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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)

#151

Post by matthewdgreen »

bigDinosaur wrote: post #67
benced wrote: post #44

Earlier quoted context omitted.

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…

They're set at whatever the payment networks can get away with. There's nothing that says that's good for anyone else, although it is very good for Mastercard and Visa.

There are several ways to reduce costs underlying payments. One is better IT. Notice that IT infrastructure has improved and dropped in cost by immeasurable amounts since those 3% fees were first instituted. Another way is to reduce card fraud. Notice that we’ve had excellent solutions to many types of fraud for decades now, but online shopping still requires us to enter 16-digit easily-stolen numbers into websites, and so fraud is enormously higher than it needs to be. With biometrics and modern smartphones, in person fraud should be very low.

A better way to look at these networks is to understand two things: the first is that at one level, they’re an insurance business that makes a profit from insuring against fraud, and reducing fraud would reduce the profit margins they can make from that business. And a second way to understand them is as guardians of a hugely profitable network portal that’s very hard to compete with, and they’re charging as much as the market can bear for that service.

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

#152

Post by paulsen »

mzitelli wrote: post #88
kwanbix wrote: post #84

Earlier quoted context omitted.

In Argentina we have Mercado Pago which is basically this.

It is not the same. Mercado Pago is a product from Mercado Livre and charges at least 0.8% per transaction.

Transfers from a bank to another and between banks and/or digital wallets (like MercadoPago) are free and almost 99% of time instant in Argentina

The transfer system is like that due to government regulation

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

#153

Post by matthewdgreen »

benced wrote: post #125
sophia01 wrote: post #98

Earlier quoted context omitted.

Oh come on. You are going to debate whether a 3% parasitic tax is good or bad. Interchange is paid on debit card transactions too, it's not credit card specific.

Parasitic takes for granted that credit card companies do nothing. Anyone who works in finance could tell you that's very false. (I'm open to the idea that this is a market inefficiency that needs government correction - but you need more than just saying "3%" to prove that)

And that is why we’ve continued to pay about 2.5-3% since the 1980s, despite the fact that every element of the card networks’ technical infrastructure and hence cost structure has radically changed since that time.

A simple way to determine whether “look, the burden of proof is on you to prove this is abusive” is the correct standard is this: try to get precise details on how much the underlying service costs, how much the various types of revenue are shared between card processors, Visa, and issuing banks. You’ll find that it’s almost impossible to get a clear picture of those details without signing an NDA. But if I’m wrong about this, come back to me with it and we’ll discuss how to use it to evaluate whether the fees are reasonable.

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

#154

Post by Loughla »

55555 wrote: post #141
thimabi wrote: post #49

Earlier quoted context omitted.

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 availa…

I am in Thailand. Fraud is a much smaller issue because it’s a push-based system. You cannot withdrawal from someone else’s account just by knowing the number, unlike with credit cards.

What about fighting charges? In the US, if I flag a charge on my credit card it's immediately cancelled and they deal with it.

How does that work?

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

#155

Post by anal_reactor »

orangea wrote: post #54
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…

> targeted specifically high ticket items (jewelry, luxury) My immediate instinct upon reading this is "of course those businesses wouldn't be interested". They are selling a brand and image first, and if it looked like they wanted people to download some new app and put in their bank details to make a purchase instead of swiping a credit card it would cheapen the brand. Luxury stores are all about a streamlined expe…

I think when the guy mentioned he studied past failures it's prime example of crunching the numbers and applying theories without actual common sense. "Ah yes, I wouldn't buy a Gucci bag for $999 but for $995 it's a deal done" you don't need PhD in economics to realize this is stupid.

The fact that the second part of his comment is full of acronyms "we ASDFed the GHIJ over KLMN" suggest it's yet another case of a manager completely detached from reality of average consumer.

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

#156

Post by AdieuToLogic »

everyone wrote: post #3

The fucked up thing is how they are enforcing archaic puritan ideals on the whole world. Acting as self appointed global censors. (Eg. not allowing adult games on Steam or Itch.io) The most confusing thing for me is why. I have read a few theories, but nothing convincing. What could be a strong enough motivator to do such a bizarre thing? Also we need governments to keep them in line. We cant have private corps actin…

> The fucked up thing is how they are enforcing archaic puritan ideals on the whole world. Acting as self appointed global censors. (Eg. not allowing adult games on Steam or Itch.io)

Banks, which constitute the majority of both payment networks, are not "enforcing archaic puritan ideals on the whole world" nor acting as "censors."

> The most confusing thing for me is why. I have read a few theories, but nothing convincing. What could be a strong enough motivator to do such a bizarre thing?

There is no need for theories regarding the inability to sell "adult games on Steam or Itch.io" as the answer is simple. Banks have identified this particular line of business to exceed their risk tolerance for any combination of:

  Chargebacks
  Fraud
  Money Laundering
They have lost too much money in this particular domain.

That's it.

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

#157

Post by bubblethink »

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?

The solution is decoupling and disaggregation. The core payment infra or transaction processing is a utility and there can be more regulation or state intervention there. Credit or lending is an add-on product which shouldn't be tied to payment infra.

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

#158

Post by geokon »

DevX101 wrote: post #50
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.

As far as I understand with WeChat you can't disputes purchases and do things like chargebacks. If your phone is somehow stolen and account drained (they'd need to know your pin..) then you're probably be screwed?

So there isn't the concept of insurance as far as I understand.

Not to defend the credit card companies in the slightest.. but its a bit apples to oranges

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

#159

Post by CalChris »

> According to the Federal Reserve, over 100 billion debit card payments were made in 2021, compared to 51 billion credit card payments. In terms of transaction value, debit cards processed $4.6 trillion, while credit cards reached $4.9 trillion, indicating that credit transactions tend to be about double in average value.

Interesting that debit cards are twice the swipes that credit cards are. Didn't know that. I wore the debit card hair shirt for decades. They have a ~0.73% transaction cost vs 1.5% to 3.5% for credit card swipes. But I never once got any benefit from this lower transaction cost.

So now I have the Trifecta and a Savor. I work my credit cards aggressively and use their benefits to exceed their annual fees before even accounting for 3% cash back and Membership Reward Points and signup bonuses.

I am winning on this. Consequently someone else must be losing. It seems to me that the debit card users are subsidizing me.

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

#160

Post by SV_BubbleTime »

CalChris wrote: post #159

> According to the Federal Reserve, over 100 billion debit card payments were made in 2021, compared to 51 billion credit card payments. In terms of transaction value, debit cards processed $4.6 trillion, while credit cards reached $4.9 trillion, indicating that credit transactions tend to be about double in average value. Interesting that debit cards are twice the swipes that credit cards are. Didn't know that. I wo…

Just a quick note, no one has ever become wealthy from their credit card rewards.

I don’t know what your system is, but it sounds like you enjoy it, so you do you.

And yes. Cash and debit cards have always subsidized credit.

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