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Can the Visa-Mastercard duopoly be broken?

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Re: Can the Visa-Mastercard duopoly be broken?

#351

Post by ProjectArcturis »

tryptophan wrote: post #21
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…

Visa/Mastercard are looking very overvalued to me. When fednow comes out, I see very little reason for people to use those legacy options anymore. Its like the market is completely oblivious to the impending doom coming for these rent seekers. Every single app/store/site is gonna be begging you to enroll in fednow and will be offering 2-3% discounts/bonus points for any purchases made through it.

Zelle, Venmo, and PayPal are the ones that should really be worried.

Re: Can the Visa-Mastercard duopoly be broken?

#352

Post by nobody9999 »

moffkalast wrote: post #251
atombender wrote: post #191

Earlier quoted context omitted.

...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…

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

Huh? That hasn't been my experience. At all.

I make online purchases nearly (yesterday I made two!) daily with my debit card with no problem at all.

Perhaps that's an issue where you live. I'm in the US, so YMMV, I guess.

Re: Can the Visa-Mastercard duopoly be broken?

#353

Post by JumpCrisscross »

hn_throwaway_99 wrote: post #288
JumpCrisscross wrote: post #189

Earlier quoted context omitted.

> Why should transaction "cost" anything? It is just running arithmetic instruction on a number in a computer. Every dollar that crosses a payments platform has a non-zero chance of creating some combination of legal, regulatory and customer-service costs. Frictionless transactions are as real world as their physics counterpart. > would argue batch processing makes no sense It does, from a deeply fundamental level. T…

> Every dollar that crosses a payments platform has a non-zero chance of creating some combination of legal, regulatory and customer-service costs. Frictionless transactions are as real world as their physics counterpart. Yes, but pretty much all of those costs are a factor of the originating individual transactions. In reality net settlement is just one additional transaction where things can go wrong. Again, I'm no…

> all of those costs are a factor of the originating individual transactions

Correct, to a degree. Hub-and-spoke systems (clearinghouse, with banks at the periphery) are cheaper and more efficient than an everything-connected topology. The clearinghouse can run cheap rails because it knows it has pushed those problems to the periphery. The main missing factor, however, is float.

Float makes RTGS more expensive than batched settlement. If you give me RTGS rails, I can batch on top of it and recycle the yield on float into savings, possibly rebates (or credit, e.g. how banks front credit against deposited cheques).

The batch mechanism will always be cheaper under real-world conditions. That's what I want to emphasize. This isn't an artefact. It's fundamentally inescapable.

Re: Can the Visa-Mastercard duopoly be broken?

#354

Post by kube-system »

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?

Merchants pay different fees depending on their risk category. High risk merchants can pay 15% or more.

Re: Can the Visa-Mastercard duopoly be broken?

#355

Post by dkobia »

legitster wrote: post #59

I'm pretty confident Visa's dominance is a completely natural monopoly. There are plenty of 3rd party payment options (Amex and Diners' are still both fairly widely accepted) and nothing is stopping consumers from having multiple cards. But I think the network effects are too strong and we are seeing a pretty normal Pareto distribution. Even if you added 20 new market entrants with good coverage, consumers and busine…

The Finance industry is especially attuned to this type of distribution mostly from dealing with pretty intense risk. The strongest players rise to the top fast and a moat of trust weeds out the rest. Crypto despite the ideological objectives is not immune to this.

Re: Can the Visa-Mastercard duopoly be broken?

#356

Post by guntab-dan »

searchableguy wrote: post #258
jrvarela56 wrote: post #181

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.

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.

Yep this is true. I work in online escrow. It's basically the original "smart contract", and until we are able to reliably digitize purchase events it's hard to beat. I have friends who talk about smart contracts, not understanding that it's currently very difficult for a computer to recognize events like "buyer has taken possession of merchandise", whereas it's pretty easy for a human.

Re: Can the Visa-Mastercard duopoly be broken?

#357

Post by GekkePrutser »

novok wrote: post #332
GekkePrutser wrote: post #306

Earlier quoted context omitted.

That seems so much hassle for so little. But in Europe credit cards don't give cashback.

Your going to pay with some sort of payment card, and credit cards are easy to sign up for and less hassle to use with payments than debit cards, which require you to tap in a pin all the time. Also less fraud protection, etc.

Here in Europe it's the complete opposite. They're hard to sign up for (banks don't like giving them) and you get registered for the loan which means you will have a harder time getting a mortgage or car loan. The more loans you already have the harder it gets. I heard in the US it works the opposite way.

And the pin is required here on both (and rightly so IMO to protect against skimming). Only for minor contactless payments it isn't. But the same goes for both.

And we don't get much additional fraud protection or other benefits like insurance on them that we don't get with our debit cards.

I'm surprised the payment systems are so completely opposite. Despite being the same tech from the same companies.

The only reason I have one is that my work insists that I get an Amex due to some dirty deal they have. Which is a horrible card for traveling in Europe, nobody accepts it besides hotels. Try getting a taxi in Paris for example..

I also had my personal one as my debit sometimes didn't work but these days it works everywhere.

Re: Can the Visa-Mastercard duopoly be broken?

#358

Post by kube-system »

rowanG077 wrote: post #200
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…

> Visa and Mastercard are the privatized court systems of the internet. You make it sound like that is a good thing. They are loose cannons that time and time again have shown they shouldn't be trusted.

It's better than flying to China and hiring a Chinese lawyer to dispute some aliexpress purchase.

Re: Can the Visa-Mastercard duopoly be broken?

#359

Post by nobody9999 »

scarface74 wrote: post #290
mchusma wrote: post #203

Earlier quoted context omitted.

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…

Every study shows that consumers are willing to spend more on a credit card than when they are using cash. Taxi cabs drivers for instance were against being forced to use credit cards until they realized they got larger tips.

>Taxi cabs drivers for instance were against being forced to use credit cards until they realized they got larger tips.

I only have anecdata about this, but every taxi driver (50+) I've ever discussed CC vs. cash (this is in NYC and limited to medallion taxis) has said they prefer cash every single time.

That's mostly because of the 5% CC processing fees on every transaction, as well as delays in receiving their money from CC transactions.

I imagine it's different elsewhere, but not (at least AFAICT) where I live.

Re: Can the Visa-Mastercard duopoly be broken?

#360

Post by scarface74 »

lotsofpulp wrote: post #343
scarface74 wrote: post #313

Earlier quoted context omitted.

Well, my wife and I are kind of the degenerate case of getting credit card rewards since we are “digital nomads” traveling across the US, staying in mid tier Hilton hotels, using Uber, and flying everywhere. This means that 100% of our personal spending[1] goes on credit cards unlike most people who have car notes and mortgages/rent that they can’t put on credit cards. Just on credit cards we get: - 7-10% back on fli…

> 10%-14% back on hotels (Amex Hilton Aspire) > This doesn’t count hotel and airline loyalty points. Can you show your calculation for this? Hilton pesos get devalued on a daily basis in my experience, and they even nerfed their free weekend night with the Aspire credit card so that it is only useful for “standard” reward nights and not “premium” reward nights. Of course, all the nice hotels like Waldorfs and Curio w…

You’re not going to get a great value by staying at a Tru one night paying with a combination of points and money in East MiddleOfNowhere Nebraska.

But I’ve literally been looking at points vs money in every major city in the US and a few in Canada as I’ve been creating our itinerary.

With Hilton, when you pay with all points, you don’t pay taxes and fees and if you stay five nights and use your points, you get the 5th night free.

We stay exclusively at Embassy Suites, Homewood Suites and as a last resort Home2Suites so we can have two separate rooms (Embassy and Homewood) or at least have more space and a full refrigerator (Home2Suites). I work remotely and need the separate room to work.

You can’t really stay at a Waldorf or Curio when you are staying at hotels 280 days a year. During the winter we stay at our 2nd home/investment property.

Next year, we will be staying at the following places with all points for 7 days and getting values between .7 cents and 1 cent each: Los Angeles, San Diego, Santa Fe, NYC, Chicago and San Juan. This is just staying in mid range Embassy Suites. San Juan is at the Caribe for 10 days.

We won’t make it to the following cities until 2024. But I’ve seen good values in New Orleans, DC and Hawaii.

I was just referencing credit card rewards above. But you get 10x per dollar at Hilton, 10x for being a Diamond member (automatic with the Aspire card) and 14x with the Aspire.

The calculation was based on .007 * 14.

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