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Can the Visa-Mastercard duopoly be broken?

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Re: Can the Visa-Mastercard duopoly be broken?

#241

Post by asiachick »

chiefalchemist wrote: post #199
julienb_sea wrote: post #136

Earlier quoted context omitted.

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.

Perhaps. Adding... The benefit of credit cards is...credit, and the ability of the card to abstract the idea of spending money away from the consumer. Few things exemplify "out of sight, out of mind" better than credit cards. The model is amazingly profitable as well. Like printing money, literally.

Interestingly, in Japan, at least until recently, the way credit cards worked is, when you buy something you'd have to say how many payments you were going to pay it off in and your bank would automatically take money from your bank account at that level.

In other words, you'd go to some electronics store and by a $2000 TV and they'd ask "how many payments". You'd say 10 and you'd end up paying $200 a month. I don't know the origin of why they did it that way. To be clear, this was bank credit cards, not store cards. I imagined it was something to do with the commitment and knowing you couldn't just pay off some minimum. Purchases under a certain amount and/or by store you were not allowed to divide up.

I've had Japanese friends come to America and want to buy something for $500 and ask if they can have ask for 4 payments and have to explain that system doesn't exist here. If you want to make 4 payments you make 4 payments.

I've never looked into if the bank is giving all the money to the merchant and then charging the customer per month or if they're sending to the merchant per month. Nor did I ever look into interest fees. I just know it is (was?) common.

Re: Can the Visa-Mastercard duopoly be broken?

#242

Post by Hanschri »

I would like to show you the national payment system in Norway, BankAxept[0]. It's used in 8/10 purchases in physical stores. The system verifies the card has a sufficient balance before the transaction is verified, and charges the account instantly on purchase.

The subscription to the network is 150 NOK/month, with each transaction costing 0,21 NOK each, before volume rebates. 1 EUR/USD is worth roughly 10 NOK at the time of writing, so about 15/0,021 for the subscription/transaction cost. I don't know much about VISA and MasterCard costs, but I would hazard a guess they're higher.

I think the only time I ever use VISA is when purchasing things online, and even then I'm not quite sure it's always VISA. Fun fact, BankAxept stopped accepting the magnetic strip in 2011. Now chip & pin or NFC are the two main ways of paying, with NFC transactions under 500 NOK not requiring the PIN to be entered, except periodically for verification.

[0]:https://en.wikipedia.org/wiki/BankAxept

Re: Can the Visa-Mastercard duopoly be broken?

#243

Post by motohagiography »

Sure, but it requires a fork of the EMV/global platform protocols, and a technology change that obviates payment terminals. It will always exist as a legacy integration, but you basically need a parallel infrastructure with better economics.

An open wireless tap protocol for cryptocurrency hardware wallets would do it, and then there would have to be a delegation wallet / cash register version where you can delegate payment collection to an employee without giving them the whole bank account, and then some kind of insurance to backstop inevitable fraud, and a market for securitzing and trading the bonds for that insurance, all with transaction fees that are competitive with cards and interac. Nothing current crypto exchanges and companies can't do today.

I actually foresee these becoming popular as a reaction to CBDC's and the cashlessness that will very severely marginalize people and cut them out of the economy. Further, I could see shops themselves polarizing, where just like you may not go to a McDonalds (I haven't been in one in decades), there are places you go, and places you don't, and the places that only accept govt fiat will be the places you go when you don't have a better option. It will be like going to a small town greengrocer who accepts crypto or gives credit by private arrangement repayable in crypto vs. some globalized big box store. There's a floor on how stupid and overreaching regulations can be before the economics of peoples individual risk/reward calculation switches to evading them. It's literally the mechanism behind pervasive low level corruption in authoritarian regimes, where past a point, governments themselves have invented the incentives for citizens to evade them, and created massive underground economies as a result. Worse, the state benefits from the black market money and turns a blind eye to the criminals who support it, and that's how you get places like Chicago, Baltimore, LA, and to a lesser extent, Vancouver.

Yes, the duopoly will be broken, but it will be the side effect of emerging cashless society policies from some spectacularly naive policymakers.

Re: Can the Visa-Mastercard duopoly be broken?

#244

Post by organsnyder »

humanwhosits wrote: post #217
lotsofpulp wrote: post #165

Earlier quoted context omitted.

> Instant, cost-free transfers between any two accounts, completed faster than you can lift your finger off your smartphone. This is available to most people in the US via Zelle. I have been using it for nearly 10 years I think. https://www.zellepay.com/get-started Ideally, the federal government would have already made it a utility available to all, but for now the functionality is there for those who can get a bank…

I don't want some third party doing the bank transfer, just lets the banks 1:1

You need a network of some sort, unless each bank has to maintain a direct interface with every other bank.

Re: Can the Visa-Mastercard duopoly be broken?

#245

Post by yieldcrv »

mcv wrote: post #196
lotsofpulp wrote: post #165

Earlier quoted context omitted.

> Instant, cost-free transfers between any two accounts, completed faster than you can lift your finger off your smartphone. This is available to most people in the US via Zelle. I have been using it for nearly 10 years I think. https://www.zellepay.com/get-started Ideally, the federal government would have already made it a utility available to all, but for now the functionality is there for those who can get a bank…

But it's available to everybody in Europe regardless of what bank or other service they use.

biiig asterisk on that is necessary

basically friends in the same country using a select few major banks are likely to have instant sepa available between them and it seem like the normal thing, while the reality is that instant-sepa is a massive patch work of availability between countries, banks, currencies

an outsider to the EU trying to do business is unlikely to be a part of a social circle where everyone is using the same thing

theyll encounter super slow multi business day SEPA, where no bank knows where the transfer is yet, the same as ACH in the US

Re: Can the Visa-Mastercard duopoly be broken?

#246

Post by asiachick »

misterprime wrote: post #211
skimo8 wrote: post #177

Earlier quoted context omitted.

I use it for cash back. It helps to significantly offset sales tax for me. Yes, the money is always coming from somewhere and arguably products might be cheaper without credit cards. However, it’s the game we’re in, so why leave money on the table?

cash back *rewards. Please don't use your credit cards for cash advances unless you REALLY know what you're doing and why.

I assumed they were referring to the % cash "back". For example the Apple Card

> Get up to 3% cash back on every purchase you make

https://apply.applecard.apple/

I've always assumed I'm paying that 3% so might as well try to get some of it back.

Re: Can the Visa-Mastercard duopoly be broken?

#247

Post by philip1209 »

makeitdouble wrote: post #208
philip1209 wrote: post #114

Earlier quoted context omitted.

Lower fees matter most for low-margin businesses. If your business has 5% margins, then taking your payment processing fees from 3% to 1% is transformative for your profits. The reality is that most low-margin B2C businesses are brick and mortar service-based businesses, such as restaurants. And, therein lies the problem for Paypal and for crypto payments: The low-margin businesses that care about CC fees are not ear…

Yes. There is a huge divide between online and offline. For online your choice is to poney up the fee or not get paid at all. You’ll also probably target a wider audience and region restricted payment networks become less viable. Offline credit cards processing currently has super low fees, but it’s also a field where there is already way more competition than VISA/Mastercard, in particular there will be national car…

Yeah, but the danger is that cash-only businesses will have smaller check sizes, and at the end of the day that probably translates to less in alcohol sales. So, if sales decreases because of unfavorable payment methods (such as cash), then it's the high-margin item (alcohol) that probably gets affected most.

Re: Can the Visa-Mastercard duopoly be broken?

#248

Post by dalyons »

mchusma wrote: post #203
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 am an online merchant. The visa Mastercard fees are enormously high, so not. We are not "happy to pay it". The 3% is not to cover any consumer protection, that cost is born by the merchants. When a dispute is made by a customer, the merchant is assessed a fee, and almost always loses the dispute. The fees are so high that credit card companies give extremely high rewards back, which is in effect a regressive tax. I…

> consumers can dispute anything within x days and merchants have to issue a refund. No administration.

Er merchants will get instantly crushed with first party fraud. As soon as people realize they can acquire a good and then get an instantly approved dispute the day after, game over. Unless thats not what you mean?

Re: Can the Visa-Mastercard duopoly be broken?

#249

Post by mcv »

bcrescimanno wrote: post #108
kelnos wrote: post #26

Earlier quoted context omitted.

Perhaps this is an irrational fear, but one of the reasons I like credit cards is because when a charge happens, no money leaves my personal accounts. If a charge is fraudulent, it gets cleared up without me being out some amount of money until it gets cleared up. I assume with FedNow (same as if I were to transact using debit cards), money leaves my bank account more or less immediately when a charge happens. That m…

That fear isn't irrational at all (at least, it wasn't). About 20 years ago, I had a debit card number stolen and my account was cleared out. It took about a month to get resolved an, in that time, I had some very unpleasant conversations with quite a few people including my landlord about my inability to pay my bills. In the grand scheme, I suppose it didn't harm me--but it was an extremely unpleasant situation to d…

How can someone clean out your account with just the card number? Was there no 2FA?

Re: Can the Visa-Mastercard duopoly be broken?

#250

Post by leesalminen »

moffkalast wrote: post #236
leesalminen wrote: post #173

Earlier quoted context omitted.

I think it depends on the scenario. If you’re buying $0.50 worth of bananas at a farmer's market, then maybe irreversibility doesn’t matter. Could be even a $20 lunch bill, I've never done a chargeback at a restaurant before.

So what you're saying is that it's only useful for meaningless amounts? Sounds pretty pointless.

Something that is a meaningless amount for you surely isn’t meaningless for the person receiving it.

To extrapolate the idea some, I’d be comfortable using an irreversible payment method for various B2B SaaS subscriptions. Those can reach perhaps more meaningful amounts to you.

It seems that you’re rather dismissive of this conversation, so I’ll wish you a pleasant day/evening.

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