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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?

#251

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…

...In the US. Outside the US, credit cards are much less common outside the US. The alternative to credit cards isn't CoD, it's debit cards, which are connected directly to a bank account. Merchants love debit cards because they have near-zero transaction fees. You don't need credit card for chargebacks, just strong consumer protection laws that permit the bank to claw the money back from the merchant. As for fraud,…

The thing about debit cards though, it's a different system and they don't work for online payments which makes them effectively useless.

> People seem more wary of accruing debt in Europe; it's easy to lose control over your personal finances with a credit card.

Well using credit means you're taking a loan, and subsequently paying interest on that loan even if it's just a month. Why would you pay interest on a loan that you don't need and pay an exorbitant amount in monthly fees just to have the card? Seems like absolute lunacy. And here it doesn't tie into the credit score system much so there isn't a reason to do it solely because of that.

Luckily these days there are fee-less prepaid cards that work like debit cards, but function as credit cards. That's my go-to.

Re: Can the Visa-Mastercard duopoly be broken?

#252

Earlier quoted context omitted.

So far I think the first step has failed spectacularly a few times, let alone any follow up. I'm not saying the above is necessarily impossible, but at this point I've acquired an instant gag reflex when I hear blockchain. I'm not sure if that's a healthy approach for me, but it's true. Why does it have to be a blockchain instead of a government-mandated nonprofit (e.g. FedNow) to operate it? Wouldn't that have more…

I used to feel the exact same way until I saw what Circle did with USDC. I’m highly doubtful that FedNow will be able to compete in terms of innovative new features. Say what you will about blockchain, there’s a lot of builders out there aggressively churning out new tech without anyone’s permission.

USDC and Circle are not as clean as they would like us to believe. https://taibbi.substack.com/p/the-financial-bubble-era-comes...

Re: Can the Visa-Mastercard duopoly be broken?

#253

Earlier quoted context omitted.

I don't think anyone disagrees with you in terms of the value of credit cards, the issue is whether their fees are worth it. Their huge profit margins, as well as how they previously fought tooth and nail against, for example, allowing merchants to levy a credit card surcharge, suggest that their duopoly position is allowing them to charge exorbitant amounts for their services.

Well 3% fees on every purchase on the planet is a pretty astounding amount of fucking money. Explains why so many real world shops are still cash only.

Also, taxes. Card networks issue 1099-K forms in the USA and report earnings to tax agencies.

That's a major reason Argentina is taking steps to mandate acceptance of debit cards - so that income is accurately reported for tax purposes: https://www.bcra.gob.ar/MediosPago/Politica_Pagos-i.asp

Re: Can the Visa-Mastercard duopoly be broken?

#254
post #204

Earlier quoted context omitted.

No one can drain ky bank account through my payment card either. For one, they lack the authorisation to do so, and for another, there's a limit (which I can change) to how much can be transferred per day.

> they lack the authorisation to do so How does the German banking system prevent an unscrupulous online retailer from charging you 500€ for a 50€ item? Or charging you twice?

2FA, you get a popup in your bank app asking "Do you want to pay X euro to Y?" for online payments. Can turn that off if you want, but it isn't a big bother.

Re: Can the Visa-Mastercard duopoly be broken?

#255

Earlier quoted context omitted.

Whoever comes up with a way to encode this dynamic in a smart contract(s) could make a killing - or at least raise a lot of money hehe.

The dynamic is having some trusted 3rd party to manage disputes. Which defeats the point of crypto.

It's just a useful feature the fiat system has.

The bigger point of crypto is that this trust can be parametrized and made transparent in a public ledger with less intermediaries. I see it as getting to feature parity, not as something that undermines trustless-ness - don't throw the baby out with the bathwater.

Re: Can the Visa-Mastercard duopoly be broken?

#256
post #128

Earlier quoted context omitted.

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…

At least going by your retelling, I'll say PayPal was right to refuse reversal.

Mindlessly clicking through OK buttons is end-user negligence, not fraud. Your brother presumably had multiple opportunities to notice something was not okay before completely signing off on it. It's tantamount to signing a contract without so much as even glancing through the terms, then turning around saying you never meant to sign it.

Fraud protection does not absolve someone from being a responsible adult.

Re: Can the Visa-Mastercard duopoly be broken?

#257

Earlier quoted context omitted.

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.

Yep. Also one of the reasons crypto will never work (as-is) for online, digital currency/payments. Customers don't want irreversible transactions.

There's nothing about cryptocurrencies that mandates irreversible transactions. A decentralized buffer/escrow system is quite possible, it wouldn't surprise me if it already exists.

Re: Can the Visa-Mastercard duopoly be broken?

#258

Earlier quoted context omitted.

Yep. Also one of the reasons crypto will never work (as-is) for online, digital currency/payments. Customers don't want irreversible transactions.

Whoever comes up with a way to encode this dynamic in a smart contract(s) could make a killing - or at least raise a lot of money hehe.

Plenty of escrow services exist to resolve this and there are a few variation of on-chain court for dispute handling such as kleros.

The reality is very few people know they can chargeback and most use debt & instant payment option for low ticket high volume transactions.

If something was holding crypto from being used to pay for daily essentials, it is not charge back ability.

Re: Can the Visa-Mastercard duopoly be broken?

#259

European Union solved big part of the problem many years ago in 2015 with a new law. They capped the fees of Visa and Mastercard at max. 0.3% of the transaction volume on private consumer cards. It has many upsides (especially increased acceptance). The only downside: There are no real or good cashback programs (like getting 1-2% back) in Europe because of this.

Maybe I just hate money but IMO there are no good cashback schemes. A merchant-to-consumer wealth transfer that piggybacks on every transaction? Has a smell of fraud or corruption but not stinky enough for American regulators. Good job to the EU on this one.

Re: Can the Visa-Mastercard duopoly be broken?

#260

Earlier quoted context omitted.

This, absolutely. It is totally embarrassing to watch my UK family or EU friends interact with their banking systems and compare it with the US. To be fair, things are improving a little bit. But we're still so very far behind the EU banking system. Instant, cost-free transfers between any two accounts, completed faster than you can lift your finger off your smartphone.

> 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 have been using it for nearly 10 years I think.

Zelle launched in June 2017

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