Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Can the Visa-Mastercard duopoly be broken?

economist.com

Post reply on HN
Print view View original

411–420 of 703 posts

Re: Can the Visa-Mastercard duopoly be broken?

#411

Post by Nursie »

GekkePrutser wrote: post #357
novok wrote: post #332

Earlier quoted context omitted.

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…

> 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.

Which part of Europe? That's not how it works in the UK. You build up a record by using credit products and it benefits your score to keep them in good order.

Though it is how it works here in Australia. When you apply for a mortgage they take your credit card limit into account as a negative.

> And we don't get much additional fraud protection

That's interesting. The UK (again) has significant legal protections for credit that mean the credit card company is jointly liable for the debt in some circumstances, like fraud, and must return your money pending an investigation. There's much less protection with debit cards.

Re: Can the Visa-Mastercard duopoly be broken?

#412

Post by Schroedingersat »

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…

> then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it.

That sounds amazing. Let's do that.

Re: Can the Visa-Mastercard duopoly be broken?

#413

Post by Nursie »

moffkalast wrote: post #239
hn_throwaway_99 wrote: post #118

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.

In many countries the fees are capped much lower than 3%. In these countries you see the opposite - small shops and restaurants now don't want the expense of dealing with cash, which has to be stored securely, counted, reconciled and banked. All of these things take time and money.

Cash isn't some 'free' panacea for a business.

Re: Can the Visa-Mastercard duopoly be broken?

#414

Post by brewdad »

mixmastamyk wrote: post #379
refurb wrote: post #375

Earlier quoted context omitted.

Credit cards are superior to debit cards in every way. Fraudulent charges can be reversed immediately, don’t impact you at all (since the money isn’t yours). Chargebacks can force a retailer to give your money back. The benefits are endless.

They aren't a good solution to paying a friend $10 or your rent every month.

I can pay my child's college dorm fees with a credit card with no additional fee. At least I get a little cash back. But, yeah, that kind of arrangement is extremely rare.

Re: Can the Visa-Mastercard duopoly be broken?

#415

Post by shukantpal »

mcv wrote: post #183
insane_dreamer wrote: post #127

Earlier quoted context omitted.

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

That's the thing; lots of businesses outside the US have no problem using bank transfers. I only have a credit card for internet purchases outside Netherland; every Dutch site (including many international ones, like Steam) supports iDeal, which is far safer than credit cards.

Not really safer

"There is no chargeback right however, which can be considered a disadvantage for the consumer using this payment method."

Re: Can the Visa-Mastercard duopoly be broken?

#416

Post by Silhouette »

snazz wrote: post #198
PaulDavisThe1st wrote: post #146

Earlier quoted context omitted.

This does not negate the parent post at all. You're just describing another deficiency of the US banking system.

Out of curiosity, how do European banks avoid this issue? If my debit card or ACH info is compromised and someone drains my checking account, is there a way to use the stolen funds before the bank/court finishes their investigation?

Out of curiosity, how do European banks avoid this issue?

In the UK we have a system of Direct Debits that is popular particularly for making recurring payments like household bills or subscriptions. You provide your bank account numbers to the merchant and they can collect the required money directly.

It sounds like a huge opportunity for abuse by merchants but the easy setup is balanced by a universal Direct Debit guarantee for account holders that basically says if any erroneous charge is made then you get your money back from your bank first and questions are asked later. Merchants are required to provide all customers who pay this way with certain information about the guarantee scheme (and everyone actually does).

That in turn sounds like an opportunity for abuse by customers but having personally run a business that accepts Direct Debits I can tell you that we have never seen a single abusive reversal of a Direct Debit payment. In contract we've had a few problems with legitimate charges to cards being reversed later and the whole system around chargebacks with credit cards seems to be unreliable for both merchants and cardholders.

Re: Can the Visa-Mastercard duopoly be broken?

#417

Post by Silhouette »

brewdad wrote: post #408
justinc8687 wrote: post #391

Earlier quoted context omitted.

That's not true. As a business, at least, I can run an ACH Debit[0] with just a routing number, account number and name. NACHA rules prohibit this, but nothing programmatically prevents this from happening. [0] https://plaid.com/resources/ach/how-does-an-ach-transfer-wor... .

u/vimy was talking about European banks. There is no "pull" there. People freely share their account info because one can only push money in with that info.

That's still not true. Pull-based schemes are widely used across the SEPA region and in national schemes such as the UK's Direct Debits.

A notorious celebrity in the UK famously revealed his bank details as a stunt to show that a large-scale data loss incident wasn't a big deal and he ended up making an unexpected payment to a healthcare charity shortly afterwards.

Re: Can the Visa-Mastercard duopoly be broken?

#418

Post by notsapiensatall »

pulisse wrote: post #295
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.

> 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 difference is a consequence of law, not payment technology. It's entirely possible for someone to make fraudulent charges on a card up to its limit (which would be the analogue of draining a bank account), but CC companies are require…

There is a functional difference in how credit/debit cards work, though.

With credit cards, you get an invoice with fraudulent charges at the end of the month. You can choose not to pay those charges, citing fraud. The bank will clear the charges if they agree.

With debit cards, the money is withdrawn directly from your account. You can report the unauthorized withdrawal, and the bank will reimburse you if they agree. In the meantime, you don't have access to the money.

Re: Can the Visa-Mastercard duopoly be broken?

#419

Post by em_te »

spaetzleesser wrote: post #10
10g1k wrote: post #6

1.4 billion people in China use WeChat to pay for everything. They don't even bother with credit cards.

How much does WeChat charge in fees?

0.6% for business transactions

0% for peer to peer transactions

0% to transfer from your bank account to WeChat

0.001% to transfer from your WeChat to bank account

Re: Can the Visa-Mastercard duopoly be broken?

#420

Post by TMWNN »

arcticbull wrote: post #172
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.

Citi Double Cash is a 2% cash-back no annual fee card. Interchange benefits merchants too - there's real costs associated with holding cash, and average cart sizes are significantly bigger for credit cards. They also miss out on fewer sales. You may not value rewards programs but customers, card issuers and certainly those who operate those programs do. They're massive business. Frequently the only profitable part of…

>Citi Double Cash is a 2% cash-back no annual fee card.

Wells Fargo Active Cash is the other such card that I know of among big banks.

Post reply on HN