Can the Visa-Mastercard duopoly be broken? • Hacker News Board

Re: Can the Visa-Mastercard duopoly be broken?

#121

Post by nixass » Wed, Aug 17, 2022, 10:44 PM UTC

cycomanic wrote: post #103

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…

As your post illustrates credit cards are really a solution developped for the deficiencies in the US banking system which have been exported to the rest of the world due to the dominance of the US market. 20 years when I was still living in Germany, hardly anyone had a credit card, while everyone was using automatic payments and electronic wiretransfers. I was very surprised when later (about 13 years ago) a US frie…

Why would I use credit card at all? Sure it does help when traveling but not much use for it otherwise

Re: Can the Visa-Mastercard duopoly be broken?

#122

Post by JumpCrisscross » Wed, Aug 17, 2022, 10:44 PM UTC

hn_throwaway_99 wrote: post #58

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 fi…

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

This isn't an anachronism. Batched net settlement is inherently cheaper than real-time gross settlement.

Canonical example: if I send you $10, then you send me $5 and I send you $2, in net settlement, there is a single $7 transaction; with RTGS there are three transactions of $17. The first system not only has lower transaction costs, it also scales better on account of needing less capital. TL; DR If there is a real-time settlement system, it is always possible to build a net settlement system on top of it that's cheaper (albeit slower).

Re: Can the Visa-Mastercard duopoly be broken?

#123

Post by dcolkitt » Wed, Aug 17, 2022, 10:44 PM UTC

lotsofpulp wrote: post #104

holistio wrote: post #97

Earlier quoted context omitted.

Nobody really has rewards. We don't have them in Europe, and some people in the USA think they have them. What they have is crazy high credit card fees and the need to juggle a bunch around to get a few things credit card companies decided to buy for you en masse. When I buy a $5 latte, I give Visa $0.01. When you do the same, you pay $0.15. Come the hell on. "REWARDS". Smh.

I get a minimum 2.6% cash back on everything I purchase, but most things I get 3.5% to 5.25% cash back. There are a bunch of free 2% cash back credit cards, so people would at least break even if they wanted to.

Generally those types of deals require either parking six figures out liquid assets at the issuing bank and/or paying high annual fees (which of course favor the biggest spenders who amortize the cost over lots of volume). Either way the current system definitely favors the rich over the middle class.

Re: Can the Visa-Mastercard duopoly be broken?

#124

Post by tossl568 » Wed, Aug 17, 2022, 10:45 PM UTC

rvz wrote: post #85

odrekf wrote: post #34

Earlier quoted context omitted.

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…

Every lightning channel update is a valid Bitcoin transaction that can be broadcast at any time by either party for final settlement. Lightning is absolutely Bitcoin. You can use the lightning network as very cheap fiat rails if you don't want to deal with Bitcoin or it's volatility. Look at LN/Taro.

Re: Can the Visa-Mastercard duopoly be broken?

#125

Post by alberth » Wed, Aug 17, 2022, 10:45 PM UTC

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…

Debit card?

Consumers already have a choice that has lower interchange fees to merchants (but also has way less chargeback protections) and that’s a debit card.

Re: Can the Visa-Mastercard duopoly be broken?

#126

Post by jon-wood » Wed, Aug 17, 2022, 10:46 PM UTC

mc32 wrote: post #92

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…

CoD. How did that even work? I mean how was fraud prevented? Did money get counted and balanced every night? How did they prevent drivers from getting robbed or inadvertently losing money (miscounting etc?$

Most of this isn’t that mysterious in practice. Apply whatever you know about how supermarkets, bars, and other cash accepting businesses operate. Then add in the fact that yes, drivers would occasionally get robbed, it was a risk of the business and priced in much like shoplifting is for a supermarket.

Re: Can the Visa-Mastercard duopoly be broken?

#127

Post by insane_dreamer » Wed, Aug 17, 2022, 10:47 PM UTC

cycomanic wrote: post #103

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…

As your post illustrates credit cards are really a solution developped for the deficiencies in the US banking system which have been exported to the rest of the world due to the dominance of the US market. 20 years when I was still living in Germany, hardly anyone had a credit card, while everyone was using automatic payments and electronic wiretransfers. I was very surprised when later (about 13 years ago) a US frie…

that's the thing; businesses don't want to have to rely on the court system to get refunds.

the x% CC processing fee is essentially fraud/non-payment insurance

Re: Can the Visa-Mastercard duopoly be broken?

#128

Post by Zircom » Wed, Aug 17, 2022, 10:47 PM UTC

makeitdouble wrote: post #93

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…

To note, all of these work on PayPal, with a bank account. PayPal are a dick on fraudulent merchant account detection and it’s well know assets can be frozen on a whim, but at this point it’s the one of the few other options.

PayPal is a joke when it comes to addressing fraud, it's completely hit or miss on both sides. My younger brother got scammed out of like $100 trying to order a chair from a furniture website that turned out to be some guy in China scamming people. The "online store" only accepts Paypal and when checking out, instead of the usual PayPal process is directs you to a page that's already completely filled out to send the correct amount as a personal friends and family transaction. He realized something was up literally minutes after completing the transaction when he saw that the email confirmation listed a random Chinese email address and saw it sent as a friends and family transaction and immediately called PayPal support and they basically told him to get bent and refused to reverse the transaction, because they don't offer any guarantees or protection on personal transactions, completely refusing to address the fact that this guy is scamming people using their platform.

He had to do a chargeback with his credit card company and got his money back that way, but of course PayPal banned his account in response.

Re: Can the Visa-Mastercard duopoly be broken?

#129

Post by csomar » Wed, Aug 17, 2022, 10:47 PM UTC

pkaye wrote: post #102

andersonmvd wrote: post #43

In Brazil many stores are dropping credit card and allowing only PIX (instant debit transfer) cause it's cheaper for business (0,22% avg transaction fee vs 1%-2% of credit cards - src (pt-only) https://g1.globo.com/economia/pme/noticia/2022/03/23/pix-e-m... ). The President of Brazilian Central Bank recently said that "credit cards will soon cease to exist" src (pt only) https://www.poder360.com.br/economia/campos-ne…

I presume instant payments don't have the chargeback feature of credit card? That is the main benefit I care about credit cards.

My guess is charge backs are probably a US/Canada thing. Many countries have credit cards without the protections. It happens to work in the US because there is a credit score system, high volumes and most people play by the rules.

Re: Can the Visa-Mastercard duopoly be broken?

#130

Post by lotsofpulp » Wed, Aug 17, 2022, 10:47 PM UTC

dcolkitt wrote: post #123

lotsofpulp wrote: post #104

Earlier quoted context omitted.

I get a minimum 2.6% cash back on everything I purchase, but most things I get 3.5% to 5.25% cash back. There are a bunch of free 2% cash back credit cards, so people would at least break even if they wanted to.

Generally those types of deals require either parking six figures out liquid assets at the issuing bank and/or paying high annual fees (which of course favor the biggest spenders who amortize the cost over lots of volume). Either way the current system definitely favors the rich over the middle class.

In my case, it does not have to be liquid. Any investments count, including IRA/529 and other accounts. The 2% cash back cards generally have no requirements.

I am going to have those same investments anyway in VOO at one brokerage or another, so there is no opportunity cost.

You are correct that it is sort of a wealth transfer from poorer to richer. But merchants are free to offer discounts for non credit card purchases, and they do many times.