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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

#301

Post by timothytavarez »

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…

The real shittiness begins when having to deal with them as a business. If you’re classified as high risk, which could be whatever the fuck, you’re deplatformed or need to deal with Byzantine merchants.

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

#302

Post by sersi »

LelouBil wrote: post #279
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.

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

Yup and even when they are credit cards, "cartes à débit différé", they behave more like automated charge cards. The amount is automatically taken out of your account at the end of the month, you are supposed to pay in full and don't have the option of making minimum payments. So the poor banks cannot make nearly as much money with interest rates and instead are forced to have relatively high account maintenance fees (that are published and much more transparent to the customer).

That said as a French person with a ssn living in Asia, I don't have a french credit card because it's so expensive and foreign conversion fees are very high, whereas I use a us card because the currency conversion rate is very close to the market rate and it costs a lot less to maintain the account.

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

#303

Post by gnfargbl »

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.

This is not a universal, however. In the UK, two-thirds of adults have a credit card.

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

#304

Post by johnnyanmac »

danvayn wrote: post #258
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.

Yes, it’s because Americans have to build credit or otherwise optimize their credit score to finance large purchases. In most other countries there either isn’t a credit score concept or your credit score does not have to be built up over a long period to be effective like it does here. It doesn’t help that a third of Americans dont really have savings either; credit helps them to work around this

Yeah, it's all a huge con. The best fiscal habits involves not spending money you don't have, so you should never need a CC to begin with. But if you take that route, you end up being unable to finance a car or apartment because companies can't snoop into how you spend money. So you're forced to either play the game or be so rich you can buy everything you need in cash (which, ironically qualifies you for the best kinds of CC's anyway).

Now, if you DO manage to that threshold... you still want to delay finances. Because installments now become ways to give your money more time to make money and offset whatever you are paying for. The models and incentives are completely at odds.

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

#305

Post by gatestone »

I find this interesting as a technology, as a business process, and above all as a system for managing trust on a global scale across different jurisdictions. In a sense, the credit card system accomplishes something that even the UN, international law, Interpol and military mights cannot do: it enables individuals to enter into trustworthy global agreements with minimal effort and risk, and at very low transaction costs.

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

#306

Post by _bernd »

bux93 wrote: post #296
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.

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 acceptin…

At least in Germany as far as I'm aware all banking cards are in fact "simple" visa cards who uses "V-pay", since 2012/2014?

Personally I "like" or prefer V-pay because it made payment in the EU more easily for me without the need of a credit card even 8 years ago. Since the pandemic, I only pay for a (real) credit card (with daily billing) because some goods or services can only be paid with a "real" card, like more expensive cars at a car renting company or sometimes hotel rooms and the like.

In general I try to pay with cash so nobody needs to pay extra fees. But more and more smaller businesses prefer electronic payments. Then I use the banking card with V-pay and to state it again, the real visa card is only used when no other options are available.

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

#307

Post by alwaysmrno »

Visa and Mastercard are legacy companies providing a service that is outdated in the modern world. China generally doesn't use Credit cards because when they "Modernized" there was new technology and infrastructure so you didn't need a nosey middel-man to handle the transaction. Instead they use apps. Scandinavia is hopefully moving away from these card-providers soon. They have the bankaxept system that works flawlessly in their area and have started introducing Apps for payments and microtransactions. For some reason some of the apps require a debit-card, but i hope they will drop that requirement soon.

I just hope these leeches on society will sone go bankrupt.

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

#308

Post by _bernd »

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.

IIRC then normal bank cards and debit cards can be charged with these future payments up to 500 Eur. So for small and normal cars this works.

I too have a real credit card to be able to rent for instance "bigger" cars like even an Audi A6.

Most often hotels also block 500 Eur, or they state upfront that you need a proper/real credit card and not just a debit card.

That's for me the only reason I have VISA and use it like 3 or 4 times a year...

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

#309

Post by dns_snek »

derektank wrote: post #218
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.

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

VAT is a regressive consumption tax. Raising VAT, hurting poor people the most, skimming a bit off the top and then "redistributing" it back to them would make no sense.

Do you mean a higher corporate tax paid by companies like VISA and Mastercard?

Either way, the solution is already on the horizon: Digital Euro.

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

#310

Post by KellyCriterion »

_bernd wrote: post #306
bux93 wrote: post #296

Earlier quoted context omitted.

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 acceptin…

At least in Germany as far as I'm aware all banking cards are in fact "simple" visa cards who uses "V-pay", since 2012/2014? Personally I "like" or prefer V-pay because it made payment in the EU more easily for me without the need of a credit card even 8 years ago. Since the pandemic, I only pay for a (real) credit card (with daily billing) because some goods or services can only be paid with a "real" card, like more…

> o nobody needs to pay extra fees

Processing cash is by far >not free<! In fact, it costs a lot of money due to all the things involved (counting/collection/recycling etc). Anf it inwolves additional risks for the handling party.

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