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OpenAI is Visa – Buttering up the government to retain a monopoly

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Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#121

Post by lxgr »

Spooky23 wrote: post #115
jncfhnb wrote: post #112

Earlier quoted context omitted.

Consumer friendly is not the only thing we should care about. It’s also utterly fucked that it’s a system that disproportionately rewards people for being wealthy as richer people have access to better cards

Not at all. Back in the 90s, I had an American Express Gold Card, probably the premier travel card at the time. It was expensive, but for my specific situation, the travel benefits were basically making me $500 a year, alot of money for me. People with good credit have access to better cards. It’s about people who pay their shit on time, not wealth.

And I'd be willing to wager that the ability to pay bills on time might be somewhat correlated to wealth.

What you're giving is a rationalization for why the economic landscape of credit cards looks the way it does, which is useful for understanding it, but not at all the same thing as a justification for that being desirable for society as a whole.

We have a perfectly fine mechanism for making lending cheaper for people who pay on time: Interest rates. There's no economic need for tangling all of that up with rewards/cashback rates.

> It was expensive, but for my specific situation, the travel benefits were basically making me $500 a year, alot of money for me.

While I also greatly benefit from the system myself I still consider it a massive resource sink for society at best, and borderline predatory lending behavior at worst, and would gladly see it disappear the same way it has in the EU.

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#122

Post by hattmall »

Spooky23 wrote: post #113
lxgr wrote: post #92

Earlier quoted context omitted.

If they provide that much value to consumers intrinsically, then why are banks paying the same consumers to use them? I completely agree that credit (and just as much, if not more, debit) cards are an incredibly useful invention and great accelerator for online commerce. I don't know of any other way of paying a merchant I know next to nothing of that will allow me to get my money back if they do not deliver on their…

In a market, participants woo customers with financial and other incentives to select their product. The price discovery stuff is pretty obvious. Do business with PayPal. It works great… until PayPal arbitrarily decides to freeze your account. Use Venmo or cash app… except sellers will pressure you to treat it like a gift vs. a purchase. You can use ACH, but now some random company has access to your checking account…

The bank doesn't eat the fraud. They charge it back to the merchant. That's why restaurants and bars don't like them, and if you fight the charge backs they raise the rates or drop you entirely.

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#123

Post by bruce511 »

lxgr wrote: post #92
Spooky23 wrote: post #83

Earlier quoted context omitted.

Credit cards are probably the most consumer friendly innovation ever — a product of the time they were developed. It was an era when the federal government functioned and the credit card operations were so problematic a heavy hand was required. Every supposedly better alternative adds margin for the supplier, increases the risk of fraud, and leaves the user with poor recourse due to the lack govnerment regulation. Ad…

If they provide that much value to consumers intrinsically, then why are banks paying the same consumers to use them? I completely agree that credit (and just as much, if not more, debit) cards are an incredibly useful invention and great accelerator for online commerce. I don't know of any other way of paying a merchant I know next to nothing of that will allow me to get my money back if they do not deliver on their…

>> If they provide that much value to consumers intrinsically, then why are banks paying the same consumers to use them?

The clue to this is in the question. Banks offer cash-backs (and other rewards) not Visa or MC. They do so because credit cards are a commodity and they need to differentiate their product from all the other card providers.

In effect some of the fee paid by suppliers is routed back to the customers. To suppliers the cost is part of doing business, and built into the price.

As a supplier I much prefer customers to use cards over cash. Cash is very expensive to deal with in any volume. And is far more vulnerable to theft (by external people, but also staff.)

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#124

Post by hattmall »

AlexandrB wrote: post #120
rqtwteye wrote: post #93

Earlier quoted context omitted.

They aren't very vendor friendly and their fees are way too high. Little bit like Amazon. they are are consumer friendly at the expense of their vendors.

> they are are consumer friendly at the expense of their vendors. Isn't this a winning formula because the consumer is the one spending the money? Imagine an opposite approach that was vendor-friendly at the expense of the consumer. I don't think most people would willingly use that. Back before Amazon, WalMart did the same thing[1] by squeezing their vendors to lower prices and passing (some of) the savings onto sho…

They aren't mutually exclusive. They used to be merchant friendly.

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#125

Post by reissbaker »

alexcannan wrote: post #75
reissbaker wrote: post #64

Earlier quoted context omitted.

It's written by Taylor Lorenz. I wouldn't expect it to be particularly well-researched; just to have a maximally anti-tech slant.

Nothing in this article is anti-tech. Anti-monopoly, yes.

OpenAI is not a monopoly and has numerous extremely large and well funded competitors such as Google (gemini), Meta (llama), and Alibaba (qwen), to say nothing of smaller startups like Anthropic. The blog post blindly asserts it's a monopoly because monopolies are bad.

Taylor Lorenz also insists that everyone continue masking and social distancing for Covid and that refusing to do so in 2024 is equivalent to denying AIDS during the height of the AIDS epidemic. And she obsessively lies about her age to the extent that her actual birth year is listed as a range of plausible years on Wikipedia, since she's changed her statements repeatedly by wild margins. I think her compulsive, somewhat paranoid difficulty engaging with reality is important context when reading her (many) vague, unresearched, but extremely negative blog posts about tech.

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#126

Post by bruce511 »

lxgr wrote: post #100
dangus wrote: post #96

Earlier quoted context omitted.

I think you're missing the point here a little bit. To break this down more simply: Credit cards: Merchants pay 3% and pass the cost on to the customer, IRS gets the vast majority of business taxes paid (no way to under-report taxable income), average person gets all the benefits of a fully funded government plus 1-2% of their purchase back in credit card rewards. Average person also gets a revolving credit line with…

With your last sentence, you supply your own counterexample demonstrating that "tax-evasion-enabling cash or credit cards costing the merchant 2-3%, pick one" is a false dichotomy. As I've mentioned, another counterexample is that Visa and Mastercard credit cards very much continue to exist in the EU, even after consumer credit card interchange rates have been capped to 0.3%.

I'm shocked, shocked, to discover that in the land of the "free market" the market optimizes for corporate profit not low prices.

This is not news. In the US people vote for politicians who promise low regulation, business friendly and "economy" priorities. Those politicians run with corporate money and favor corporations.

Other places (like the EU) have people who vote differently and have more appetite for reigning in the "free market" while serving consumers as the priority.

It's not impossible for people to change, just unlikely. We tend to assume the pond we live in has the best water.

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#127

Post by lxgr »

hattmall wrote: post #122
Spooky23 wrote: post #113

Earlier quoted context omitted.

In a market, participants woo customers with financial and other incentives to select their product. The price discovery stuff is pretty obvious. Do business with PayPal. It works great… until PayPal arbitrarily decides to freeze your account. Use Venmo or cash app… except sellers will pressure you to treat it like a gift vs. a purchase. You can use ACH, but now some random company has access to your checking account…

The bank doesn't eat the fraud. They charge it back to the merchant. That's why restaurants and bars don't like them, and if you fight the charge backs they raise the rates or drop you entirely.

That’s only true for online payments (and even then only if 3DS is not used).

Merchants are not liable for fraud at the POS (which includes almost all restaurants, except maybe those doing deliveries or taking down payments for reservations via the phone etc.)

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#128

Post by jncfhnb »

Spooky23 wrote: post #115
jncfhnb wrote: post #112

Earlier quoted context omitted.

Consumer friendly is not the only thing we should care about. It’s also utterly fucked that it’s a system that disproportionately rewards people for being wealthy as richer people have access to better cards

Not at all. Back in the 90s, I had an American Express Gold Card, probably the premier travel card at the time. It was expensive, but for my specific situation, the travel benefits were basically making me $500 a year, alot of money for me. People with good credit have access to better cards. It’s about people who pay their shit on time, not wealth.

1) the card is expensive in an upfront way that is difficult for poorer people to justify for playing money games

2) getting the value of the card is contingent on spending more money. A poor person with fewer expenses won’t get nearly as much benefit

3) let’s not ignore the elephant in the room which is credit cards trying everything to get you to make minimum payments to prey on the financially illiterate, which again, are heavily concentrated in the poor

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#129

Post by jncfhnb »

bruce511 wrote: post #123
lxgr wrote: post #92

Earlier quoted context omitted.

If they provide that much value to consumers intrinsically, then why are banks paying the same consumers to use them? I completely agree that credit (and just as much, if not more, debit) cards are an incredibly useful invention and great accelerator for online commerce. I don't know of any other way of paying a merchant I know next to nothing of that will allow me to get my money back if they do not deliver on their…

>> If they provide that much value to consumers intrinsically, then why are banks paying the same consumers to use them? The clue to this is in the question. Banks offer cash-backs (and other rewards) not Visa or MC. They do so because credit cards are a commodity and they need to differentiate their product from all the other card providers. In effect some of the fee paid by suppliers is routed back to the customers…

The rationale of the banks is clear. The problem is that these are perverse incentives.

The costs hit all customers, not just the ones who use credit cards. And the benefits accrue largely to the cardholders of premium cards, which are wealthy people. It’s a tax on being poor to subsidize the wealthy and the middlemen.

Cards should be forced into being a true commodity with perfect competition. The incentive rewards games are harmful to society.

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#130

Post by awad »

messe wrote: post #60
em500 wrote: post #55

Earlier quoted context omitted.

In most of Europe and several large Asian cities I visited, AMEX and Discover acceptance is far lower than Visa/MC (which charge lower fees to merchants).

AMEX/Discover is virtually unknown in most of Europe. Outside of US-defaultism, why in the world would anyone expect it to be accepted here?

Fun fact: AMEX has been involved in international payments in one way or another for more than a 100 years and the AMEX card was the first international charge card, launched the same year as the original BofA Visa Card.
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