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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

#271

Post by DANmode »

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.

Fun fact: Visa owns some of Stripe.

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

#272

Post by missedthecue »

mococa wrote: post #119

In brazil we have pix with 0 fees.

Between individuals it is free. For commercial transactions, there is a fee between 0.22% and 0.33% per transaction, which is actually ~2x the fee of the Visa network (0.13%)! Visa is extremely efficient at moving money anywhere in the world.

Credit and debit card transactions have higher fees because unlike Pix, there is chargeback risk, and the the merchant and acquiring banks party to the transaction are compensated for the risk they assume in those transactions. Pix on the other hand is digital cash. When you spend it, it's gone. Unlike with chargebacks and disputes, there is no reliable mechanism to recover funds for goods not delivered.

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

#273

Post by brnt »

franga2000 wrote: post #266
klrefg wrote: post #263

Earlier quoted context omitted.

How do any of they rent cars when they travel? I think that still requires a credit pretty much anywhere in Europe. I’s bet the proportion is way higher than 5% even if the overwhelming majority use their credit cards the same was as debit.

The only time I "needed" a credit card is when I tried to sign up for some US company's service. It rejected my debit card because it wanted credit, so I just took my business elsewhere. Other than that, I've rented cars, rented other things with a "X will be charged to your card if you return it late", unattended gas stations... all the usual places you'd think need a credit card. It's fine. We do have a "negative l…

I had a car rental in Oslo that only allowed debit cards if you took out their full insurance. I was already insured, we rented though some sort of front, but they only allowed that on a credit credit card.

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

#274

Post by adrian_b »

canjobear wrote: post #233
adrian_b wrote: post #199

Earlier quoted context omitted.

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.

A refutation of that view: https://www.complexsystemspodcast.com/episodes/credit-card-r...

Looking now at that, it does a poor job of making a true refutation.

What that article explains, is that the system of credit card fees and rewards that is used in USA is extraordinarily complicated, variable and obfuscated in comparison with other countries, so it is extremely difficult to discover who gains most and who loses most.

So the conclusion is more like "there is insufficient evidence because we cannot access all the required financial information" for the claims of the other article and the refutation itself presents no evidence that the claims of wealth redistribution are incorrect.

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

#275

Post by gpvos »

crossroadsguy wrote: post #231
shimman wrote: post #228

Earlier quoted context omitted.

Do you have a link? Highly interested in that thread. Do you know if people discussed how state solutions faired? I'm assuming something like Pix from the Brazilian Central Bank does an even better job at prevention while providing a public service.

https://www.library.hbs.edu/working-knowledge/how-credit-car... probably this Pix, UPI, and a few more

That would be this post of 16 days ago, 453 comments: https://news.ycombinator.com/item?id=49432201

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

#276

Post by lxgr »

toomuchtodo wrote: post #226
lxgr wrote: post #220

Earlier quoted context omitted.

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.

> Take SEPA Instant, for example. It’s great for many things, but effectively nobody pays using it in stores or even online. My link mentions how Wero, replacement for US credit card rails in Europe, is being built on top of SEPA Instant. An adoption tracker is included, to show uptake progress. ~35% of tracked banks in scope in Europe for Wero have adopted it, as of this comment. They are actively building to get of…

I can definitely see that it would look like that – if stakeholders wanted to. On that, I’m not convinced at all.

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

#277

Post by alightsoul »

Qiu_Zhanxuan wrote: post #169
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…

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...

UPI in India too. Why are they targeting pix specifically? Yappy in Panama and alipay in China but those are privately owned, as the us wants.

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

#278

Post by LelouBil »

klrefg wrote: post #263
karlosvomacka wrote: post #133

Earlier quoted context omitted.

For US readers - in my country in europe I'd say that 95% of people have only debit card, not credit card. it's very not common to have a credit card here. Card payments are extremely common, but everyone uses debit card.

How do any of they rent cars when they travel? I think that still requires a credit pretty much anywhere in Europe. I’s bet the proportion is way higher than 5% even if the overwhelming majority use their credit cards the same was as debit.

You pay a deposit with your debit card and get it refunded afterwards ?

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

#279

Post by LelouBil »

karlosvomacka wrote: post #133
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.

For US readers - in my country in europe I'd say that 95% of people have only debit card, not credit card. it's very not common to have a credit card here. Card payments are extremely common, but everyone uses debit card.

I don't know for other European countries, but in France a lot of people call them "Cartes de crédit" AKA Credit cards, even though, like you said, they are actually debit cards for 95% of people, so this adds to the confusion

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

#280

Post by holgerschurig »

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…

If we look at this in a non US-centric view, then many other areas have solved this, partially since decades.

For example, in Germany we used to have a bank card, "EC Karte", it is now called "Girocard".

So, if you are a shop and accept Girocard, you pay 0.2% of the transaction plus a fix 0.05 - 0.10 €.

And in Germany virtually everyone has a Girocard, it's part of getting a bank account. The cards are free to the customers.

So assume you're a small Café with 8000€ per months, 70% via Girocard and 30% via credit cards. Then you'd pay ~ 17€ per month for Girocard, but 95€ if you use "blended sum" - a contract with a payment provider to accept all cards. But you don't have bureaucracy. With you do an extra contract with a credit card only provider it's still 41€ for just the 30% of your monthly business.

That creates the effect that in Germany lots of shops don't accept credit cards. The market speaks.

I know that other countries also have payment methods, e.g. Netherland or China. It's just the US banking system that is decades behind what is possible.

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