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

sherwood.news

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

#141

Post by greyw »

fakedang wrote: post #132
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.

Compared to Stripe which charges 2-3% roughly, Visa/Mastercard gateways charge 0.3-0.5%. Not sure where the high fees argument comes from, or I'm misconstruing something here. Like an aforementioned comment stated above, their dominance is all about consumer convenience reinforcing vendor adoption. If you have an equally smooth payment process to compete against that, it will crumble. Case in point, India and UPI. Cr…

Visa and MC are four party payment systems. In short, the fees paid on a transaction are split between the merchant acquirer cut (merchant service charge), the card network (scheme fees) and the card issuer's bank (interchange).

Stripe is a merchant acquirer and Visa/MC a card network.

The 2%-3% are the total fees imposed by a stripe, a merchant acquirer. The 0.3% is Visa's cut. After subtracting the card issuer's cut, what remains goes to Stripe.

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

#142

Post by eszed »

chii wrote: post #102
lxgr wrote: post #90

Earlier quoted context omitted.

> I'm more likely to care of my card works and not care if I'm charged x% fee. Sure, any alternative needs to work on a practical/technical level, be convenient, have fraud protection etc. But if it does, and a merchant I know and trust (these are fairly big caveats!) were to offer me a discount equivalent to what my card issuing bank pays me in cashback and then some as an incentive for paying using that alternative…

> were to offer me a discount equivalent to what my card issuing bank pays me in cashback and that's exactly why these card networks made the merchant agree in the contract to not do exactly that.

I think that shouldn't be permitted. (As in, be illegal for the card companies to impose or enforce.)

On the other hand, most gas stations seem to post credit vs cash prices, so they get away with it. What's the story there? Why don't more merchants do it?

It's also contrary to card agreements for merchants to add an extra fee ("it's +0.50 if you use a credit card, is that OK?"), but that doesn't seem to be meaningfully enforced.

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

#145

Post by kidneystereotyp »

lxgr wrote: post #90
jopsen wrote: post #85

Lol, visa had network effect. It also took a long time to build up such a network. Replacing all payment terminals is not easy. And as a customer I'm more likely to care of my card works and not care if I'm charged x% fee. The visa trick if any, was hiding the credit card fee and pushing it to merchants. Whether its a trick or not is hard to tell, for small businesses it was probably bad, but for a big business deali…

> I'm more likely to care of my card works and not care if I'm charged x% fee. Sure, any alternative needs to work on a practical/technical level, be convenient, have fraud protection etc. But if it does, and a merchant I know and trust (these are fairly big caveats!) were to offer me a discount equivalent to what my card issuing bank pays me in cashback and then some as an incentive for paying using that alternative…

for the only dumb mouse in this thread: what would an alternative be?

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

#146

Post by Ntrails »

jncfhnb wrote: post #129
bruce511 wrote: post #123

Earlier quoted context omitted.

>> 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…

> And the benefits accrue largely to the cardholders of premium cards, which are wealthy people.

To have competition you do need a way to differentiate, and it's going to be funded by some combination of those fees, interest/charges, kickbacks etc. Some interchange fee is simply necessary, iirc the EU attempts to prevent the egregious regressive aspects of that by capping the interchange fees of all cards. Thereby eliminating the "Amex Premia" as it were.

I reckon it's a pretty sensible step?

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

#147

Post by throw0101d »

Spooky23 wrote: post #83
jncfhnb wrote: post #77

Earlier quoted context omitted.

The duopoly isn’t really as problematic as the concept itself. Credit cards, where customers are bribed to insert a middleman into all transactions and suppliers are largely powerless to refuse it; are a plague. The switching costs of a consumer to a different credit card are small. The switching cost of a business saying they no longer allow certain payment types is potentially very painful.

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…

> Credit cards are probably the most consumer friendly innovation ever

Depends on the consumer.

Vendors often have to raise their prices to keep their own margins, which is passed onto the consumer. If you're too poor or otherwise 'unwanted' to be given a credit card then you are paying higher prices without any benefit.

* https://www.cnbc.com/2023/05/27/lower-income-americans-pay-f...

* https://www.vox.com/the-goods/22454885/who-pays-for-credit-c...

* http://archive.is/https://www.nytimes.com/2023/03/04/opinion...

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

#148

Post by throw0101d »

dangus wrote: post #96
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…

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…

> Merchants pay 3% and pass the cost on to the customer, […] average person gets all the benefits of a fully funded government plus 1-2% of their purchase back in credit card rewards.

And if you're below-average (i.e., poor or otherwise 'unwanted') and don't have a credit card then you are paying higher prices without any benefit:

* https://www.cnbc.com/2023/05/27/lower-income-americans-pay-f...

* https://www.vox.com/the-goods/22454885/who-pays-for-credit-c...

* http://archive.is/https://www.nytimes.com/2023/03/04/opinion...

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

#149

Post by shadowerm »

reissbaker wrote: post #125
alexcannan wrote: post #75

Earlier quoted context omitted.

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…

She is obviously a true believer or very clever self promoter that knows her target market.

The real question is why is such stupid shit like this being posted here?

Anthropic is actually a great example of the free market working well.

To compare OpenAI to Standard Oil just shows the person has no idea of the business practices of Standard Oil.

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

#150

Post by mnky9800n »

ADeerAppeared wrote: post #16
insane_dreamer wrote: post #6

Doesn't explain what regulations Visa pushed for and got which helped it maintain its monopoly. Would be helpful to have some concrete examples of what it did and what OpenAI is trying to do. The point of the article sounds plausible, but doesn't really present any evidence to support it. Also OpenAI in no way has a monopoly of the kind that Visa/MC has.

> Also OpenAI in no way has a monopoly of the kind that Visa/MC has. I think this is misreading how literal the comparison is meant to be; Sherwood's running a bunch of "OpenAI is X" articles today. This is not about the massive duopoly which has been catastrophic for US payments, but about the way companies entrench themselves. > Doesn't explain what regulations Visa pushed for and got which helped it maintain its m…

Think if Walmart told its shareholders that they were banned from owning Costco stock.
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