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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?

#81

Post by toast0 »

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?

Authentication and capture have different processing requirements and availability needs.

You want to have 100% uptime for authorize, but correctness isn't strictly required; if you allow too much in charges, you'll probably end up collecting user fees, which is not a negative for the bank. On the other hand, you want exactly once processing for capture, and you don't really need that to have 100% uptime, since the financial industry is built around batch processing.

Re: Can the Visa-Mastercard duopoly be broken?

#82

Post by frant-hartm »

aidenn0 wrote: post #40
dhosek wrote: post #28

Earlier quoted context omitted.

>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).

IIRC it's only for non-cash payments that you can't charge a different amount for; cash discounts are allowed across the board.

In the EU (whole EEA actually) the merchants are not allowed to charge a different amount for cash and personal cards (debit or credit cards). They can charge the transaction fee they pay for business (company) cards and they need to inform the consumer in advance.

Re: Can the Visa-Mastercard duopoly be broken?

#83

Post by arcticbull »

dcolkitt wrote: post #78
philip1209 wrote: post #49

Fraud protection of credit cards is the root of modern e-commerce. In some ways, Visa and Mastercard are the privatized court systems of the internet. If I end up on a random, self-hosted ecommerce site and decide to make a purchase - what guarantee do I have that the item will show up or be as-described? If I bought something through a bank transfer, reversing that purchase would be incredibly difficult. And, suing…

The Achilles heel of this setup is that not all transactions are equal risk. Very low risk transactions are paying near identical fees to very high risk transactions, despite orders of magnitude differences in fraud rates. How long will Apple selling in-store products to 800 FICO score consumers be willing to subsidize eBay vendors and gift card resellers?

They’re not. The 3% is a blended average. The rate varies by the specific card kind, the card brand, the specific vendor in Apples case when they have leverage - or the merchant category code when they don’t have leverage. Even chargeback history matters.

Apple likely has a deal that borderline costs merchant acquirers money and that gift card vendor is probably paying 10%.

Re: Can the Visa-Mastercard duopoly be broken?

#84

Post by jrvarela56 »

philip1209 wrote: post #49

Fraud protection of credit cards is the root of modern e-commerce. In some ways, Visa and Mastercard are the privatized court systems of the internet. If I end up on a random, self-hosted ecommerce site and decide to make a purchase - what guarantee do I have that the item will show up or be as-described? If I bought something through a bank transfer, reversing that purchase would be incredibly difficult. And, suing…

This. My company does payment processing for small merchants and all the complexity of credit cards is rooted in this dynamic.

- Consumers can pay stuff on credit

- Consumers can 'chargeback' if they feel something went wrong

These two mechanisms are the lubricant that provides a +% in online commerce greater than the % charged for processing payments.

Re: Can the Visa-Mastercard duopoly be broken?

#85

Post by rvz »

odrekf wrote: post #34
tossl568 wrote: post #30

Earlier quoted context omitted.

I absolutely, positively do not.

It has much, much better scalability and uptime. The other day the entire LN went down due to 1 bad node. That has never happened, and will never happen in the original Bitcoin design (ticker: BCH).

None of the mentioned coins / solutions: Bitcoin, Bitcoin Cash, Lightning Network, Ethereum, Layer 2 solutions are even close to being a credible alternative to the Visa-Mastercard duopoly. (Also, Lightning is not Bitcoin)

No business wants to use a volatile asset that loses its value when a person or institution refunds and immediately sells hundreds of thousands of Bitcoin(s) and takes the whole market down with it for payments at scale in the long term.

We have given it years for them to mature and none of them have the safety / security or standardisation compliance required to be credible enough for regular businesses to being using it and I'm sorry it is not early days.

I would say a cryptocurrency / blockchain project that aids or is faster than the current system, complies with regulations, has a trusted and centralized stablecoin on the network like (USDC) and is able to scale whilst allowing cheap payments will also be able to compete with the Visa-Mastercard duopoly.

That is, the ISO 20020 standard and compliant cryptocurrencies which are highly likely to be used for payments (with USDC) in the long term.

Re: Can the Visa-Mastercard duopoly be broken?

#86

Post by echelon »

stefan_ wrote: post #80
echelon wrote: post #57

Earlier quoted context omitted.

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.

The grandparent is exaggerating somewhat, it's split between Alibaba and WeChat.

Much better, but five or so peer competitors is best for consumers and other businesses.

Of course, as a business, you want to be a monopoly.

Re: Can the Visa-Mastercard duopoly be broken?

#87

Post by kelnos »

saurik wrote: post #46
reaperducer wrote: post #25

Earlier quoted context omitted.

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…

I mean, you can always log into that WeChat account from another device... your WeChat username and password are maybe a bit more secure than all those numbers printed ostentatiously on your card, but are they really that different?

What other device? If I'm out and about and my phone gets stolen, broken, or even the battery just runs out, how do I pay for my transit ride home, where I -- maybe -- have a backup device?

This is the -- pretty common -- failure case I worry about. And yes, I know it's also possible for physical wallets to be stolen. But cash doesn't "break" or run low on charge. Software bugs or internet access issues don't cause paying with cash to fail.

Example of stupidity: I can pay for transit in my city with my phone. However, there are newer payment readers on a small percentage of trains here that just don't like my phone, and insist "Invalid Card". The company that manages support for the readers has been unable to help me. The older readers on older trains work fine. The older readers on all the buses work fine. But I have to carry a physical transit card with me all the time anyway, and -- amusingly enough -- it's more convenient to tap the card than to unlock my phone and hope it works.

Re: Can the Visa-Mastercard duopoly be broken?

#88

Post by pkaye »

karamanolev wrote: post #19
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 Can they? I was under the impression (unverified) that they are under contract to provide the same prices for CC customers as they do for cash or debit card.

I don't know if its state specific but there were some lawsuits in the past that removed this restriction and a cash discount is okay or a surcharge for credit card should be disclosed before you pay.

Re: Can the Visa-Mastercard duopoly be broken?

#89

Post by kelnos »

pphysch wrote: post #53
reaperducer wrote: post #25

Earlier quoted context omitted.

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.

Do they use it because it's "just fine", or because there's no alternative? How many people have daily problems with it (problems they might not have if cash were an option), but we just don't hear about it.

Re: Can the Visa-Mastercard duopoly be broken?

#90

Post by jen729w »

arcticbull wrote: post #77
philip1209 wrote: post #49

Fraud protection of credit cards is the root of modern e-commerce. In some ways, Visa and Mastercard are the privatized court systems of the internet. If I end up on a random, self-hosted ecommerce site and decide to make a purchase - what guarantee do I have that the item will show up or be as-described? If I bought something through a bank transfer, reversing that purchase would be incredibly difficult. And, suing…

The fees are 3% only in the US and the bulk of that is returned to buyers as cash back or loyalty points, and to offset the cost of loan origination and warranties. The EU has capped debit interchange at .2% and credit at .3%, Australia in the low 1s if I recall correctly. They just don’t really have rewards.

Yeah typically around 1.5% in Australia. Which is often passed on to the consumer at the point of sale.

We do have a non-Visa/MC payment system here in 'eftpos', which is ubiquitous. AFAIK this is exclusively debit not credit, but this isn't my area, I'm just a consumer.

https://www.eftposaustralia.com.au

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