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Ask HN: Do we need to pay billions in fees to Stripe, Block, PayPal and Visa/MC?

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Re: Ask HN: Do we need to pay billions in fees to Stripe, Block, PayPal and Visa/MC?

#141

Post by nulbyte »

Aachen wrote: post #116
solardev wrote: post #58

Earlier quoted context omitted.

It's probably just a cultural difference between (broadly) the US, Europe, and Asia. In the US it's increasingly uncommon to buy things with cash or cash-equivalents (Venmo, Zelle, etc.), especially high-value items. Basically we have very few consumer protection laws compared to the EU, and it's very much a "buyer beware" culture here. If you get screwed by a merchant, most of the time it's just too bad for you, unl…

Thanks for providing the context > paying with cash (which leaves you almost always without recourse if anything happens) One remark about this though: you always have recourse in court. We often hear the USA is incredibly litigious, but it's not like we'd not (threaten to) bring action against a merchant not acting honestly The main situation where I see chargebacks being useful is when you fell for a scam and the p…

> One remark about this though: you always have recourse in court. We often hear the USA is incredibly litigious, but it's not like we'd not (threaten to) bring action against a merchant not acting honestly

It is, however, like we (in the US) wouldn't bring action in court. Ordinary consumers don't want to have to go to court to resolve a dispute with a merchant. Unless you have a substantial amount riding on the outcome, you're just going to lose, even if you win. It costs time and money to go to court. While you may legally have recourse with litigation, in practice, it doesn't usually work that way.

Re: Ask HN: Do we need to pay billions in fees to Stripe, Block, PayPal and Visa/MC?

#142

Post by Nextgrid »

tebbers wrote: post #119

No we don’t need to pay billions. There are moves afoot in the UK to do direct bank to bank payments with Open Banking. HMRC (the UK tax authority) has been doing this for years. When I pay my tax bill, I select my bank, scan a QR code with my phone, that launches my banking app, I authorise the payment and off it goes in just a few seconds. Instant and a few pence, even for thousands of pounds. This particular imple…

Open Banking is an overengineered and terrible solution, requires middlemen and there's nothing "open" about it. Do not fall for the hype.

Basically, instead of having a URL scheme to represent a bank transfer request that your banking app could register itself for and handle, they'd rather rely on a middleman to get a broad read/write access token to your bank account so they can initiate the payment from there.

These tokens are not scoped. When you do this, you fully trust the merchant (and theoretical legal recourse you may have) to not lie and only initiate the bank transfer for the amount they claimed - but there's nothing technically preventing them from taking more, or silently also grabbing your account history in the process (no bank provides an audit trail to know which read actions were taken).

In fact, I suspect the fact you can do a read access as a byproduct "for free" and silently is a big part of why this type of payment is pushed so heavily.

In addition, "Open" banking requires either significant regulatory/licensing hurdles, or a middleman like TrueLayer who (at least at one point, not sure how it is now) will be happy to lend their license to you for a fee. On top of that, you either need a middleman or need to integrate with each bank's API separately - so generally speaking, you'll always need said middleman.

All for something that can be resolved on the client side with a simple URL scheme. But don't expect a corporatocracy like the UK to go for the simple solution if they can instead go with one that provides turf to as many middlemen and parasites as possible.

Re: Ask HN: Do we need to pay billions in fees to Stripe, Block, PayPal and Visa/MC?

#143

Post by gizmo »

Thanks to modern payment companies we are already living in the good place. Before Paypal you almost couldn't get paid on the internet at all. If you wanted to accept credit card payments it was a whole ordeal and banks didn't understand why anybody even wanted to sell things on the internet.

Payment processing also got much cheaper. It's arguably still more expensive than it should be, but giving up a few percentage points in revenue in exchange for frictionless payments is a really good deal.

Re: Ask HN: Do we need to pay billions in fees to Stripe, Block, PayPal and Visa/MC?

#144

Post by martinald »

Nextgrid wrote: post #120
oldprogrammer2 wrote: post #9

Stripe, Block, and PayPal each solved a massive pain point. PayPal provided a way to pay people and vendors without giving away your credit card number. Square made it easy to accept payment in person on a phone, without an extensive upfront underwriting experience and without expensive fixed monthly fees. Stripe did the same as Square, but for accepting online payments. Fraud and Risk come in many forms, and these p…

A lot of the fraud hinges on the fact that all you need to drain an account is a static card number. A lot of hacks are subsequently piled on top of that to try and make it harder (SCA/3D Secure, captchas, etc), and a lot of busywork is spent tidying up the consequences of that (chargeback handling, etc). You could eliminate a lot of the fraud by moving off a mostly-static identifier to merchant, amount and time-limi…

This is already happening, 16 digit PANs are due to be phased out https://developer.visa.com/capabilities/vts

Re: Ask HN: Do we need to pay billions in fees to Stripe, Block, PayPal and Visa/MC?

#145

Post by nazcan »

alberth wrote: post #107
thesausageking wrote: post #39

Earlier quoted context omitted.

The challenger to these will solve for a different problem. Not every transaction needs complex fraud detection or being able for the customer do to chargebacks. For a 3% discount, would customers agree to use something that worked just like cash, where the transfer was instant and couldn't be undone? Then you don't have to worry about fraud, chargebacks, etc.

You just described debit cards. And there fees are 1/10 of that of credit cards, as a result of giving up these benefits.

But at least in Canada, only have low fees if they are in person - not online.

Re: Ask HN: Do we need to pay billions in fees to Stripe, Block, PayPal and Visa/MC?

#147

Post by Nextgrid »

martinald wrote: post #144
Nextgrid wrote: post #120

Earlier quoted context omitted.

A lot of the fraud hinges on the fact that all you need to drain an account is a static card number. A lot of hacks are subsequently piled on top of that to try and make it harder (SCA/3D Secure, captchas, etc), and a lot of busywork is spent tidying up the consequences of that (chargeback handling, etc). You could eliminate a lot of the fraud by moving off a mostly-static identifier to merchant, amount and time-limi…

This is already happening, 16 digit PANs are due to be phased out https://developer.visa.com/capabilities/vts

The page is light on details, but is it scoped and merchant/amount/time limited? Because if not, it’s yet another “hack” that merely reduces one specific type of fraud (when a card number is leaked) without fully addressing the problem, so the need for chargeback arbitration (and thus associated costs) persists.

Re: Ask HN: Do we need to pay billions in fees to Stripe, Block, PayPal and Visa/MC?

#148

Post by [deleted] »

deepsun wrote: post #128
blacklion wrote: post #115

Earlier quoted context omitted.

PayPal: In Netherlands there is system called iDeal which provide online payments via tokens, without giving any of your data to seller (recipient). It is supported by all banks. It is super-convinient, you scan QR code by bank app on your smartphone if you pay on other device (laptop, computer) or link is opened by your bank app on mobile and you approve payment. You don't need to enter anything, only select your ba…

Same thing in Ukraine. And it's not because they face less fraud attempts, it's just their tech is years ahead of US.

[deleted]

Re: Ask HN: Do we need to pay billions in fees to Stripe, Block, PayPal and Visa/MC?

#149

Post by miki123211 »

oldprogrammer2 wrote: post #9

Stripe, Block, and PayPal each solved a massive pain point. PayPal provided a way to pay people and vendors without giving away your credit card number. Square made it easy to accept payment in person on a phone, without an extensive upfront underwriting experience and without expensive fixed monthly fees. Stripe did the same as Square, but for accepting online payments. Fraud and Risk come in many forms, and these p…

Most countries that aren't the US basically did this, in one way or another.

There are multiple ways of doing so, two-factor authentication (think 3d secure) is one, an oAuth like system where you log in to your bank on their website and consent to a wire transfer is another. There are variations on these ideas, the system we have here gives you a 6-digit code in your banking app which you can enter on any device, trusted or not, and then accept the transfer via a pop-up on your phone, no personal data involved.

As far as I understand, both US law and US history heavily incentivize the use of credit cards. There's no nice way for landlords, banks, mortgage lenders and other such institutions in the US to do "background checks" on their customers except through credit scores, and that incentivizes credit card use. There's also a regulatory difference in how credit versus debit card chargebacks are handled, making credit a lot more friendly to consumers in cases of actual fraud.

Then there's the historical aspect, in the era where there were no computers, and most vendors could at best call a bank to verify if a card was valid, a debit based system wasn't technically feasible, which is what put the US on the path of credit. A lot of poorer countries had the major cash-to-cards transition a lot later, in the era of chips and dial-up modems, which made debit a lot easier to implement, and so that's what they went with, and debit usually means far lower fees.

Re: Ask HN: Do we need to pay billions in fees to Stripe, Block, PayPal and Visa/MC?

#150

Post by solardev »

Aachen wrote: post #62
solardev wrote: post #60

Earlier quoted context omitted.

I have a longer reply in a sibling post ( https://news.ycombinator.com/item?id=41276479 ), but basically, yeah... in the US we have very few consumer protections, so credit cards offer some of that in lieu of a functional government. They also have much better protections against fraud (if someone steals your credit card and buys something with it, you're not liable... the bank will pay you back). If you get scammed…

Getting scammed is a problem but it's not super common and the banks have a policy of refunding the money. Society bears the cost that way, and has the incentive to prevent and educate, rather than that it ruins some individual's life

The banks where you live, you mean? Here they won't care, once you send it, it's gone forever even if it was a scam.
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