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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

#71

Post by charleslmunger »

fauigerzigerk wrote: post #46
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…

>They're scared because these apps have successfully vertically integrated to become banks. I'm not sure tech companies really want the core banking business, which is to lend money (taking on credit risk in the process) funded by deposits. I can imagine Amazon doing it for smaller consumer purchases as they know their customers well. But who will make loans to SMEs and larger retail loans? Google and Apple? I doubt…

It's not really the core banking business in the US - interest is only about 50% of income for large banks.

http://money.cnn.com/2017/02/22/investing/atm-overdraft-fees...

And check out page 38 of BoA's annual report: http://media.corporate-ir.net/media_files/IROL/71/71595/BOAM...

Interest income was $44.7 billion, non interest income (aka fees, trading, and services) was 42.6 billion.

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

#72

Post by ams6110 »

PeterisP wrote: post #21

Even the first line of illustration is kind of misleading - "Paycheck is deposited into employee's bank account"; there's no such thing as a paycheck in most places worldwide, no checks get involved. The employers pay out the salary with free or cheap bank-to-bank payments, and have done it long enough that the term 'check' has no colloquial relation to your salary. The main difference for accessibility of such payme…

Many, many small businesses in the US still issue paper payroll checks.

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

#73

Post by steve19 »

forkLding wrote: post #50

Its interesting how they didn't mention Paypal as a wannabe Alipay tech company, last time I used Paypal, its basically functioned as an alternate bank account that just doesn't accrue interest whenever I use it to buy stuff on the internet or sell stuff. I can also see the similarities between the UI of my actual online bank account and Paypal account. Users (like me) will also really appreciate if they took on more…

PayPal is already a bank. From wikipedia 'Since July 2007, PayPal has operated across the European Union as a Luxembourg-based bank'

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

#74

Post by mixmastamyk »

gruez wrote: post #29
baq wrote: post #20

Earlier quoted context omitted.

paypal isn't a bank, though.

GP mentioned: >free transfers between bank accounts does it really matter if it was done through some third party service?

Why put another potentially malicious, rent seeking third-party between you and your friend's banks?

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

#75

Post by Taniwha »

em500 wrote: post #66
gruez wrote: post #7

>Western bankers and credit-card executives who travel to China keep returning with the same anxiety: Payments can happen cheaply and easily without them. but there are plenty of "bank -> wallet -> merchant" services in US as well. most notably paypal: you deposit money to your paypal wallet, and spend that money at various online merchants, no credit cards involved.

In China you can spend Alipay/WeChat at offline as well as online merchants. And not just larger merchants but also at micro-businesses like mobile food stalls and hole in the wall eateries. Because both the equipment and fees for the merchant are much cheaper than those required for traditional credit/debit card processing.

Exactly - WeChat is used for everything - homeless people on the street have WeChat QR codes - that gives you an idea how cheap that process is.

Here in NZ I pay in cash (I kind of like the idea of an anonymous payment system) but these days younger cashiers often trigger ATM payment while I'm standing there holding cash and have to reach around and cancel it on the ATM terminal - it's the same in China but more so

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

#76

Post by dzonga »

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…

smaller banks also provide protection against 'too big to fail' syndrome. They won't over leverage risk.

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

#77

Post by nicoburns »

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).

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

#78

Post by nicoburns »

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.

Perhaps, but in the UK I can do instant bank transfers for free. Very useful for settling small debts between friends and such things.

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

#79

Post by MBCook »

drivingmenuts wrote: post #14
drb91 wrote: post #10

Is there any evidence these chat based payment apps (venmo, apple pay, facebook messenger, snapchat...?) are replacing credit card transactions in the US? They seem to replace person to person cash transactions instead.

Should Apple Pay be on that list? AFAIK, it's not possible to pay someone directly Apple Pay to Apple Pay. It's more like the standard stand-in for a credit card. Don't get me wrong, I'd love for Apple Pay to be that convenient, but it's not there yet. Ed: changed easy-to-use to convenient

It is now with Apple Pay Cash, as the sibling comment pointed out.

HOWEVER, that’s backed by a real bank account at a real bank Apple chose for the purpose (in the US). Transfers involving credit (paying as credit card or using a credit card to move money in) still hit the standard fee. Other transfers are just normal US debit transfers.

So Apple Pay Cash isn’t bypassing anything, at least in the US. It’s further entrenching them. Don’t know how it works in other countries.

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

#80

Post by frockington »

JTbane wrote: post #65
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.

It still vexes me that I can't instantly transfer money from my bank to a friend's account without paying, or using a third-party like Venmo or Paypal.

Most banks are using Zelle now, all but instant in my experience
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