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Can the Visa-Mastercard duopoly be broken?

economist.com

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Re: Can the Visa-Mastercard duopoly be broken?

#51

Post by reidjs »

dhosek wrote: post #28
toomuchtodo wrote: post #4

https://www.moderntreasury.com/learn/what-is-fednow > FedNow is an instant payment service for both individuals and businesses. Once launched, the initial transaction limit will be $25,000. This means that FedNow be more useful for small businesses and retail payment needs until it is widely adopted and the transaction limit grows. > In early 2022, the Federal Reserve released pricing and fee details for their real-t…

>Merchants can pass the CC surcharge through Unless things have changed in the last 20ish years, if you accept credit cards you’re not allowed to charge different prices for CC vs non-CC payments (although there are apparently some carve-outs for gas stations).

This is not enforced, though. Almost every store near me charges a surcharge on small purchases (<$10) made with CC.

Re: Can the Visa-Mastercard duopoly be broken?

#52

Post by meowkit »

reaperducer wrote: post #25
10g1k wrote: post #6

1.4 billion people in China use WeChat to pay for everything. They don't even bother with credit cards.

Fortunately, phones never get lost. Or broken. Or stolen. Or discharge. Or malfunction. Or lock people out for no good reason. I can put a $100 bill through the washing machine and it's still perfectly usable. When I can do that with a phone, maybe I'll switch. I ran a credit card through the washer and dryer last month, and even though it got bent, and the stripe doesn't work anymore, the chip does. And the numbers…

Tech people know how to back up their devices, passwords, photos, etc.

Hell most apps are good enough that people are backing up these things without even realizing it.

Re: Can the Visa-Mastercard duopoly be broken?

#53

Post by pphysch »

reaperducer wrote: post #25
10g1k wrote: post #6

1.4 billion people in China use WeChat to pay for everything. They don't even bother with credit cards.

Fortunately, phones never get lost. Or broken. Or stolen. Or discharge. Or malfunction. Or lock people out for no good reason. I can put a $100 bill through the washing machine and it's still perfectly usable. When I can do that with a phone, maybe I'll switch. I ran a credit card through the washer and dryer last month, and even though it got bent, and the stripe doesn't work anymore, the chip does. And the numbers…

Despite all this, the largest community on the planet is using it just fine.

Re: Can the Visa-Mastercard duopoly be broken?

#54

Post by squeaky-clean »

dhosek wrote: post #28
toomuchtodo wrote: post #4

https://www.moderntreasury.com/learn/what-is-fednow > FedNow is an instant payment service for both individuals and businesses. Once launched, the initial transaction limit will be $25,000. This means that FedNow be more useful for small businesses and retail payment needs until it is widely adopted and the transaction limit grows. > In early 2022, the Federal Reserve released pricing and fee details for their real-t…

>Merchants can pass the CC surcharge through Unless things have changed in the last 20ish years, if you accept credit cards you’re not allowed to charge different prices for CC vs non-CC payments (although there are apparently some carve-outs for gas stations).

You're not allowed to charge more for using a CC, but you are allowed to offer a 5% "cash discount". Extremely common in New York City.

Re: Can the Visa-Mastercard duopoly be broken?

#55

Post by db1234 »

immortaljoe wrote: post #13

Rupay in India seems to be doing it. Non affiliated video about it: https://youtu.be/B_AY4a3_-GQ

Visa and Mastercard complained to US Govt about Indian Govt backing Rupay. I am sure they will lobby against any attempts to break their monopoly in US too.

Re: Can the Visa-Mastercard duopoly be broken?

#56

Post by autoexec »

toomuchtodo wrote: post #4

https://www.moderntreasury.com/learn/what-is-fednow > FedNow is an instant payment service for both individuals and businesses. Once launched, the initial transaction limit will be $25,000. This means that FedNow be more useful for small businesses and retail payment needs until it is widely adopted and the transaction limit grows. > In early 2022, the Federal Reserve released pricing and fee details for their real-t…

> This will allow consumers to self select if they want the benefits of paying with a credit card (but paying for the privilege).

My guess is that they'll just raise their prices to include the fee no matter how the customer offers to pay for something.

Re: Can the Visa-Mastercard duopoly be broken?

#57

Post by echelon »

10g1k wrote: post #6

1.4 billion people in China use WeChat to pay for everything. They don't even bother with credit cards.

A single point of failure, leverage, unilateral negotiation, and control. Horrifying for all people and businesses (especially competitors).

Real Standard Oil situation there.

Not that our own duopolies aren't also problematic.

Re: Can the Visa-Mastercard duopoly be broken?

#58

Post by hn_throwaway_99 »

sytelus wrote: post #23

I still haven't understood why credit cards companies need to go through this complex multi-hop "settlement" pipeline that takes almost a day for transactions to get "processed". Is it because some banks still depend on mainframes doing batch processing?

> Is it because some banks still depend on mainframes doing batch processing?

Pretty much all banks use mainframes to do batch processing. "SFTP runs the world".

I got heavy into fintech a couple years ago, and at first I thought "This is all insane." I was coming from a SaaS world where it's easy to think about transactional guarantees with API calls.

I finally "got it" when I realized that pretty much all of our financial system in the US is based on the digitization of manual processes from the 50s and 60s. If you think of how banks worked before computers (e.g. large binders of ledgers that were manually reconciled), that's basically how it still works today, those big binders have just been turned into digital files that are processed by machines.

I'm no fan of crypto, but the one place where I can see real utility for blockchain is as a backend settlement service for banks.

Re: Can the Visa-Mastercard duopoly be broken?

#59

Post by legitster »

I'm pretty confident Visa's dominance is a completely natural monopoly. There are plenty of 3rd party payment options (Amex and Diners' are still both fairly widely accepted) and nothing is stopping consumers from having multiple cards.

But I think the network effects are too strong and we are seeing a pretty normal Pareto distribution. Even if you added 20 new market entrants with good coverage, consumers and businesses would still prefer to have Visa as the lingua franca of payments.

I think it will also be pretty hard to get away from that 3.5% processing fee. That covers a lot of fraud prevention work that credit card companies take on for consumers and businesses. Will consumers be happy to give up those protections and reap back a percent or two on prices? And emerging payment technologies seem to create more opportunity for fraud.

Re: Can the Visa-Mastercard duopoly be broken?

#60

Post by cardosof »

Can the duopoly be broken? Yes, you can have Pix, the system created by the Brazilian Central Bank for instant, verified payments and some credit/installments features. It's cheaper for business but then a central bank will know all your transactions. There are some talks of sharing the system with Canada and other countries.
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