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

tautology.town

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

#211

Post by lxgr »

diegocg wrote: post #26
collabs wrote: post #15

In my opinion, the only solution is everyone (individuals as well as corporations) gets a direct account with the federal reserve as long as you can associate a taxpayer identification with the account. Using it is voluntary but it is free of cost, paid for by taxes, and moving money to and from accounts is free of cost. Depositors would get the same overnight interest rate that banks do, and this interest is added e…

So the article shows how visa and mastercard are, by far, not the ones taking the largest fee, and the solution is to get rid of them? Where are you going to do the transactions in your scheme? Because credit card transactions are not the same as sending money from one bank account to another. There are settlements, disputes, chargebacks, etc. How is the central bank going to offer the same variety of products descri…

> So the article shows how visa and mastercard are, by far, not the ones taking the largest fee

But they set the interchange rates and disallow (or at least have until recently, in the US) merchants to discriminate against cards based on rate or type via their “honor all cards” rules.

They are absolutely propping up and benefiting from the high fees.

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

#212

Post by lxgr »

toomuchtodo wrote: post #30
diegocg wrote: post #26

Earlier quoted context omitted.

So the article shows how visa and mastercard are, by far, not the ones taking the largest fee, and the solution is to get rid of them? Where are you going to do the transactions in your scheme? Because credit card transactions are not the same as sending money from one bank account to another. There are settlements, disputes, chargebacks, etc. How is the central bank going to offer the same variety of products descri…

Central bank instant payment system. The US has FedNow, and has had it for almost 3 years. It costs a few pennies to move up to $10M per XML message. Brazil's Pix costs ~$10M/year to run: https://whatispix.com/ This is much cheaper than the entire credit card ecosystem skimming ~3% off of the economy. Efficiency! FedNow Is Live - https://news.ycombinator.com/item?id=36801491 - July 2023 (1022 comments) Walmart is cur…

FedNow is a payments rail, which is a long shot away from being a full retail payments scheme. The latter needs a disputes story, customer knowledge, merchant acceptance…

Take SEPA Instant, for example. It’s great for many things, but effectively nobody pays using it in stores or even online.

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

#213

Post by losvedir »

ecommerceguy wrote: post #183
eastbayjake wrote: post #155

Earlier quoted context omitted.

Debit cards are not subject to surcharging, and any merchant doing so is violating Visa/Mastercard regulations. (And possibly state law in several places -- Colorado where I live caps surcharge at the lesser of 2% or the cost of payment processing.)

Correct, Toast specifically will not allow it under any circumstance. Debit cards issued by smaller community banks or credit unions are exempt from the cap and carry higher interchange rates (often 1.0%–1.65% + $0.10). All merchants should either do Surcharging or Cash Discount.

You say "Correct", but Toast works the opposite of the person you're responding to. They charge the same fee regardless if it's a debit or credit card. They charge based on the network, and most debit cards in my experience use the Visa or Mastercard network. Yes, this is contrary to the Visa/MC terms, but I've never seen it enforced.

https://support.toasttab.com/en/article/Are-customers-charge...

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

#214

Post by c22 »

puzzledobserver wrote: post #89
toast0 wrote: post #71

Earlier quoted context omitted.

> Another thing to consider is your credit card rewards cash back etc are really trading your privacy for a little rounding error worth of discount in comparison to using cash. How much privacy really? If I get mostly $20s from the ATM, and the merchant does daily deposits of most of the $20s they get, why wouldn't banks start scanning and tracking serial numbers (if they don't already), if my purchasing habits are a…

In a theoretical sense, you are right. The life of most currency notes is bank to customer to merchant to bank, and the bank could just track serial numbers to figure out your spending habits. Practically, it would make little sense. The actual life of most currency notes is bank1 to customer to merchant to bank2, and there is a large probability that bank1 and bank2 are different entities. And then, so many more peo…

Serial number scanning is a common feature of electronic cash counters (also networking!) I'm pretty sure all incoming serial numbers are scanned and checked against a database to find stolen banknotes. I don't know if any banks are tracking outgoing serial numbers, but it would be pretty trivial to implement. I've noticed when I go in and withdraw cash from a human teller that the cash no longer comes from a drawer, but rather is dispensed by an automatic cash handling machine and then handed to me.

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

#215

Post by drdeca »

nsvd2 wrote: post #128
asdfasvea wrote: post #105

Earlier quoted context omitted.

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…

Yes, let's bring the experience of waiting at the DMV or dealing with the IRS to payment systems. Great idea

My experiences with the DMV have actually been pretty decent. I think a lot of their negative reputation is from how it used to be, but that they have improved substantially since then?

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

#216

Post by labcomputer »

arjvik wrote: post #200
seabre wrote: post #165

Earlier quoted context omitted.

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.

2 business days is a lot more strict than credit cards, which at the very least would not blink an eye at 2 weeks.

Er what?

You don’t even pay for the fraudulent credit card transactions in the first place! There’s no money for them to return!

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

#217

Post by toomuchtodo »

lxgr wrote: post #212
toomuchtodo wrote: post #30

Earlier quoted context omitted.

Central bank instant payment system. The US has FedNow, and has had it for almost 3 years. It costs a few pennies to move up to $10M per XML message. Brazil's Pix costs ~$10M/year to run: https://whatispix.com/ This is much cheaper than the entire credit card ecosystem skimming ~3% off of the economy. Efficiency! FedNow Is Live - https://news.ycombinator.com/item?id=36801491 - July 2023 (1022 comments) Walmart is cur…

FedNow is a payments rail, which is a long shot away from being a full retail payments scheme. The latter needs a disputes story, customer knowledge, merchant acceptance… Take SEPA Instant, for example. It’s great for many things, but effectively nobody pays using it in stores or even online.

https://news.ycombinator.com/item?id=49632470

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

#218

Post by derektank »

adrian_b wrote: post #199
avianlyric wrote: post #140

Earlier quoted context omitted.

The EU caps all card interchange fees at 0.3% for credit cards and 0.2% for debit, which is an order of magnitude lower than some of the fees in the US. That’s why you don’t see the same kinds of credit card deals in the EU compared to the US.

I think that there was a recent HN thread that linked to an article which argued that the credit card system of USA has the purpose of taking money from the poor and giving them to the rich, and the estimated amount of the money transferred in this way was huge. The EU limits for card fees prevent this in Europe, which is very good.

Wouldn’t it be simpler for European countries to simply raise the VAT and redistribute the proceeds to poor people, rather than regulate the interchange fees if the concern is inequality

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

#219

Post by titanomachy »

ianhawes wrote: post #58
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…

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.

Most stripe transactions do use cost-plus pricing. The flat pricing is popular with smaller businesses, but larger companies graduate from it pretty quickly.

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

#220

Post by lxgr »

toomuchtodo wrote: post #217
lxgr wrote: post #212

Earlier quoted context omitted.

FedNow is a payments rail, which is a long shot away from being a full retail payments scheme. The latter needs a disputes story, customer knowledge, merchant acceptance… Take SEPA Instant, for example. It’s great for many things, but effectively nobody pays using it in stores or even online.

https://news.ycombinator.com/item?id=49632470

That’s a list of news articles (notably none about SEPA Instant, the closest analogy to FedNow!), not a response to my point.

It actually supports my point: FedNow could be SEPA Instant (if it were to be widely supported and available to retail bank customers), but it’s definitely not UPI, Pix, Wero etc.

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