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What do Visa and Mastercard do? An intro to card networks
291–300 of 317 posts
Re: What do Visa and Mastercard do? An intro to card networks
#292TL,DR: They steal from businesses that take card payments with giant commissions.
You're welcome!
Re: What do Visa and Mastercard do? An intro to card networks
#293There used to be an account on Twitter that was heavily involved in this industry. Every now and then I'd glean some slightly useful information from their posts. My favourite one being "the name verification isn't a thing - you can enter anything". So I've been doing that ever since and it's _always_ passed.
Re: What do Visa and Mastercard do? An intro to card networks
#294VisaNet & 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...
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…
It should be said that being on a US sanctions list doesn't appear to carry the same weight it once did. A Japanese citizen was added to one this month and her bank was able to effectively ignore it, not sure about options where credit cards are concerned, but there are local alternatives which don't rely on US payment networks.
Re: What do Visa and Mastercard do? An intro to card networks
#295There used to be an account on Twitter that was heavily involved in this industry. Every now and then I'd glean some slightly useful information from their posts. My favourite one being "the name verification isn't a thing - you can enter anything". So I've been doing that ever since and it's _always_ passed.
At least in the US, and as of a few years ago (when last I tested), address verification can also be a bit flaky. Zipcode/postalcode is solid, but street address matches don't reliably account for the various ways people can colloquially write them. It's not awful, just not good. We should re-test it some time, but as of a few years ago, street address checks were not a major improvement in fraud prevention compared to just Zipcode and CVV checks.
Re: What do Visa and Mastercard do? An intro to card networks
#296Earlier 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.
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.
Note that the caps were introduced because the EU already had widespread use of bank cards, but local schemes were being replaced with Mastercard/Visa debit - the caps were brought in to prevent the duopoly from profiteering. (Apple/Google pay also use Mastercard/Visa virtual cards in the EU.) Before the cap, credit cards had way higher fees and there were some reward cards, which led to merchants simply not accepting Mastercard/Visa. Local schemes included Mastercard-owned Maestro (used in Germany, The Netherlands and for some reason Brazil) but also local schemes like Belgium's Bancontact/MrCash. It's unfortunate some of those schemes didn't just merge and started competing in foreign countries as well.
Re: What do Visa and Mastercard do? An intro to card networks
#297Earlier 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.
Assuming they pay their credit card bill themselves, it's effectively a volume discount for big spenders (though that "volume" goes to multiple vendors). The argument that the money "comes from" other customers is sort of like claiming that when you "save money" by buying things on sale, the money comes from other customers who paid full price. Actually you aren't "saving money" at all; you're spending money. Similar…
The model is inverted here, though. The whales essentially get the big discounts at the expense of those who go into debt for one reason or another. That's why there's an argument of wealth transfer up. The "biggest spenders" will end up paying little or no interest
Re: What do Visa and Mastercard do? An intro to card networks
#298There used to be an account on Twitter that was heavily involved in this industry. Every now and then I'd glean some slightly useful information from their posts. My favourite one being "the name verification isn't a thing - you can enter anything". So I've been doing that ever since and it's _always_ passed.
That’s because there are more than 200 other parameters used for risk analysis during authentication. Worked in payments industry. Some banks don’t place high priority to name but some do.
Re: What do Visa and Mastercard do? An intro to card networks
#299Earlier quoted context omitted.
A refutation of that view: https://www.complexsystemspodcast.com/episodes/credit-card-r...
I reached the midpoint of the podcast without seeing a proper argument against this then I gave up. It tries to argue that higher reward rates are necessary to attrach customers that pay a lot (for credit card companies) and that lower income people are generally subsidized by taxes (obvious but unrelated), but at no point (until where I read) it seems to address the issue of merchants having to generally increase pr…
> lower income people are generally subsidized by taxes
Pretty flimsy argument to begin with. Because the rich then argue to lower their taxes and/or simply not pay them and the whole system falls apart. Not to mention that lower income people paying more to keep afloat debt than taxes (which at worst is a much better interest deal for an installment plan) is a much worse model for society.
Re: What do Visa and Mastercard do? An intro to card networks
#300Earlier 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.
> has the purpose of taking money from the poor and giving them to the rich Are you saying it is intentional ? Is it not more simply explained as simple greed by two companies colluding to keep competitors out of their market?
It may be a partial factor. Similar to how CC companies have a logical reason to reject high charge chargeback items , but may also be ideologically driven to push certain agendas as well.