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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?

#251

Post by quohort »

hugs wrote: post #172
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…

> You could eliminate a lot of the fraud by moving off a mostly-static identifier to merchant, amount and time-limited tokens the user generates with their bank (or the merchant redirects them there). This would address a lot of the issues - the tokens are useless when leaked... This almost sounds like a subtle recommendation for the Lightning Network. It's based on single-use invoices that are locked to a specific r…

It's pretty much how every cryptocurrency works, with separation of public (receive) and private (send) keys.

The fact that invoices are temporary in LN is a weakness of the design, not an intentional choice. The lightning network represents a regression from the typical use-case of cryptocurrency because both sender and receiver need to be online to make a payment.

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

#252

Post by jkaplowitz »

Nextgrid wrote: post #199
martinald wrote: post #186

Earlier quoted context omitted.

In a word yes. You'll still get a lot of chargebacks by the way. With a lot of ecomm I've been involved with the fraud you are talking about is actually a small part of chargeback volume. Most is unhappy or demanding customers, or another type of low level fraud, claiming goods didn't arrive despite a photo of the person literally accepting them from the delivery company. This is absolutely rampant in b2c with smalle…

Thing is, if you eliminate the risk of unauthorized transactions, you can then reasonably discontinue the concept of chargebacks as a whole, replacing it with a mediation/arbitration service that consumers can opt-in for an additional fee. This would open the door to cheap or even completely fee-free transactions if the user doesn't want to opt-in to additional protection, which they reasonably may not want when the…

How do you handle the part of chargebacks that currently validly apply to authorized non-fraudulent transactions, like services/product not delivered or not as described, or accidental double charges from vendors like random taxi drivers with whom you don't have a way to arrange a refund?

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

#253

Post by jkaplowitz »

Muromec wrote: post #234
holowoodman wrote: post #185

Earlier quoted context omitted.

The things that are still missing to make this perfect: - SEPA instant transfers (exist, but cost extra) - A consistent (across all banks) API to poll for received payments for the merchant - A consistent API (e.g. an URL schema that browsers do support) to quickly fill in payment details with your bank's transfer form.

Dutch iDeal will be rolled out continent wide pretty soon ( soon in bank time ), which is what you want. Last time I checked instant sepa (which was today) it was free as in zero commissions on either side and was actually instant.

Depends on the bank. In Germany, N26's free account charges 0.49€ per instant SEPA transfer, and sometimes it's unavailable because the other bank (e.g. one used by many German doctors) only supports non-instant SEPA.

But yes, instant SEPA is often free and often available and very nice when both of those are true.

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

#254

Post by snotrockets »

Muromec wrote: post #233
rafram wrote: post #216

Earlier quoted context omitted.

That’s fair, but paying by credit card lets you: - Keep the money in the bank (and earn interest on it) for another month or so - Contest fraudulent charges or payments for goods or services that are never delivered - Earn travel rewards (I know, those have systemic downsides) - Pay any business in essentially any country in any currency with no fee for you and a low fee for the business

SEPA has no fees and doesn’t care about currencies either. It’s EU only however.

You're wrong on all accounts here:

1. Banks are also allowed to charge fees for SEPA transfers, with some limitations.

2. It does care about currencies, in that it only supports one: the E stands for Euro, and all SEPA transfers, in the four rails it provides, are in Euros, including transfers from and to countries that are not in the euro zone.

3. And SEPA isn't limited to the European Union, as it has 36 states participating in the scheme, more than the EU's 27.

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

#255

Post by Panzer04 »

BeetleB wrote: post #153
devman0 wrote: post #96

Earlier quoted context omitted.

I think the issue here is who is paying the fee and where is the fee surfaced. A free market solution would work here, but it requires some regulating to create the transparency required. Everyone pays their own credit card fee as a line item on the receipt, merchants are required to print it on the receipt. If customers actually had to pay their own fee's on each swipe you'd see a lot less people reaching for the Pl…

Technically the merchant is paying the fee, and he perhaps is passing some or all of it to you. The reason merchants might not pass it all to you if that they get a lot more sales volume when they support credit cards, so they can still be more profitable while paying for some of those fees. I know I'm going to get hated for saying this, but the businesses that charge extra for credit card use under $10 are trying to…

The issue is there's a huge disparity in the fees for certain payment methods.

Some cards cost merchants much more than others, but they are contractually forbidden from differentiating their prices based on that. It's anticompetitive. Lots of "buy now pay later" schemes work similarly, when afterpay was (or is) a big thing they charge 7% and forbid the merchant from including that cost in their prices.

If the consumer had to bear the cost of their payment choice, no problem, but the reality is consumers with low fee payments are paying slightly more than they should for everything and those with high fee payments pay less than they should for everything.

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

#256

Post by snotrockets »

multjoy wrote: post #76
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.

>Not every transaction needs complex fraud detection or being able for the customer do to chargebacks. Fraud is an industrial level enterprise. You absolutely need fraud detection if you're accepting payment that isn't cash.

You also need it for cash, but there fraud takes different form, and need different mitigations.

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

#257

Post by h_tbob »

I like to look at things from first principles. Karma if you will. What u plant is what grows.

Debit card interchange fee in America is so low!

Credit card interchange fee is so high.

I think it’s because u are making a “deal with the devil” when u do credit. Buying stuff with other peoples money.

So naturally the “devil” charges a high price for his service.

If you want to do business with people buying on credit, you have to pay more. I think the universe is telling us we should quit with all the credit cards!

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

#258

Post by jkaplowitz »

BeetleB wrote: post #190
jakub_g wrote: post #151

Earlier quoted context omitted.

In Poland, the default way for computer shops in 2000-2010s was to offer 2% discount when paying in cash. (The prices displayed were assuming cash, so if you paid by card, you'd pay more.) I didn't see this anywhere else though. It probably made sense for computer shops because most transactions one would do there would be sporadic, big, and planned. (Since then, the Mastercard/Visa fees went down to 0.2-0.3% due to…

> I didn't see this anywhere else though. In the US offering different prices when paying by cash vs card was a violation of the agreement with Visa, as is putting a minimum price threshold for card usage. It's still fairly widespread though, and occasionally makes the news. Might explain why you didn't see it often.

I believe the Visa merchant agreement never forbade cash discounts, only credit card surcharges. I'm not sure, but the current rules are different due to a legal settlement.

In the US, not only does Visa now allow cash discounts and minimum price thresholds up to US$10, but they also allow, in most states, credit card surcharges (sometimes subject to specific state-law legal requirements).

Visa still officially disallows minimum price thresholds outside the US and certain related territories like Guam, and credit card surcharges outside the US - but I nevertheless see them plenty often here in Germany in small shops. I think the permission to offer cash discounts is global.

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

#259

Post by snotrockets »

levelz wrote: post #124

Unless you've worked for a payment processing company, or for a major retailer that does a lot of payment processing, you have no idea how much fraud or attempted fraud happens in transactions (you can even see it as a small retailer if you are getting sales online and say you'll ship international).

Or how many different rails and protocols there are, and how many of those you need to support if you actually want to serve most customers.
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