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

bloomberg.com

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

#131

Post by abakker »

s73v3r_ wrote: post #82
abakker wrote: post #61

Earlier quoted context omitted.

This all depends whether you can shift the risk. It is fine to break things if you have managed to get insurance to cover the downside.

I would phrase that another way. It's fine to break things if you can make whole the people who are negatively affected by breaking things. Someone getting their money returned after it was stolen from your startup bank is one thing, but that person missing their car payment and having their car repo'ed because of that missing money, and thus not being able to make it to work and getting fired is another.

Exactly- I was trying, dryly, to be tongue in cheek. As the example you gave illustrates well, covering risk almost never includes second order consequences, it is part of the “limited liability” that companies get. Unfortunately, customers tend not to be informed well enough to reason through these possibilities up front. We never know exactly what will break, or how we might be effected by that breakage.

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

#132

Post by [deleted] »

stcredzero wrote: post #58
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…

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. My wife works in banking, for a small local bank. The regulations are heavily skewed against smaller banks. Regulations around consumer mortgages seem to be designed to keep smaller banks out. Unle…

[deleted]

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

#133

Post by sametmax »

nicoburns wrote: post #77
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…

Anecdotally, I've only seen a few people using apple pay in the UK. Everyone now has contactless card (which you just tap on the machine to pay almost instantly), which as very popular. A lot of places seem to support apple pay, but it's much less convenient than contactless (obviously some people disagree).

Another advantage is that you don't add yet another entity knowing what you do with your life in the mix. The bank already has the information, and the shop. I don't really want apple/google/whatever to append to the stock pile of stuff they know about me: my consumption habits, the money I got and the places I visit despite the fact my geoloc is off.

The massive centralization of our life is a huge problem.

Like we said "don't give everything to facebook" 10 years ago and people only wake up now, I wish people realized it's not about a particular brand. It's a general advice.

The worst part is that the power you give to them is invisible, so it doesn't seem that much. It feels harmless. But the potential for controlling ones life is huge.

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

#134

Post by azinman2 »

kerbalspacepro wrote: post #51
azinman2 wrote: post #24

I don’t know why our society hasn’t fully realized that everything is 3% more expensive specifically because of these fees. Europe at least has far lower upper limits on these fees. I hope someone is able to replace the banks here one day.

"I don't know why our society hasn't realized that everything is X% more expensive specifically because of these [things that are required to pay for the service you're getting]"

There is no law that says money must be exchanged over credit cards that drain 3% from the merchant. Aside from checks, cash, and money orders, the Alipay example from the article shows that alternatives can and do exist. Europe also has credit cards, yet the government caps the fees far lower. It doesn’t have to be this way.

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

#135

Post by azinman2 »

frockington wrote: post #88
khuey wrote: post #25

Earlier quoted context omitted.

Because we like our 2% credit card rewards.

After and afternoons worth of research I've manged to get ~4% back on every purchase. As long as you have a decent credit sore you can really optimize your "cashback" and beat the fees. If you're one of the churner people I'm sure you could do much better

What card gives you 4%? And how long will that last? Just wait until interest rates start to climb...

I opened years ago a Schwab checking account with 4% interest. Now it’s something like 0.04%.

Regardless, the merchant never got their 3-4% back! Which means everyone has to pay 3% more for their items, cash or credit card.

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

#136

Post by frockington »

volgo wrote: post #123
frockington wrote: post #88

Earlier quoted context omitted.

After and afternoons worth of research I've manged to get ~4% back on every purchase. As long as you have a decent credit sore you can really optimize your "cashback" and beat the fees. If you're one of the churner people I'm sure you could do much better

How do you get 4% cash back without using any of those airline points? I mean straight up cash back

Chase Freedom and Discover IT have 5% rotating, I also normally redeem my point for travel and get 1.5x multiplier for that

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

#137

Post by mixmastamyk »

dkasper wrote: post #35
mixmastamyk wrote: post #13

Earlier quoted context omitted.

Hmm, most other countries have free transfers between bank accounts. It's just the US (maybe a few others) still stuck in the stone age.

ACH bank transfers are free in the US too, just takes a few days. Personal transfers with Venmo or paypal are free too in most cases. The fees are for credit cards which make up almost all online transactions and have fees everywhere in the world.

Still not as ubiquitous as it should be.

In NZ for example, folks have their bank account # proudly displayed over a plate of cookies for purchase at 25 cents on a whim.

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

#138

Post by jboles »

TACIXAT wrote: post #116
jboles wrote: post #113

Earlier quoted context omitted.

> 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.

That’s a fair point, I had not considered the micro transaction aspect.

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

#139

Post by dzink »

PeterisP wrote: post #34
dzink wrote: post #22

Regulation in the US makes it harder for this to happen but 3 stepping stones will let the tide turn and Amazon is very close to crossing them. 1. Money transmission regulations require at least $2 million in reserves and 2 years to get a license to transmit money in all 50 states. 2. Knowing the credit and identity of your customers is critical in preventing fraud, illegal transactions, and other issues which cost h…

$2 million in reserves seem like peanuts, any serious attempt to enter this business would imply investing enough money that mere $2 million is just a reasonable cost of doing business. Paypal needed $200m of venture capital to get started, a $2m requirement isn't prohibitive. As for the delay, a common practice to enter a new market in finance is to "just" buy an existing bank that has all the required permits and a…

Buying a bank exposes you to being regulated and restricted as one, just as doing business on Government contracts adds a bunch of friction and overhead to every transaction and to your business (ask Google/Alphabet). The key to mass payments is lower friction per payment. Tech can fix a lot of things that regulation had to be used to prevent, but you have to pay the regulatory cost before you can remove the requirement for it. It's a bit of a Catch 22 in the US.

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

#140

Post by jopsen »

jjoonathan wrote: post #81
jopsen wrote: post #43

Earlier quoted context omitted.

Lots of other countries have debit cards linked to accounts with standing credit, instead of the "credit card" that you pay off every month. These debit cards very low fees, sometimes they work as both debit and visa card, so you can use them abroad too.

Who gets the seller fees? In the US, you only get a piece of the action if you use a credit card. Otherwise you still pay the higher, transaction-fee-included price, but you don't get any part of the transaction fee.

I see many stores with fees for using foreign credit cards. Like ~1 USD..

Or I guess the seller pockets the fee.

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