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Visa and Mastercard: The global payment duopoly (2024)

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Re: Visa and Mastercard: The global payment duopoly (2024)

#41

Post by anodari »

forinti wrote: post #37
kyrra wrote: post #34

Earlier quoted context omitted.

My understanding is that Pix took over because the Brazilian gov did transfer payments during covid and the (only?) way to get those payments was via Pix. So it forced everyone to start using it. And once people had more familiarity with Pix, merchants started pushing for it because it charges ACH level fees. The chargeback system (MED) is only so-so right now, but expected to get better. There is a lot to like about…

I started using Pix, because it's the best way to do business with Chinese ecommerce sites. You don't have to give your credit card details and refunds go straight back to your account. In fact, it really impressed me that Aliexpress got it working before many Brazilian sites.

If you use an intermediary, implementation is usually very simple and straightforward. The biggest challenge is becoming a direct participant—that is, communicating directly with the central bank. In this case, you need to enter the regulatory framework and become a payment institution.

Re: Visa and Mastercard: The global payment duopoly (2024)

#42

Post by [deleted] »

topdan wrote: post #12

China is a footnote in the article, but their story here is interesting. China's WTO accession commitments in 2001 agreed to open its financial services sector, including payment card services, to foreign companies, except they never did. The US sued (presumably on behalf of VISA and MasterCard) and won in 2012: https://ustr.gov/about-us/policy-offices/press-office/press-... MasterCard just started being full offered…

[deleted]

Re: Visa and Mastercard: The global payment duopoly (2024)

#43

Post by zamadatix »

rprend wrote: post #30

Speaking as someone who tried (and failed) to build a competitor, merchants don’t actually care about the fees. We built a mobile payment system using bank transfer rails (ACH debits and FedNow credits) for ecom platforms. QR payments, just like AliPay, but for the US. We studied past failures at this same idea, and targeted specifically high ticket items (jewelry, luxury), because the fees are a bigger problem, and…

Not being the #1 priority is very different than not caring at all. It may feel that way when trying to sell the alternative, but the merchant would still disagree at the end of the day.

The alternative to new competition (which would probably also raise its rates as soon as it became popular enough) is regulation on the fees, as seen in Europe. This makes some sense as the problem is less with the capabilities of the systems which exist today and more with the size of the fees of established players. I don't see the US going down this route any time soon though.

Most likely, in my mind, is the world (and maybe eventually the US) moves away from US based solutions in this space over the coming decades as other governments continue to consider this something to act on.

Re: Visa and Mastercard: The global payment duopoly (2024)

#44

Post by benced »

pavlov wrote: post #13

The credit card duopoly is another instance where the EU has done a good job with regulation, but everyone just takes it for granted until they’re reminded how much worse the rest of the world has it. In the EU, card payment fees are capped at 0.2% for debit cards and 0.3% for credit cards. In the US, these interchange fees are about 2%. US businesses pay over $100 billion annually in these fees to card networks. If…

People always cite the first-order benefits of this regulation but don't look into anything else. To be clear, I haven't either but what I would look for is: - are real prices cheaper for consumers? - is economic activity higher or lower (i.e. maybe credit cards encourage purchases?) - does making credit cards a less lucrative business lower credit card penetration? - is lowering credit card penetration, particularly for people bad at doing interest math a good thing? - is making cash or debit cards relatively more appealing good?

My vague impression is that the studies on these questions are mixed (am I wrong? A quick Google found several EC funded ones which I'm a little suspicious of). Note that the US has 4 credible payment processing networks but the fees have remained constant. My suspicion is that 3ish% is the optimal value or a very large anti-trust investigation (not a price cap) is in order.

Re: Visa and Mastercard: The global payment duopoly (2024)

#45

Post by MyOutfitIsVague »

throwaway328 wrote: post #38

Reading Barrett Brown's "My Glorious Defeats" at the moment, being reminded of that time Anonymous went after Visa, Mastercard, and others, in retaliation for them blocking payments to Wikileaks. An action the payment companies took extrajudicially at the behest of the US government because the US gov was't happy with Wikileaks. Wikileaks' crime was that they'd been very successful at getting true information to the…

Very many of us are quite critical of all authoritarianism, and don't feel like we've been represented by any presidential administration for our entire lives. Centrist liberalism isn't flashy or popular, though, and it doesn't spawn many angry rallying cries or outrage that goes viral, so you'd think that we don't exist.

The current flavor of authoritarianism is quite bad, though, and does distastefully wear its hypocrisy on its sleeves.

Re: Visa and Mastercard: The global payment duopoly (2024)

#46

Post by altruios »

drdrey wrote: post #28
colesantiago wrote: post #16

So what is the solution to this duopoly except for crypto? I envision a third payment processor that isn't Visa or Mastercard and not even crypto. It isn't Stripe or PayPal either, something completely different. Thoughts?

why not crypto? stablecoins could be a credible answer to this problem

Not with the new acts passed this last week. Only established players are in that space now (Also - this is going to get way worse now with fees devaluing the dollar that are now invisible to the average consumer).

Re: Visa and Mastercard: The global payment duopoly (2024)

#47

Post by kristofferR »

Not a total duopoly, almost all cards in Norway are dual network - the local network BankAxept + Visa/Mastercard, the cheapest option (BankAxept) is selected invisibly for the users when possible while the cards still works flawlessly all places that only accept Visa/Mastercard globally.

Big businesses only pay 0.0475% + ~0.003 USD per transaction for BankAxept: https://bankaxept.no/hjelp/priser-for-bankaxept

8/10 card transactions in Norway are BankAxept. I think many other countries have similar solutions, and if not they should implement them. It won't end the duopoly, but it does decrease the consequences.

Re: Visa and Mastercard: The global payment duopoly (2024)

#48

Post by TMWNN »

itake wrote: post #15
pavlov wrote: post #13

The credit card duopoly is another instance where the EU has done a good job with regulation, but everyone just takes it for granted until they’re reminded how much worse the rest of the world has it. In the EU, card payment fees are capped at 0.2% for debit cards and 0.3% for credit cards. In the US, these interchange fees are about 2%. US businesses pay over $100 billion annually in these fees to card networks. If…

Is there information on EU vs US credit limits? How do the account fees compare between EU and US?

>Is there information on EU vs US credit limits?

I would be very interested in this as well.

My understanding is that cashback cards of the type we have everywhere in the US (e.g. Amazon Amex = 5% back on Amazon purchases, Wells Fargo Active Cash = 2% back on everything) don't exist elsewhere.

Another example: I just earned $1000 from Chase Sapphire as a new customer bonus for diverting $5K of the spending I would do elsewhere on that card over three months.

Re: Visa and Mastercard: The global payment duopoly (2024)

#49

Post by thimabi »

mzitelli wrote: post #17

Brazil central bank introduced Pix a few years ago. It took over the country as the public basic infrastructure for money transfer. Totally free and instantaneous transactions between people and companies, available to all banks. Then, just last week, the US presidency launched an investigation considering Pix an unfair trade practice against the US. Actions like that may show the current direction of the US governme…

I got in this thread with the expectation of seeing a comment like yours, so thank you for that.

I think what worries the U.S. more is the likelihood of Pix spreading around the world. It’s such a great public program that I believe many countries will eventually adopt it, or adopt some version of it. In fact, AFAIK some places already have it, like Thailand and Malaysia.

Consumers like it because it is widely available and free, companies like it doubly so, and even governments like it because it helps to combat tax evasion and fraud.

Right now, the only thing that makes credit cards a better proposition is being able to pay without having enough money in the bank, and maybe enjoying greater protection from fraudulent merchants. But I believe even that will change in the future, to the benefit of Pix-like systems.

Re: Visa and Mastercard: The global payment duopoly (2024)

#50

Post by DevX101 »

pavlov wrote: post #13

The credit card duopoly is another instance where the EU has done a good job with regulation, but everyone just takes it for granted until they’re reminded how much worse the rest of the world has it. In the EU, card payment fees are capped at 0.2% for debit cards and 0.3% for credit cards. In the US, these interchange fees are about 2%. US businesses pay over $100 billion annually in these fees to card networks. If…

0.2% should be about the correct rate. WeChat in China has zero transaction fee in the system and a 0.1% fee on withdrawals. Visa/MasterCard amounts to a private tax on the economy. Unfortunately I don't see this changing anytime soon, since the US allows rent-seeking middlemen like Visa/MC, TurboTax, and PBMs (pharmacy drugs), to continue their operation as long as they keep funding the right politicians.
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