

Re: Debit cards are hidden financial infrastructure

#324

Post by spir » Sat, Nov 13, 2021, 5:19 PM UTC

simonbarker87 wrote: post #203

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

You're right that ethereum's fees are extremely high, and they will only get much higher. That's because, heading into the future, ethereum isn't intended for direct use by end-users.

End-users may expect to use ethereum's live & emerging scaling solutions, also known as Layer-2 networks or L2s.

The ethereum chain itself has become known as the "base layer" or, more commonly, "the L1". Only rollups, governments, megacorps, and extremely rich people will be able to afford transacting directly on the L1.

The good news is that L2s are becoming great for end-users. Some are live now (optimistic rollups), and the most promising of them will be live soon (zk/validity rollups).

For example, Arbitrum and Optimism are optimistic rollups L2s and have achieved a significant linear decrease in transaction fees.

As another example, zkSync 2.0 and StarkNet are zero-knowledge rollup L2s, also called validity rollups, that achieve a greater linear decrease in end-user cost than optimistic rollups, and unlock a (truly) exponential decrease in end-user fees by using a spectrum of off-chain data solutions. This fantastic result of exponential decrease in cost for end-users is achieved by way of an important new-ish branch of mathematics called "zero knowledge proofs".

Currently, zkSync 2.0 and StarkNet are the "Luke Skywalkers" of ethereum scaling. We are expecting great things from them, and need them to deliver to allow hundreds of millions of users to onboard to ethereum next year.

https://l2beat.com/

https://l2fees.info/

https://arbitrum.io/

https://www.optimism.io/

https://zksync.io/zkevm/

https://starkware.co/starknet/

Re: Debit cards are hidden financial infrastructure

#325

Post by eyelidlessness » Sat, Nov 13, 2021, 5:21 PM UTC

xdennis wrote: post #199

eyelidlessness wrote: post #76

Earlier quoted context omitted.

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…

Debit cards are a fraud? Living on borrowed money is a fraud.

It’s a scam that:

0. for many aspects of life you need positive credit history to live at all

1. debit cards don’t help you build credit

2. secured credit cards (your own money! not borrowed!) do

3. both function almost the same way, but the latter is much less equally available

And if you think “living on borrowed money is a fraud”, I suppose that means you think only independently wealthy people should own homes? Nearly no one could afford to buy a home anywhere without a mortgage.

Re: Debit cards are hidden financial infrastructure

#326

Post by philjohn » Sat, Nov 13, 2021, 5:32 PM UTC

cameronh90 wrote: post #231

joecool1029 wrote: post #141

Earlier quoted context omitted.

I seem to recall there being service levels at banks in Canada and maximum numbers of transactions per month until one gets hit with per-transaction fees. I was told explicitly when I opened my TD Canada Trust account there that it was imperative that I both keep money in the accounts and use them occasionally or dormancy fees would accrue (and if there was no money left, they'd then slam it with overdraft fees). The…

UK banks are pretty heavily regulated. For example, the overdraft fee spiral has been banned and in many cases banks were required to pay compensation. Yet we have quite a lot of banks to pick from - around 60 if you include building societies (more if you include private, niche and specialist banks). We also have a fair few new and digital challenger banks like Monzo, Starling, Atom, Revolut and arguably Metro Bank.…

There are a lot of things that are just plain better in the UK compared to the US. Out of network ATM fees being a big one.

See also regulation about what the incumbent last-mile network provider (Openreach) can charge ISP's to provide services on their lines which has led to a larger number of ISP's available in any one place (unless you're in Hull, because of historical reasons).

Re: Debit cards are hidden financial infrastructure

#327

Post by organsnyder » Sat, Nov 13, 2021, 5:35 PM UTC

mdp2021 wrote: post #198

desmosxxx wrote: post #192

Earlier quoted context omitted.

I think it's pretty well documented that intentional reordering happens and still happens

Should not that cause legal action - duly and factually?

Only if it's illegal.

Re: Debit cards are hidden financial infrastructure

#328

Post by huge87 » Sat, Nov 13, 2021, 5:36 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…

Correct. I use YNAB as a system to ensure that every dollar of spending on my credit cards are backed by liquid cash. I'm not going to argue the merits or downsides of something like YNAB; use whatever suits you.

But when that card statement balance comes due every month, it should make no difference because the cash was already deducted from my books when I made the charge.

Re: Debit cards are hidden financial infrastructure

#329

Post by reducesuffering » Sat, Nov 13, 2021, 5:37 PM UTC

nightski wrote: post #66

just-ok wrote: post #52

Earlier quoted context omitted.

One of the biggest wins from credit cards (imo, of course) is reward programs. Getting a 1-3% discount on purchases is pretty nice (plus, obviously, fraud protection, etc.). However, some issuers are using crypto to claw back at this perk; for example, the Coinbase debit card can give you 4% back.

The Coinbase card ties up your assets (you have to hold USD or crypto on their platform). Whereas the credit card is an interest free loan for the statement period. I'd take the latter any day of the week.

Bank account savings interest rates are like 0.40% annual, 0.03% monthly. I'd take an extra 1% cash back over a loan that accrued me only 0.03%.

Re: Debit cards are hidden financial infrastructure

#330

Post by pessimizer » Sat, Nov 13, 2021, 5:51 PM 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…

Even worse, they batch transactions by the day, and reorder them highest debit first in order to maximize overdraft fees.

So if you spend $5, $5, $5, and $40, in that order, with $38 in the bank, instead of getting one $35 overdraft fee, you get 4. It's the difference between a balance of -$52 and a balance of -$157.

I once worked at a bank where they had for a period doublecharged people for overdrafts, driving them into further overdrafts even after deposits clearly intended to cover those overdrafts had been made. The cheery low-level administrators loudly resented that they had to refund the overcharges at all, because people who kept their accounts that low were obviously deadbeats anyway.