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What do Visa and Mastercard do? An intro to card networks

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Re: What do Visa and Mastercard do? An intro to card networks

#161

Post by warkdarrior »

Aspos wrote: post #11
gloryjulio wrote: post #4

Earlier quoted context omitted.

> and it does not require anything close to that to maintain their network. If it's so easy to disrupt visa/mastercard payment network, they wouldn't be able to charge this much. Payment is a highly competitive business. We witnessed so many payment companies went under or were bought out, but these two stay for years and are still profitable. The truth is their moat is considered very durable and hard to build. A gl…

If someone owned all the highways, building an alternative would be difficult as well.

Why hasn't Alipay completely replaced Visa and Mastercard in US? Everyone has a smartphone to scan a QR code.

Re: What do Visa and Mastercard do? An intro to card networks

#162

Post by kiririn7 »

bob1029 wrote: post #93
rednb wrote: post #85

Earlier quoted context omitted.

You are literally linking to a page published by Visa's Investors Relations Department. The problem is that like all cartels, they hold progress back. Things could be even more efficient than the current state of affairs. For example we could have open standards with thousands of local players, much faster settlement times etc... There are also aspects such as the fact that due to this concentration of power, the who…

I like how providing an incredibly efficient payment network is framed as holding progress back. I'd frame it as making the standards for competition very high. I don't see people getting super ideological about their inability to create monocrystaline turbine blades or 2nm semiconductors in their garages. Why payment networks? Because computers? The overall network is way more complicated than a specific technologic…

“It works extremely well” doesn’t establish “its prices and restrictions are justified”. much better, less parasitic systems are possible, look at brazil and PIX. "These networks would be usurped if someone could actually come up with a better system" the problem is the network effects with payments is so strong that this is wrong. to explain it simply, Network effects and customer lock-in mean the best system doesn’t automatically win.

Re: What do Visa and Mastercard do? An intro to card networks

#163

Post by warkdarrior »

losteric wrote: post #6
UltraSane wrote: post #5

Earlier quoted context omitted.

Credit card companies are mostly parasitic middle men but I have a credit card that I use for most payments and pay off the balance every month and effectively get 2% cashback with no interest costs.

The actual rates charged to merchants are variable, and typically higher for rewards/cashback cards. Basically, other people are subsidizing cards with higher benefits/cash back (of course as people shift, the merchant raises prices to compensate for the higher average fee, or just charge an additional Z% higher than your cash back)

> other people are subsidizing cards with higher benefits/cash back

Ripping off other people is the American way.

Re: What do Visa and Mastercard do? An intro to card networks

#164

Post by Aspos »

warkdarrior wrote: post #161
Aspos wrote: post #11

Earlier quoted context omitted.

If someone owned all the highways, building an alternative would be difficult as well.

Why hasn't Alipay completely replaced Visa and Mastercard in US? Everyone has a smartphone to scan a QR code.

I struggle to understand how is this relevant. Alipay is closer to paypal than to VISA/MC

Re: What do Visa and Mastercard do? An intro to card networks

#165

Post by seabre »

avianlyric wrote: post #144
seabre wrote: post #106

Earlier quoted context omitted.

As someone who has been hit with fraud on a debit card and a credit card, the process to recover money from fraud on a credit card is so much easier and more hassle-free than a debit card. The big difference is that with a debit card, it's your money that is hit by fraud. The debit card is basically just a proxy. You have to go file a police report. You have to hope the bank will give you the money back. When the cre…

This depends heavily on the country you’re in. In the UK banks are required to refund you within a single business day if they don’t have any evidence that the customer isn’t trying to defraud the bank themselves. They try to squirm out of that of course. But in general getting your money back isn’t too tricky even with a debit card.

Oh yeah. I should definitely caveat: I am in the US. I think banks here are required to cap your loss to $50 USD if you report unauthorized fraud within two business days. But still, the onus is on you. Meanwhile, virtually all credit cards in the US offer $0 liability protection. Which means at most you pay nothing.

Re: What do Visa and Mastercard do? An intro to card networks

#166

Post by abdullahkhalids »

jimbob45 wrote: post #84
ianhawes wrote: post #58

Earlier quoted context omitted.

There is, it's called debit cards, but Stripe et al. "simplified" pricing by charging a percentage regardless of card type instead of the traditional interchange-plus pricing. Merchant banks "used to" make money by tacking on fixed fees, i.e. a set-up fee, terminal fee, monthly fee, etc, but then Stripe came along and provided (1) a better dev experience, (2) better onboarding, and (3) simplified pricing.

You have to wait for the investigation to complete to receive compensation if you’re hit by fraud on a debit card. Credit cards don’t share that issue. If you’re poor or living paycheck-to-paycheck, debit cards are potentially a risk to your livelihood.

The underlying problem is that the whole concept of cards is insane. Basically, you go around telling every shopkeeper the code for your safe, and ask them to take however much cash you owe them out of the safe.

Sane ways to organize payments:

- Merchant gives you a bill-id. You input it into your bank website - where you see the bill amount being charged. You accept, and bank pays merchant.

- You give merchant your card number (that's the only information - no expiry, no ccv, no name). A notification pops up on your bank website asking if you want to pay what the merchant is requesting. You accept.

- You go to your bank website and obtain a random number, either allowing a single transaction or a recurring transaction. You give the merchant the number. After merchant charges it, no other merchant can charge the same number.

Re: What do Visa and Mastercard do? An intro to card networks

#167

Post by kiririn7 »

9cb14c1ec0 wrote: post #39
bob1029 wrote: post #34

VisaNet & friends make the modern consumer world go round. The fees they extract are a drop in the bucket compared to the economic activity that they enable with their networks. Many businesses simply couldn't exist without something approximating this. https://investor.visa.com/news/news-details/2016/Visa-Commis...

Yes. As a merchant it's pretty cool that the money just shows up and I don't have to chase down as much bad debt. The processing costs easily pay for themselves.

unfortunately those processing costs actually dont need to exist.(or atleast should be 10x smaller)

Re: What do Visa and Mastercard do? An intro to card networks

#168

Post by c0_0p_ »

RobRivera wrote: post #24
techdmn wrote: post #7

I remember reading a comment here a while back about merchants being offered a discount on the processing fee if they also transmitted detailed data about the purchase (essentially the data that would be on the receipt). That data could then be resold on to advertisers. Does anyone remember this or have links to more data? (Not having much luck with search, maybe I'm hallucinating the whole thing.)

This would explain why so many damn coffee shops dont deal with cash now - the double as a coffee shop and data reseller

I don't think this is the reason, cash will always have no fees. In some senses it can have negative fees if you're not very diligent with your tax reporting *wink wink*.

Not accepting cash is probably more to do with not wanting to deal with it, not needing to trust employees with it, keeping poor people out, and preventing robbery.

Credit card companies and banks know basically squat about your purchase except in certain circumstances (buying gas or flights causes more data to follow, called L2 or L3 data), or if they work with a data enrichment provider. There is a lot of action in this space right now, but the banks are hardly equipped to handle more data even if it became available.

Re: What do Visa and Mastercard do? An intro to card networks

#169

Post by Qiu_Zhanxuan »

asdfasvea wrote: post #105
losvedir wrote: post #44

I play the credit card "game" because I hate feeling like I'm leaving money on the table, but I really wish I didn't have to. Some degrees of fees make sense, to run the network, and handle fraud, but it's ridiculous that people have this sense that shopping should somehow fund your vacation. Where I am it's increasingly common to see credit card fees when checking out. I get it, because merchants are being charged 3…

It boggles my mind that the government has privatized currency to these people. Crazy-person-but-actually-really practical-idea: Nationalize one if these networks. Maybe Discover. The US government should provide us digital currency. The simplest way is to force the current systems to do that. All that rent they collect in terms of transactions fees shouldn't be profit for a private business but fees of the governmen…

No Chance in hell, the US government is even going after Brazil because they've done the right thing. See https://en.wikipedia.org/wiki/Pix_(payment_system)#United_St...

Re: What do Visa and Mastercard do? An intro to card networks

#170

Post by c0_0p_ »

kccqzy wrote: post #142
mikeweiss wrote: post #13

Earlier quoted context omitted.

I would love if it was transmitted to the bank for my own use so I can easily remember what I purchased or run budgeting software against it! Obviously wouldn't be excited about it being resold tho.

It does, at least in some cases. When I book flights directly from an airline, the bank knows the name of the passenger, the date of the flight, the origin and destination airports, as well as the cabin class. For one bank (Chase), the information is printed on the statements; for another they have a web lookup tool.

Flights are one of the very few cases where this happens automatically though the card providers systems. It's called L2 data, and it's sent a little while after the transaction goes through.
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