Visa and Plaid Abandon Merger After Antitrust Division’s Suit to Block • Hacker News Board

Re: Visa and Plaid Abandon Merger After Antitrust Division’s Suit to Block

#291

Post by pjg » Thu, Jan 14, 2021, 10:09 AM UTC

paxys wrote: post #3

It would have gone through had Visa's CEO not been so honest at the time of the merger announcement saying that they intended to use Plaid's data to get a leg up on their competitors. > The DOJ cited Visa CEO Al Kelly’s description of the deal as an “insurance policy” to neutralize a “threat to our important US debit business.”

OK. But will DoJ disallow the acquisition of finicity by Mastercard ? VISA and Mastercard follow each other. I'm waiting to hear the verdict on finicity acquisition by MC

Re: Visa and Plaid Abandon Merger After Antitrust Division’s Suit to Block

#292

Post by pjg » Thu, Jan 14, 2021, 10:15 AM UTC

pg_bot wrote: post #232

tadfisher wrote: post #156

Earlier quoted context omitted.

The problem is that Nacha is building these APIs on top of ACH. There needs to be a universal realtime payment and account-validation network, not a file FTP'd to the Fed that's sent out three times a day.

Take a look at FedNow which is aiming to offer a 24/7/365 instant payment service for all US banks by 2023-24. (I would realistically expect 2028-30 for it to go online) This is being worked on, but everything moves at a glacial pace.

FedNow is a while away. RTP (Real-time payments) from the The Clearing House is already doing it. They have appx half the DDAs (bank accounts) in the US covered. Another year or two they will have 80-90% Also Push to Card and VISA/MC Debit are real-time payment systems i.e. 7x24x365 where you can pull or push money to the bank account linked to the VISA/MC branded ATM card

Bottom line: Fednow may be too little too late

Re: Visa and Plaid Abandon Merger After Antitrust Division’s Suit to Block

#293

Post by pjg » Thu, Jan 14, 2021, 10:18 AM UTC

toomuchtodo wrote: post #17

ryanwhitney wrote: post #15

Earlier quoted context omitted.

It’s like oauth except you type your password for site A into a box on site B’s domain Pretty wild it even exists

It is a hack around regulatory failure to mandate this functionality at finance firms (both Congress and the Fed have failed in this regard). The Fed's instant payments product (FedNow [1]) goes live in 2023, which is going to put downward pressure on Visa's debit business. The Fed only began to move on instant payments when pressured by Congress [2] (who didn't want smaller banks held hostage by Early Warning System…

FedNow is a while away. RTP (Real-time payments) from the The Clearing House is already doing it. They have appx half the DDAs (bank accounts) in the US covered. Another year or two they will have 80-90% Also Push to Card and VISA/MC Debit are real-time payment systems i.e. 7x24x365 where you can pull or push money to the bank account linked to the VISA/MC branded ATM card Bottom line: Fednow may be too little too late, but real-time payments are happening outside of VISA/MC

VISA/MC are aware of this. They expect "Interchange compression" i.e. reduction in revenue from Credit Card fees as users switch to other systems. However it isn't a show stopper because in parallel they have discovered (and are using ) new ways to increase interchange revenue e.g. Virtual Cards, Prepaid Cards etc.

Re: Visa and Plaid Abandon Merger After Antitrust Division’s Suit to Block

#294

Post by toomuchtodo » Thu, Jan 14, 2021, 2:21 PM UTC

pjg wrote: post #293

toomuchtodo wrote: post #17

Earlier quoted context omitted.

It is a hack around regulatory failure to mandate this functionality at finance firms (both Congress and the Fed have failed in this regard). The Fed's instant payments product (FedNow [1]) goes live in 2023, which is going to put downward pressure on Visa's debit business. The Fed only began to move on instant payments when pressured by Congress [2] (who didn't want smaller banks held hostage by Early Warning System…

FedNow is a while away. RTP (Real-time payments) from the The Clearing House is already doing it. They have appx half the DDAs (bank accounts) in the US covered. Another year or two they will have 80-90% Also Push to Card and VISA/MC Debit are real-time payment systems i.e. 7x24x365 where you can pull or push money to the bank account linked to the VISA/MC branded ATM card Bottom line: Fednow may be too little too la…

2-3 years isn't that long in financial services. Sure, The Clearing House provides an RTP platform (and is also a financial rail for Zelle payments). Can they do it as cheap as the Fed offering FedNow as a utility similar to ACH? And to every deposit account provider in the US at a reasonable cost? Probably not. Doesn't matter how many deposit accounts you cover if someone is going to come eat your lunch because they have a Congressional mandate.

Agree on interchange compression (it's fairly obvious credit card networks are overpaid for what they offer, so of course innovation is going to bring revenue destruction), but there's no way virtual and prepaid cards are going to make up the shortfall (especially with Congress starting to lean left and progressive banking policies on the table, such as central bank pass through accounts, negating the need for prepaid cards when deposit accounts become accessible to everyone).

Long story short, finance still consumes too much of a percentage of GDP, and it's a good thing when tech comes along that pushes that drag down.

Re: Visa and Plaid Abandon Merger After Antitrust Division’s Suit to Block

#295

Post by path411 » Thu, Jan 14, 2021, 9:43 PM UTC

fintechthrow456 wrote: post #207

seanieb wrote: post #75

I’ve some friends that works there, so I’m hesitant to say this, because I’m sorry for them, but Plaid is a terrible company. Their main product scrapes financial data from unsuspecting users that simply think they’re making a bank transfer and not signing away the privacy and security of their banking, 401k and trading information. https://twitter.com/seanieb/status/1298871471645761537?s=20

As someone who's worked in fintech for 10 years, I think this is a bad take. Out of all aggregators (what this is called), Plaid is by far the most open and privacy-forward. First, they're transparent about being a 3rd party that's part of the flow (see https://plaid.com/blog/the-all-new-plaid-link/ ). It's clear it's Plaid, they use neutral colors and not the bank's, etc. They have a portal where you can manage your…

The plaid flow is typing your bank credentials into a domain not controlled by your bank, it's pretty big fail right at the start.