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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?

#131

Post by PaulDavisThe1st »

holistio wrote: post #97
arcticbull wrote: post #77

Earlier quoted context omitted.

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.

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.

The Amazon/Chase credit card gets you a 5% Amazon credit for everything you spend at Whole Foods. That pretty much destroys their profit margin on a lot of what they sell. Given that I do all my grocery shopping there (for now), and I spend a lot on food, that's $840/year plus or minus.

My regular Chase card gives me 1.5% of everything I spend back as cash. That's typically about $1k/year.

I pay nothing in (direct) card fees at all.

Re: Can the Visa-Mastercard duopoly be broken?

#133

Post by jjcon »

madrox wrote: post #69

I'm just grateful it's a duopoly and not a monopoly. Can you imagine how much worse the situation would be if one company soft-owned the entire space the way Facebook does with social media?

I'm not sure how facebook is a monopoly on really any level (see tiktok, twitter, youtube, snapchat, etc etc). Visa Mastercard duopoly also has 10x the barriers of entry that social media has.

Re: Can the Visa-Mastercard duopoly be broken?

#134

Post by JumpCrisscross »

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…

> I'm sure online merchants are happy to keep paying their ~3% fees as long as sales continue

There might be an opening in subscriptions. Those merchants know their customers, and may be willing to take on fraud risk for material bump in revenue.

Re: Can the Visa-Mastercard duopoly be broken?

#135

Post by philip1209 »

nixass wrote: post #121
cycomanic wrote: post #103

Earlier quoted context omitted.

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

For consumers in the USA, there's a negative take rate. You get cash back if you pay with a card.

Re: Can the Visa-Mastercard duopoly be broken?

#136

Post by julienb_sea »

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…

The benefit of credit cards is no one can literally drain your bank account via fraudulent access to a payment card directly tied to your bank (i.e. debit card in US nomenclature). This is a clear benefit regardless of location. Courts are slow and not scalable, and you don't want to be in a scenario where your bank has been drained right before you need to make important payments.

Re: Can the Visa-Mastercard duopoly be broken?

#137

Post by superasn »

For all the red-tape and corruption we have here, I still think India has done a phenomenal job with UPI payments. I mean I don't even remember the last time I used my credit card considering I have even forgotten the pin codes now.

One or two other thing I love about these UPI payments is that it doesn't seem to incur any 2 or 3% commissions(1) which is both great for the consumer and the merchant (as these costs would eventually be passed to the customer anyway). Also almost every cc machine, website and panwala has a the QR codes now so no need to carry a wallet or plastic cards. I can make payments of Rs.5 and that's fine.

I don't even carry a wallet anymore to a mall or any place since my driver's lic/reg is in the digilocker app(2) and the credit card is the gpay/phonepe app.

(1) Not really sure if there is or will be later, since I'm not a fintech person, but from what I can tell I don't see any commission on UPI payments yet.

(2) https://www.google.com/search?q=digilocker+license+valid

Re: Can the Visa-Mastercard duopoly be broken?

#138

Post by kelnos »

aidenn0 wrote: post #70
Areibman wrote: post #37

Does anyone sincerely believe FedNow will gain traction for consumer payments? The fees don’t seem particularly cheap (at least compared to something like Solana Pay), and the FedNow website does not inspire confidence.

If checking accounts get debit-only RTNs for cheap/free, this could potentially catch on. $0.06 per transaction with $25/month subscription fee is incredibly cheap, plus no chargebacks! Biggest issue I see is that the larger banks might not offer this to their customers so as to not cannibalize their credit card businesses and/or in-house payment system.

> $25/month subscription fee is incredibly cheap

Cheap?! That's $300/yr, and is more expensive than most credit card annual fees (for cards that even have annual fees). And with FedNow you don't get any credit card benefits. I mean, I pay $550/yr for one of my credit cards, but I get like $2k of value out of it per year in benefits. Why would I want to pay $300/yr for something that lets me do something I can already do, for free or "cheaper than free"?

Re: Can the Visa-Mastercard duopoly be broken?

#139

Post by Jensson »

kelnos wrote: post #87
saurik wrote: post #46

Earlier quoted context omitted.

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 p…

You borrow someone's phone? Have people forgotten how to talk and help each other? It is very rare for phones to get stolen or break down, and when they do it is a lot easier to borrow a phone to pay for a Taxi than it is to beg for the money for a Taxi ride, so the situation still seems better than what we had before.

Main thing stopping this would be that most phone OS doesn't seem to support guest logins, but that is an easy technicality to fix as long as there is demand for it which there will be as phones becomes more important.

Re: Can the Visa-Mastercard duopoly be broken?

#140

Post by PaulDavisThe1st »

nixass wrote: post #121
cycomanic wrote: post #103

Earlier quoted context omitted.

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

Don't think of it as a credit card. Think of it as payment mechanism. It comes with certains costs (to some users, and to all merchants) and also with certain benefits. It also comes with a certain aggregate cost to the whole of society, since essentially prices are increased to cover fees, and then some fraction of the fees are refunded to the wealthiest users (redistribution, just more subtle than taxes).
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