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

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

#251

Post by tylergetsay »

iancarroll wrote: post #115
hadrien01 wrote: post #19

Earlier quoted context omitted.

Level 2/3 data: https://docs.adyen.com/payment-methods/cards/enhanced-scheme... It's only available in the US, many countries have lower interchange fees and prohibit sending this data.

Importantly, there is only an incentive for L2/L3 data on business/corporate cards, which have an inflated interchange rate above personal cards anyway. This is not a scheme to get enhanced targeting data for personal transactions.

I believe most prepaid visa gift cards are being monetized in this way. https://www.walmartgift.com/AcctMgmt/Controls/WalMartGiftCar...

Ive heard of casinos trying to pay out winnings using some kind of prepaid card, where theyd also get info about how people spent their casino winnings. Lots of ways to leverage that data.

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

#252

Post by vjvjvjvjghv »

rootusrootus wrote: post #247
lotsofpulp wrote: post #198

Earlier quoted context omitted.

It was regulated away in the Durbin Amendment of the 2010 Dodd-Frank law: https://www.congress.gov/crs-product/R41913 https://www.ftc.gov/business-guidance/resources/new-rules-el... American sellers have had the option to collect however much extra they want from people paying with credit cards, and many do. The government, utilities, mobile network providers, insurance, schools, healthcare, gas stations, home contra…

It is interesting the breadth of experiences in this regard. I pay basically everything on my card, to the tune of 5-6 grand a month, including utilities. The only time I have ever seen a surcharge is for things like contractors doing work at my house. The gas company, electric, the city, all take the card with no extra charge. I rack up a lot of airline miles just from day-to-day use.

None of the utilities for my house take credit card without surcharge.

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

#253

Post by Aspos »

rootusrootus wrote: post #250
Aspos wrote: post #120

Earlier quoted context omitted.

Each of those networks carry a lot, a lot of ancient stuff. Gov is better off building a brand new network from scratch and promote it as a standard for banks to join. There are plenty of great examples from this century all over the world. Even Iran has a better payment infra than the US.

> Even Iran has a better payment infra than the US. That is a big claim. What would prevent someone from setting up something equally as good in the US, aside from the network effect and users unwilling to try something new for uncertain gain?

End-users don't have much agency here, network needs banks.

In Iran, they simply don't have much choice, so banks use the only network available to them. It just happens to have been built in this century, so it's not as archaic as Visa.

Here in the US, I guess only regulators could realistically create a new network and have enough power to convince banks to adopt it.

Nothing, of course, stops anyone from creating a new network. But the network effect is THE driving force here, it's not a minor factor.

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

#254

Post by opinion-is-bad »

derektank wrote: post #240
post-it wrote: post #229

Earlier quoted context omitted.

Your solution sounds significantly more complicated actually.

In what way? There are many sources of inequality. Trying to play whack a mole with each one seems much more laborious than simply deciding how much inequality you want in society, and then setting it with the tax code

Inequality isn’t as simple as pulling one tax lever, and not all levers are equally effective at all points of the pull. Dead-weight loss is an important concept when designing tax policies, otherwise why not simply eliminate ALL taxes in place of an expanded VAT or income tax or corporate tax or whatever.

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

#255

Post by pampas »

asdfasvea wrote: post #105
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…

It boggles my mind that the government has privatized currency to these people. Crazy-person-but-actually-really practical-idea: Nationalize one if these networks. Maybe Discover. The US government should provide us digital currency. The simplest way is to force the current systems to do that. All that rent they collect in terms of transactions fees shouldn't be profit for a private business but fees of the governmen…

It's not about US consumers but international trade. The US likes taxing the world's B2C activity.

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

#256

Post by foltik »

bob1029 wrote: post #205
klabb3 wrote: post #159

Earlier quoted context omitted.

> VisaNet & friends make the modern consumer world go round. I mean, as opposed to what? You could apply this to any infrastructure cartel like with AT&T in the 90s or Comcast or 100s of historical examples. The alternative to a bridge troll is not ”no bridge”.

The alternative to a bridge troll is "no bridge" if the bridge troll is the only party who has the capability to construct it in the first place.

Which is obviously not the case in this context?

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

#257

Post by notpushkin »

Aspos wrote: post #164
warkdarrior wrote: post #161

Earlier quoted context omitted.

Why hasn't Alipay completely replaced Visa and Mastercard in US? Everyone has a smartphone to scan a QR code.

I struggle to understand how is this relevant. Alipay is closer to paypal than to VISA/MC

Alipay the wallet app is closer to PayPal. But they also have Alipay+ which connects a lot of different wallets and banks: https://www.alipayplus.com/mobile-payment-provider-list/

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

#258

Post by danvayn »

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.

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

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

#259

Post by 8note »

skybrian wrote: post #234
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.

Assuming they pay their credit card bill themselves, it's effectively a volume discount for big spenders (though that "volume" goes to multiple vendors). The argument that the money "comes from" other customers is sort of like claiming that when you "save money" by buying things on sale, the money comes from other customers who paid full price. Actually you aren't "saving money" at all; you're spending money. Similar…

ok, but what about for equivalent spenders?

one cash, one credit?

the credit payer is clearly paying less, with the difference paid by increased prices overall. That is the cash purchaser paying the credit one

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

#260

Post by spauldo »

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…

In my case, it's literally free money. I travel a lot for work. I pay for everything with my card, and I'm reimbursed by the company. I rack up points, and whenever I travel for pleasure or as an independent contractor, hotels are free. I'd get free airfare like my coworkers do if I didn't avoid flying and drive everywhere.

The system is broken. No one with the power to fix it has any incentive to do so. Might as well get what you can.

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