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

601–610 of 703 posts

Re: Can the Visa-Mastercard duopoly be broken?

#601

Post by Brystephor »

jpollock wrote: post #105

I don't understand how this is possible: "Merchants hand over some $138bn in fees each year; according to the National Retail Federation, a lobby group, it is their second-biggest cost after wages." Unless they're talking about more than just credit card fees? From the same article: "But credit-card fees are unregulated and meatier, usually sitting at about 2% of the transaction and rising to 3.5% for some premium-re…

Not sure what criteria they used. But I totally believe this for any e-commerce store or company that doesn't have a physical presence.

You also get charged for each chargeback, which is likely included in that $138bn number. And if you have a high enough chargeback rate you will be fined an additional amount.

Re: Can the Visa-Mastercard duopoly be broken?

#602

Post by novok »

lxgr wrote: post #525
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.

> which require you to tap in a pin all the time I really wish US credit cards would finally switch to PIN as well. We all end up paying for lost/stolen card fraud indirectly, and PINs are extremely effective at preventing that. The downside would be if banks would use that as an opportunity to shift the liability for all remaining fraud onto cardholders as well, but the same scenario already exists with ATMs and deb…

While your waiting for your fraud process to finish, you don't have money in the bank. Also as you said, more fraud liability is shifted to card holders, so if someone stole your pin then it's even more pain.

While with a credit card, you do still have money in the bank and less instances where you are assumed to be the liable person.

Also culturally in the USA it's a common feeling that debit is not as good or the consequences are more dire with debit cards and fraud.

Bank balances are very important for most Americans to avoid late fees and so on to pay their bills, while you can hypothetically walk away from a credit card debt.

Card companies decided that the friction & support burden that PIN entry gives is not worth the revenue decrease vs. the cost of fraud AFAIK.

IMO I want push permissioned payments and not have this basically auth-free pull system of payments, but that wont happen for a long time. Subscriptions should be a subscription request send to a card, you approve in your bank app and then you can cancel unilaterally on your side on you app. None of this pull crap. Same with tap to pay.

Re: Can the Visa-Mastercard duopoly be broken?

#603

Post by denton-scratch »

GekkePrutser wrote: post #298
AlexandrB wrote: post #235

Earlier quoted context omitted.

It's also available in Canada through Interac. I'm still shocked when I go to the US and have to sign for a credit card transaction. Last time I did that in Canada was when Bush was president.

Same here in Europe. I've not signed my card for more than a decade because I've never been asked to provide a signature.

Signatures are silly. They're hard to verify, and easy to forge. And my own personal signature has degraded over the years; I can write my autograph twice, and although they both look to me like my signature, they no longer look like the same signature.

So I can understand why nobody any longer wants to have to verify signatures.

Most people that ask me for a signature (usually deliverymen) don't care what I scrawl on their device; it's usually not even an attempt at a signature, it's just the simplest I can manage on those awful devices.

Re: Can the Visa-Mastercard duopoly be broken?

#604

Post by wiederholen »

selectodude wrote: post #581
mnd999 wrote: post #577

Earlier quoted context omitted.

I dunno about US law but in the UK the law of legal tender requires you to accept payment of a debt in (exact) cash and if you've already eaten the food then a debt would certainly exist. This would not apply in a shop of course as they could just refuse to sell you the goods.

It's the same in the United States. You have to accept cash to settle a debt but if you haven't received anything, the concept of "legal tender" doesn't really exist yet. That's why laws that require accepting cash are generally done at a municipality level.

There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.

Re: Can the Visa-Mastercard duopoly be broken?

#605

Post by lxgr »

novok wrote: post #602
lxgr wrote: post #525

Earlier quoted context omitted.

> which require you to tap in a pin all the time I really wish US credit cards would finally switch to PIN as well. We all end up paying for lost/stolen card fraud indirectly, and PINs are extremely effective at preventing that. The downside would be if banks would use that as an opportunity to shift the liability for all remaining fraud onto cardholders as well, but the same scenario already exists with ATMs and deb…

While your waiting for your fraud process to finish, you don't have money in the bank. Also as you said, more fraud liability is shifted to card holders, so if someone stole your pin then it's even more pain. While with a credit card, you do still have money in the bank and less instances where you are assumed to be the liable person. Also culturally in the USA it's a common feeling that debit is not as good or the c…

> While your waiting for your fraud process to finish, you don't have money in the bank.

In many circumstances, banks are required to either resolve the issue quickly or provisionally credit you in case of disputes. Fraud liability is also limited by regulation, in addition to card scheme rules and bank policies:

https://www.forbes.com/advisor/banking/what-is-regulation-e/

> Also culturally in the USA it's a common feeling that debit is not as good or the consequences are more dire with debit cards and fraud.

I suspect that it's primarily that: Common knowledge with a lot of truth to it, but not entirely up to date and correct in many instances. Germany obviously has a lot of that as well, but with very different axioms leaving to very different outcomes in terms of guidance and behavior ("only cash is real money", "debt is bad/a moral failure" etc.)

> Card companies decided that the friction & support burden that PIN entry gives is not worth the revenue decrease vs. the cost of fraud AFAIK.

The problem is that due to market dynamics (leaving aside card scheme rules for the moment), it's really not up to individual banks to change that. The first bank to introduce a PIN on their credit card would lose a lot of purchases to their competitors due to convenience, forgotten PINs etc.

In Europe, it took heavy regulation to get banks to use 3DS – the dynamics there in terms of a first-mover disadvantage were very similar, and the existing (significant!) financial incentives were not enough.

> IMO I want push permissioned payments and not have this basically auth-free pull system of payments, but that wont happen for a long time. Subscriptions should be a subscription request send to a card, you approve in your bank app and then you can cancel unilaterally on your side on you app. None of this pull crap. Same with tap to pay.

The various stakeholders (card schemes, regulators, banks) are well aware of that customer demand. This industry is one full of legacy technology, and it'll take a while, but I think we'll get there eventually.

Re: Can the Visa-Mastercard duopoly be broken?

#606

Post by selectodude »

wiederholen wrote: post #604
selectodude wrote: post #581

Earlier quoted context omitted.

It's the same in the United States. You have to accept cash to settle a debt but if you haven't received anything, the concept of "legal tender" doesn't really exist yet. That's why laws that require accepting cash are generally done at a municipality level.

There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.

I know that. However you must accept cash to settle a debt. It's literally printed on every bill.

Re: Can the Visa-Mastercard duopoly be broken?

#607

Post by physicsguy »

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.

Transaction fees are much lower in Europe, there are some laws about it. That means that credit card rewards are nowhere near as generous.

Re: Can the Visa-Mastercard duopoly be broken?

#608

Post by krade »

baxuz wrote: post #507
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…

It should be like that in the EU ( https://ec.europa.eu/commission/presscorner/detail/de/MEMO_1... ) 2.1 Why does the proposed Regulation cap interchange fees at 0.2% and 0.3% for debit and credit card transactions respectively? The 0.2% and 0.3% caps were proposed by schemes (Visa Europe, MasterCard, Groupement des Cartes Bancaires2) in competition proceedings and appear practical as providing legal certainty while…

because people (intentionally) keep conflating interchange, card scheme fees as well as fees paid to the merchant's acquiring bank in order to make US/UK fees seem more outrageous. Just going off of Stripe pricing, the processing fee is 1.3% for EEA issued cards compared to 2.9% in the US.

Re: Can the Visa-Mastercard duopoly be broken?

#609

Post by thfuran »

apeace wrote: post #571
conjecTech wrote: post #565

Earlier quoted context omitted.

This is a false dichotomy. Other countries have debit systems that solve all of the problems you outline and charge 0.1%.

Fair point, and I'd be happy if my coffee lady could get a better deal on card processing. I'm just saying that I don't view it as such a big disaster for card processors to be charging fees in general, given that it does provide a significant value to the business owner.

3% off the top is quite a lot. Grocery stores, for example, tend to operate at around a 2-3% profit margin.

Re: Can the Visa-Mastercard duopoly be broken?

#610

Post by moate »

hnburnsy wrote: post #550
nullfield wrote: post #479

Earlier quoted context omitted.

Given who owns Zelle and what they do, and that they’re not a bank, I really want zero to do with them. They’re sus AF, IMO, and I’m just waiting for there to be a serious incident.

>Zelle is a United States–based digital payments network owned by Early Warning Services, LLC, a private financial services company owned by the banks Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo. So it is owned by the banks, but the banks that own and offer it don't give any protections.

It's almost like that's the point. A lot of tech solutions just seem like ways of offloading liability or skirting regulation in a traditional market.
Post reply on HN