China’s Payment Apps Give U.S. Bankers Nightmares • Hacker News Board

Re: China’s Payment Apps Give U.S. Bankers Nightmares

#111

Post by joncrane » Wed, May 23, 2018, 9:35 PM UTC

chatmasta wrote: post #32

The critical difference is that in China, the apps effectively are the banks, whereas in the US, regulatory capture ensures that the banks stay the banks and it's the app's problem to figure out how to interface with them. The reason the banks are scared is not because "banks" are not involved. They're scared because these apps have successfully vertically integrated to become banks. This is the logical next step for…

I think you've nailed the way Richard Fairbanks (CEO of Capital One) thinks with this part:

>it has consumer banks shaking in their boots, because there's no way they can outcompete those companies in tech. So instead they focus on regulatory capture

That's why COF is doing the whole "we're a tech company that also happens to be a bank" spiel. They are doing their best to back that up, as well. Lots of modern practices and of course they're all in on Cloud.

Re: China’s Payment Apps Give U.S. Bankers Nightmares

#112

Post by gamblor956 » Wed, May 23, 2018, 9:48 PM UTC

TACIXAT wrote: post #99

I applied to YC to bring this idea to the US (rejected). Credit cards are our primary form of digital money and their fees are excessive. The basic design was ACH money into the wallet, transfer money between balances for ultra low cost (1%), ACH money out of the wallet. The difficulties are regulation. Doing this would make you a money service business and banks really don't want to touch that. Plus it costs a nice…

ACH transfer between bank accounts is generally free, especially between accounts at the same bank. They're even blackout ready...you can use these things called "checks" (or "cheques") to execute account transfers.

Also, most CC companies aren't taking 3%+30c per transaction. Visa, for example, is 1.5% plus 10c per transaction. Amex, on the expensive side, was between 1.85% plus 10c and 3.00% plus 10c depending on the type of merchant.

If you don't have a basic factual understanding of how financial transfers actually work, it's not surprising you got rejected from YC.

Re: China’s Payment Apps Give U.S. Bankers Nightmares

#113

Post by jboles » Wed, May 23, 2018, 9:52 PM UTC

TACIXAT wrote: post #99

I applied to YC to bring this idea to the US (rejected). Credit cards are our primary form of digital money and their fees are excessive. The basic design was ACH money into the wallet, transfer money between balances for ultra low cost (1%), ACH money out of the wallet. The difficulties are regulation. Doing this would make you a money service business and banks really don't want to touch that. Plus it costs a nice…

> Credit cards are our primary form of digital money and their fees are excessive. The basic design was ACH money into the wallet, transfer money between balances for ultra low cost (1%), ACH money out of the wallet.

2% (credit card fee) is "excessive", but 1% is "ultra (!) low cost"?

Re: China’s Payment Apps Give U.S. Bankers Nightmares

#114

Post by TACIXAT » Wed, May 23, 2018, 10:01 PM UTC

pishpash wrote: post #106

TACIXAT wrote: post #99

I applied to YC to bring this idea to the US (rejected). Credit cards are our primary form of digital money and their fees are excessive. The basic design was ACH money into the wallet, transfer money between balances for ultra low cost (1%), ACH money out of the wallet. The difficulties are regulation. Doing this would make you a money service business and banks really don't want to touch that. Plus it costs a nice…

The claim is that the fees primarily cover fraud and fund various consumer protections. It would be interesting to know how much of the 3% that actually is.

I bet a lot of those go to rewards. Also, cards are pretty insecure. Maybe a phone with a lock on it to prevent physical theft and use, and all the data you would have associated with each transaction would make a great fraud detection system.

Re: China’s Payment Apps Give U.S. Bankers Nightmares

#115

Post by TACIXAT » Wed, May 23, 2018, 10:07 PM UTC

gamblor956 wrote: post #112

TACIXAT wrote: post #99

I applied to YC to bring this idea to the US (rejected). Credit cards are our primary form of digital money and their fees are excessive. The basic design was ACH money into the wallet, transfer money between balances for ultra low cost (1%), ACH money out of the wallet. The difficulties are regulation. Doing this would make you a money service business and banks really don't want to touch that. Plus it costs a nice…

ACH transfer between bank accounts is generally free, especially between accounts at the same bank. They're even blackout ready...you can use these things called "checks" (or "cheques") to execute account transfers. Also, most CC companies aren't taking 3%+30c per transaction. Visa, for example, is 1.5% plus 10c per transaction. Amex, on the expensive side, was between 1.85% plus 10c and 3.00% plus 10c depending on t…

>If you don't have a basic factual understanding of how financial transfers actually work, it's not surprising you got rejected from YC.

I'm so over people being dicks online. Sorry I didn't include an appendix with payment fee breakdowns.

Online payment processors work at that fee structure because there is an added player (see Stripe and Paypal's fees).

For the breakdown between acquiring bank, issuing bank, and processor, the acquirer and processor (Visa, MC) actually only get a small cut of each transaction. The bulk of it goes to the bank that issues the card.

Getting rejected from YC doesn't say anything about me or my idea. Plenty of people get rejected. My 4 paragraph comment on this issue doesn't reflect my total knowledge of it. Try to be nicer in the future.

Re: China’s Payment Apps Give U.S. Bankers Nightmares

#116

Post by TACIXAT » Wed, May 23, 2018, 10:10 PM UTC

jboles wrote: post #113

TACIXAT wrote: post #99

I applied to YC to bring this idea to the US (rejected). Credit cards are our primary form of digital money and their fees are excessive. The basic design was ACH money into the wallet, transfer money between balances for ultra low cost (1%), ACH money out of the wallet. The difficulties are regulation. Doing this would make you a money service business and banks really don't want to touch that. Plus it costs a nice…

> Credit cards are our primary form of digital money and their fees are excessive. The basic design was ACH money into the wallet, transfer money between balances for ultra low cost (1%), ACH money out of the wallet. 2% (credit card fee) is "excessive", but 1% is "ultra (!) low cost"?

The fixed transaction cost is really what eats up low value transactions. 30 cent fee means anything below 30 cents is unusable. A 2 percent fee with no fixed cost would be fine with me. If you know of a processor that does this, let me know.

Re: China’s Payment Apps Give U.S. Bankers Nightmares

#117

Post by mwexler » Wed, May 23, 2018, 10:23 PM UTC

frockington wrote: post #80

JTbane wrote: post #65

Earlier quoted context omitted.

It still vexes me that I can't instantly transfer money from my bank to a friend's account without paying, or using a third-party like Venmo or Paypal.

Most banks are using Zelle now, all but instant in my experience

Also, Zelle is a third party, but one owned by a bank collective so it gets a deeper integration. Potato, Potahto.

Re: China’s Payment Apps Give U.S. Bankers Nightmares

#118

Post by mwexler » Wed, May 23, 2018, 10:33 PM UTC

All the payment stuff aside, how does money get into the Alipay/Wechat ecosystem? How do I add money to the account?

In the US, where the single purpose Starbucks wallet is outpacing Apple Pay (https://techcrunch.com/2018/05/22/starbuckss-mobile-payment-...), most users pay into the thing with a credit card, so the banks still get their cut. Sure, they aren't getting the cut when it's spent on coffee like they would with a credit card, but in some ways, they already got it on the front end.

Is the bank totally out of the picture in the Ali/Wec version? Do people put cash money into Ali/Wec via top-up shops or other experiences? Direct deposit salary? Or is it a free transfer from a bank?

Re: China’s Payment Apps Give U.S. Bankers Nightmares

#119

Post by driverdan » Wed, May 23, 2018, 10:43 PM UTC

TACIXAT wrote: post #114

pishpash wrote: post #106

Earlier quoted context omitted.

The claim is that the fees primarily cover fraud and fund various consumer protections. It would be interesting to know how much of the 3% that actually is.

I bet a lot of those go to rewards. Also, cards are pretty insecure. Maybe a phone with a lock on it to prevent physical theft and use, and all the data you would have associated with each transaction would make a great fraud detection system.

> I bet a lot of those go to rewards.

This is the kind of thing you should know off the top of your head if you're interested in competing with them.

Re: China’s Payment Apps Give U.S. Bankers Nightmares

#120

Post by cmplxconjugate » Wed, May 23, 2018, 10:48 PM UTC

mwexler wrote: post #118

All the payment stuff aside, how does money get into the Alipay/Wechat ecosystem? How do I add money to the account? In the US, where the single purpose Starbucks wallet is outpacing Apple Pay ( https://techcrunch.com/2018/05/22/starbuckss-mobile-payment-... ), most users pay into the thing with a credit card, so the banks still get their cut. Sure, they aren't getting the cut when it's spent on coffee like they woul…

You sign up to the Alipay/Wepay services using a bank card. Money is transferred from the card to the payment account using the transfer credit interface in the app.