[HN Gopher] Fintech is making credit cards weirder
___________________________________________________________________
Fintech is making credit cards weirder
Author : indus
Score : 147 points
Date : 2022-08-08 17:29 UTC (5 hours ago)
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| gtowey wrote:
| > Who knows if this optimism will prove to be wise. All we can
| say for sure right now is that the companies in the best position
| to understand the risks and opportunities of investing in the
| credit card business are investing heavily.
|
| This is kind of a non-statement because every market collapse
| ever was preceded by "people who appear to understand the market
| making heavy investments" right up until the crash when it
| becomes obvious they didn't understand anything.
|
| Basically it's saying "following the herd is smart, unless the
| herd turns out to have been wrong"
| yieldcrv wrote:
| One thing my publicist used to do was make listicles. It would
| have some competitors in first or fourth spot, myself in the
| 2nd or 3rd spot and then some other potential solutions.
|
| The purpose wasn't for engagement, it was just to modify search
| results and ping a few specific people's google alerts,
| specifically the competitor.
|
| One benefit is that the competitor would be intruiged that they
| were noticed at all, and be keen on being invited to an
| interview or seen on stage in a fireside chat at a conference,
| and the continued interaction meant more partnership and deals
| got done.
|
| The point of all this being that you can collect more resources
| together. And it doesnt matter that any of our solutions didnt
| have product market fit. I periodically quizzed my co-founder
| "we're still in the 'make-money' game, right" just to make
| sure.
| Nextgrid wrote:
| The concept of a credit card is an anachronism that filled a
| local maximum and is only kept there because those who have the
| power to change things benefit from the status-quo.
|
| Back in the early days of payment cards, settlement took days or
| weeks and checking whether the customer had enough balance in
| real-time wasn't possible. The technology to make a _debit_ card
| just wasn 't there, so it makes sense that payment cards started
| as being credit.
|
| In this day and age, there is no functional difference between a
| debit or a credit card - both are processed online in the vast
| majority of cases, and even debit cards will typically allow
| offline transactions up to a certain amount if the terminal can't
| check the balance online. Banks now issue both and your current
| account and credit card account can very well be rows in the same
| table of the same DB if you obtained both from the same bank.
| There are regulatory differences (in regards to fraud protection
| for example) but those are just because the law didn't catch up
| (or doesn't want to catch up - see last paragraph) rather than a
| technical difference.
|
| Nowadays there is no reason why credit should be tied to a
| specific card & account with very rigid rules regarding repayment
| schedules and fees. If you want to lend, just put the money into
| the customer's current account and let them use that amount with
| their debit card. Even better, we already have real-world
| implementations of this - most accounts offer an arranged
| overdraft which allows the balance to go negative and
| automatically repays itself as soon as you deposit money in. Some
| banks will even "helpfully" authorize transactions despite the
| lack of an arranged overdraft, just to immediately slap you with
| an unarranged overdraft fee. Clearly the technology is there and
| has been proven.
|
| The reason credit cards persist is because their rigid, often
| complex, and nonsensical - why should the _same_ bank charge
| different fees or interest depending on whether it 's a CC vs
| overdraft usage? - rules allow these banks to offer "free" money
| (in the forms of 0% interest or benefits) to those who know how
| to play the system to their advantage, subsidized by the poor and
| less financially-savvy who don't know or can't afford to play the
| system and end up getting played by said system instead,
| incurring late payment fees and/or interest.
| pdonis wrote:
| _> The concept of a credit card is an anachronism_
|
| No, it isn't. Having a financial intermediary between you and
| entities you buy things from is a genuine benefit to you as a
| consumer: it means you don't have to give everyone you buy
| things from direct access to your bank account, as a debit card
| does. It also means that if your credit card info is stolen,
| you have a third party that deals with the issues involved
| instead of you, and you don't have your bank account funds tied
| up while the issue is being resolved, as you would with a debit
| card.
|
| Of course, in a sane world this genuine service would be sold
| as what it is--financial intermediation--and the market price
| of this service would be determined in a free market. It's
| quite true that we don't live in that sane world, but that
| doesn't mean financial intermediation isn't a genuine service
| that is worth having even in the insane world we actually live
| in.
|
| _> In this day and age, there is no functional difference
| between a debit or a credit card_
|
| Yes, there is, there is a huge functional difference. See
| above. Ask anyone who has had their debit card info stolen and
| had funds fraudulently taken direct from their bank account.
| Nextgrid wrote:
| > it means you don't have to give everyone you buy things
| from direct access to your bank account, as a debit card does
|
| I disagree that this means "giving someone else access to
| _all_ your money ". First off, you're authorizing a single
| transaction, and second, your _bank_ is still the one
| mediating the transaction - if you experience fraud, what 's
| actually happening is that your bank is the one who got
| defrauded by someone pretending to be you (by stealing your
| card/PIN/etc) and fraudulently convinced the bank to give
| them your money.
|
| I disagree that a debit card doesn't involve financial
| intermediation. The bank is still the intermediary and holds
| the money, just that the hold duration is seconds instead of
| a month (well technically _settlement_ or _presentment_
| happens a few days after authorization, but that 's all
| transparent to the cardholder). There's no technical
| difference, the difference is purely regulatory and there's
| no reason the regulations can't be amended to give debit card
| holders the same protections as credit card holders.
|
| > Ask anyone who has had their debit card info stolen and had
| funds fraudulently taken direct from their bank account.
|
| I don't know about you but all instances of fraud I had on my
| _debit_ cards have been resolved painlessly. Most fraud gets
| resolved by card network disputes which don 't care about the
| card type. The only time credit cards get preferential
| treatment is when card network disputes fail and _the law_
| forces _lenders_ (but not _debit card issuers_ ) to eat the
| fraudulent transaction anyway, but those instances are
| relatively rare.
| pdonis wrote:
| _> I disagree that this means "giving someone else access
| to all your money"._
|
| It means giving someone the information that is required to
| withdraw money directly from your account. Yes, they're
| only supposed to withdraw the amount you specifically
| authorized for that transaction, but the fact remains that
| you have given them direct access to your account. The same
| risk exists when you write a check. Mitigating that risk by
| having a financial intermediary involved is, as I said, a
| genuine service. If you personally don't value that
| service, then of course you would not use it. But others do
| value it.
|
| _> all instances of fraud I had on my debit cards have
| been resolved painlessly._
|
| That's fine, but I have known plenty of people who did not
| have the same painless experience.
| pdonis wrote:
| _> I disagree that a debit card doesn 't involve financial
| intermediation. The bank is still the intermediary and
| holds the money_
|
| But there's still only one transaction involved: the bank
| pays the merchant directly from your bank account. With a
| credit card, there are two transactions: the credit card
| company pays the merchant and you pay the credit card
| company in a separate transaction (and of course you pay
| once for multiple purchases made with the card). That's the
| intermediation that is not present with a debit card.
| jrsj wrote:
| The entire credit rating system is pretty dependent on credit
| cards too.
| Mountain_Skies wrote:
| The main reason why I use a credit card and rarely use my
| checking account's debit card is that I see the credit card as
| being a firewall between the world of scammers and my bank
| account. If someone double charges my credit card or finds a
| way to engage in some other fraud on it, that's all
| encapsulated into that account until it is resolved. If they
| clean out my bank account, I might be able to get most of the
| money back, but that's going to take time. Meanwhile I have to
| find a new way of handling cash flows by moving funds out of
| more long term accounts.
| kitsunesoba wrote:
| Same here. My debit card is used only where fees make use of
| a credit card prohibitive. I haven't used a debit card in
| day-to-day transactions in over a decade at this point.
| cobertos wrote:
| Same with how I use my credit cards specifically to keep my
| credit score. If the playing field was different (laws and
| standards) credit cards would not be the necessity they are
| today.
| Nextgrid wrote:
| True, but my point is that it's just a regulatory issue -
| technically there's no difference between credit and debit
| cards from a scam/fraud point of view (in fact scammers don't
| know nor care what account type it is as long as it
| authorizes their fraudulent transaction). There's no reason
| why the law can't be updated to offer the same protections
| for debit cards and make it where a single phone call or
| button in your banking app can immediately reverse a
| transaction (and thus give you the money back) while it is
| being investigated.
|
| In addition, keep in mind that when it comes to payment
| cards, there are 2 levels of fraud protection. One is offered
| by the card networks and in the vast majority of cases
| doesn't care about the bank or the account type. This will
| cover the vast majority of fraud and in most cases fraud
| disputes end there and thus would also apply to debit cards
| (I've used debit cards for all my life and the few instances
| of fraud I've had have been resolved by card networks just
| fine in a timely manner - in fact if the bank is willing they
| are able to credit you the amount immediately while they
| investigate, though unlike on credit cards they aren't
| obligated to by law).
|
| The second level is country-dependent and usually specific to
| credit cards - this is where laws enforce stronger
| protections and would force the lender to eat the transaction
| even if a card network dispute isn't successful. This is a
| purely regulatory difference, and there's no reason the law
| can't be updated to also apply to debit cards.
| Animats wrote:
| > I see the credit card as being a firewall between the world
| of scammers and my bank account.
|
| Yes. In the US, laws favor the credit card holder in scam
| situations.
|
| Most of fintech runs on "screw the customer, we have an
| EULA!"
| Nextgrid wrote:
| > Most of fintech runs on "screw the customer, we have an
| EULA!"
|
| Thankfully, finance is an area where in most countries the
| law is actually still enforced and will trump whatever
| EULAs or ToS you may have.
| Godel_unicode wrote:
| I'm sure that's a great comfort to everyone who got wiped
| out by the UST crash. When are they being made whole,
| again?
| htrp wrote:
| > Most of fintech runs on "screw the customer, we have an
| EULA!"
|
| Most of fintech runs on "screw the customer!"
|
| FTFY
| gamblor956 wrote:
| Debit cards and credit cards are very different things,
| functionally, legally, and practically, though they can be
| implemented similarly on a _technical_ level.
|
| Debit card transactions, legally and financially, withdraw
| money from the associated bank account at the time of the
| transaction. The only limit on the amount that can be debited
| is the amount of money in the associated bank account. If there
| is insufficient money, the transaction fails. The debit card
| user is at risk for losses due to fraud or payment disputes.
| Basically, a debit card is the same as cash but in a convenient
| thin plastic card form.
|
| A credit card transaction, legally and financially, withdraws
| money from the _issuing bank_ , who then adds that amount to a
| debt ledger of money owed by the card user to the bank. The
| transaction only fails if the transaction would exceed an
| arbitrary credit limit as determined by the bank. The credit
| card user pays back the debt at the end of the month, or over
| time, based on the terms of the credit card agreement. The
| issuing bank is at risk for losses due to fraud or payment
| disputes. Basically, a credit card is the same as a short-term
| instantaneous loan agreement, but in the form of a single
| convenient thing plastic card instead of a dozen or more paper
| loan agreements.
| Nextgrid wrote:
| What you mention are all policy/regulatory differences, which
| can be made to apply to debit cards if there's will to do so.
| My point is that the credit card concept now survives because
| there's no will to kill it off since it's a convenient way to
| siphon money from the pool/less-financially-savvy to the well
| off.
| lmm wrote:
| Someone has to take the risk. A credit card makes it visible
| what's happening; a current account offering an automatic
| overdraft is an ad-hoc, informally-specified implementation of
| half a credit card. I know which I prefer.
| robocat wrote:
| > there is no functional difference between a debit or a credit
| card
|
| There is one huge difference: credit cards the bank or vendor
| takes the risk/liability of fraud and chargebacks. Debit cards
| mostly I take the risk/liability (fraud, bad vendor/product).
|
| And a minor difference: credit cards have better integration
| for selling data about your purchasing patterns. Two of my
| banks have replaced VISA with Master Card recently: I presume
| because Master Card is monetising my data stream more
| effectively (so can afford to give banks slightly better
| profits).
| Nextgrid wrote:
| The only time that matters is when a card-network-level
| dispute fails. The vast majority of fraud gets resolved at
| the card network level and would be the same on a debit card.
| The only time credit-card-specific regulations come into play
| is when a card network dispute fails - in this case with
| debit cards you're SOL, with credit cards the law forces the
| lender to eat the cost.
|
| But again, my point isn't that there currently aren't any
| advantages to credit card, but rather that those advantages
| are purely artificial - there's no reason they can't apply to
| debit cards as well if there wasn't an interest to preserve
| the status-quo.
| humanistbot wrote:
| Literally every single "weird" or novel feature in this article
| is also offered by mainstream banks. Those banks are way less
| likely to collapse and leave their clients out of luck (remember
| most startups fail). The "weird" features mentioned in the
| article include: secured credit cards (or charge cards) for those
| with little to no credit, 'elite' metal cards with bundled
| subscriptions to Priority Pass and TSA Pre (which you can buy
| cheaper directly), split repayment, and virtual / one-off account
| numbers. Yawn.
| onlyrealcuzzo wrote:
| > and virtual / one-off account numbers
|
| Which major card issues offer this?
|
| This is a feature I've wanted for a long time - but AFAIK -
| none of my cards have it.
| TheLoafOfBread wrote:
| Erste Bank have it too. At least for Debit cards
| mritchie712 wrote:
| MBNA (acquired by bank of america) was doing this in 2001 [0]
|
| 0 - https://www.banktech.com/core-systems/mbna-offers-single-
| use...
| criddell wrote:
| I think Apple's credit card does something close to this:
|
| https://www.idownloadblog.com/2019/04/01/apple-card-
| virtual-...
| gamblor956 wrote:
| Bank of America used to offer these after acquiring MBNA, but
| stopped a few years ago in favor of better fraud protections.
| fckgw wrote:
| Citi and Capital One have done this for a decade now
|
| https://www.cardbenefits.citi.com/Products/Virtual-
| Account-N...
|
| https://www.capitalone.com/digital/eno/virtual-card-numbers/
| neon_electro wrote:
| One Finance (via an FDIC-insured partner bank) offers a
| physical debit card, a "virtual" card behind that, and the
| option to create "pockets" that you fill with money, and you
| can generate additional "virtual cards" or account numbers
| for each pocket to enable transactions directly from the
| pockets.
|
| Been really satisfied with the product since Simple died.
| https://www.one.app/
| toomuchtodo wrote:
| CapitalOne, it's specific to certain credit cards they offer.
| Bank of America used to, unsure if they still do.
| homero wrote:
| Capital One makes you download a browser extension for some
| reason which I refuse to do. There is no other way to use
| them, not online not in the app. It's the craziest thing
| I've seen.
| turkishmonky wrote:
| Citibank and Capital One offer them on some cards, iirc
| mrep wrote:
| My citi double cash card has it.
| radpanda wrote:
| The website for X1 advertises "End free trials automatically with
| auto-expiring virtual cards" [0] - if that takes off, would
| services just start blocking folks from signing up for free
| trials with X1 cards? Is that a feasible thing to do, to say
| "yeah, we accept Visa, but not Visa cards issued by X1"? I feel
| like I've heard something slightly similar recently about Google
| Ad services blocking payments from virtual cards or other "weird"
| cards.
|
| 0: https://x1creditcard.com
| NavinF wrote:
| Many banks have been providing auto-expiring virtual card
| numbers. This is a 10 year old feature. They also let you set a
| small credit limit for each number.
| asdff wrote:
| Like most 10 year or 20 year old features that one would
| think are commonsense, you won't find them in all banks.
| bityard wrote:
| 20 year old feature. Discover used to have a flash app on
| their website for generating unique card numbers linked to
| your account on their site. It saved me from more than a few
| shady websites and breaches.
|
| They discontinued it with the rationale that they didn't need
| it anymore because their fraud prevention worked well enough
| by itself or something.
| mritchie712 wrote:
| MBNA (acquired by bank of america) was doing this in 2001 [0]
|
| 0 - https://www.banktech.com/core-systems/mbna-offers-single-
| use...
| cr3ative wrote:
| Seems like a good way to accidentally get your account sent to
| collections; disconnecting your payments doesn't necessarily
| excuse you from any contract you signed.
| buildbot wrote:
| Hard disagree, considering how predatory some subscription
| services are.
| malfist wrote:
| You can disagree. Doesn't change your legal obligation
| though. Nor keep them from reporting you to collections.
| cr3ative wrote:
| What are you disagreeing with - that predatory subscription
| services will send you to collections?
| vineyardmike wrote:
| Except you can't disagree that you're responsible for
| contracts you agreed to? How is that questionable.
|
| Predatory services should be avoided. It seems _more
| likely_ that predatory services would be aggressive about
| collecting.
| artificialLimbs wrote:
| It can be a LOT easier to cancel some subscriptions that you
| don't want anymore by pulling the plug on the payment method
| rather than trying to navigate a byzantine web site or phone
| tree.
| gruez wrote:
| But the parent poster's point is that "pulling the plug on
| the payment method" doesn't necessarily cancel a
| subscription/contract. Most companies do cancel the
| contract, but you're really rolling the dice here.
| pdntspa wrote:
| I got myself banned from Xbox Live for just that, many
| years ago
| colinsane wrote:
| i got banned from one of the big cloud providers when i
| was testing my backup client against a bunch of different
| storage backends. was too lazy to delete all the backups:
| just deleted the payment info thinking they'd drop my
| data after the free credits were consumed instead of
| letting my payment-less account accrue a debt.
|
| maybe banned from multiple providers: not really sure as
| i only found out years after the fact when i wanted to
| use this particular vendor for something else.
| shmatt wrote:
| I worked for a retailer dealing with a very big reseller/bot
| problem. And yes, its pretty easy to programmatically block
| these privacy.com-style cards
|
| Another thing I've noticed is some apps (for example Allset)
| are blocking virtual phone numbers, for the same trial-abuse
| issues
| datavirtue wrote:
| Please tell us how you block these...other than examining the
| BIN and kicking them if they belong to a certain block.
|
| I wouldn't rely on this feature unless the virtual card had
| the same BIN as the non-virtual card.
| schroeding wrote:
| Don't you just... commit fraud instead of "ending the trial"?
| Just because they can't charge your credit card doesn't mean
| you don't still own the company money, right?
|
| Genuine question, I don't know how it works with credit cards.
| But you can't "cancel a contract" by voiding a direct debit
| authorization (where you allow a company to charge your bank
| account directly) and expect everything to be fine, so I would
| assume that also applies to credit cards?
| LeifCarrotson wrote:
| The premise is you've signed up for a service that advertises
| zero-risk cancellation after a trial period.
|
| On attempting to cancel - by stopping use of the service, by
| trying to cancel on the website, by emailing them, by calling
| them during your work hours and sitting on hold for an hour
| of my time that's worth more than the entire value I got out
| of the service, and recording the 2 minute interaction with
| the 'customer service' agent, by calling again the next month
| after they still didn't cancel, by escalating to a supervisor
| and recording that interaction, and getting billed again - it
| often turns out that it's impossible for mere mortals to
| cancel.
|
| In that case, cancelling by changing your credit card number
| is reasonable. Yes, there's a small chance they'll chase you
| to collections and attempt to harm your credit score if you
| do actually owe something (if they shipped you something
| physical, for example), but often they just drop it.
| shuntress wrote:
| What you are describing is the reason that "reasonable
| judgement" is a part of basically every law. Also the
| reason judges and the judiciary branch are so important.
| humanistbot wrote:
| It depends on how the contract is written, and nobody reads
| the T&Cs, so they are probably written to the benefit of the
| merchant. If you sign a contract that says you will pay $X
| for service Y each month until canceled, then you are still
| legally liable to pay that until you cancel as stated in the
| contract.
| matkoniecz wrote:
| unless this part of contract is void due to violation of
| consumer rights (for example unreasonable way to cancel
| contract is or should be legally void)
| matkoniecz wrote:
| In this case I would
|
| - cancel subscription using the same method I used to sign up
| (if it is broken - that is not my problem)
|
| - cease providing them money
|
| I would consider it as preventing fraud by scammers that make
| harder to cancel subscription than it was to create it.
| schroeding wrote:
| Agreed, but you have "cancel subscription" as the first
| action. The card provider does not, they just say "end free
| trials automatically with auto-expiring virtual cards" and
| "cancel subscription payments in one click", _without_
| having to cancel the actual subscription.
|
| Doing both is fine (and I do the same), but _only_ removing
| the payment method does not invalidate the subscription
| contract, right?
| matkoniecz wrote:
| Not sure. There is "constructive dismissal" in the
| employment law (
| https://en.wikipedia.org/wiki/Constructive_dismissal )
|
| I would not assume it to be invalid form of terminating
| subscription, I would also not assume that it is valid if
| someone has not even tried official unsubscription
| method.
| wyldfire wrote:
| It doesn't sound like fraud if an opt-out service renewal
| stops being opt-out (or if you effectively opt-out using an
| agent).
| Rebelgecko wrote:
| If the payment doesn't go through, the company should just
| stop providing the service. eg the gym cancels your
| membership
| tcoff91 wrote:
| I've definitely heard of times where gyms continue to
| attempt to charge you, claim that you owe them that money,
| and then send you to collections after months of failed
| payments.
| ChuckNorris89 wrote:
| This is definitely the case in Germany and Austria. You
| can't just stop paying your subscription and consider
| this a successful cancellation thinking everything goes
| away and sorts itself out naturally.
|
| They'll send the collection agency after you for the
| missed payments till the end of the contractual
| agreement, which for most gyms is 3 to 12 months! Gym
| chains here are absolutely predatory.
|
| The same goes for any other kind of subscription too
| like, telcos, etc.
| wccrawford wrote:
| Microsoft used to do it for XBox subscriptions as well. I
| don't know if they still do, but I definitely got caught
| on it. They ended up forgiving that bit and letting me
| use my account again without paying for service I never
| used, but they initially told me I had to pay it before I
| could use my account again.
| eli wrote:
| Gyms are terrible and often do sneaky things to take your
| money. But if you agree to a one year contract then you
| shouldn't be able to get out of it by just not paying.
| vorpalhex wrote:
| No this is a lose for the auto-renewing model since you pay
| ahead for the term typically instead of in-arrears.
|
| Which is good in my book. Being forced into auto-renewing
| subscriptions is nonsense and takes advantage of consumers.
| vorpalhex wrote:
| No, a merchant can't discriminate by sub-cards within a network
| - that's a great way to get kicked out of the network and never
| be able to charge a visa again.
|
| The network may disallow the behavior but networks are slow to
| regulate and in theory are consumer focused.
| kersplody wrote:
| A merchant can't discriminate, but the payment processor,
| credit card network, or issuer can under several conditions
| including "an immediate fraud threat." Virtual credit cards
| being used to violate contracts could very well be considered
| to be a fraud threat.
| valarauko wrote:
| > No, a merchant can't discriminate by sub-cards within a
| network
|
| This hasn't been my experience. I've had Grubhub refuse to
| accept a privacy.com card for buying a gift card.
| burnished wrote:
| Could you link to something backing up what you are saying?
| I'm curious about the facts of the matter, and also why a
| comment like yours (factually correct or incorrect it is
| pretty innocuous) appears downvoted.
| kersplody wrote:
| https://usa.visa.com/content/dam/VCOM/download/about-
| visa/vi...
|
| Section 1.7.4.1
| 0x457 wrote:
| That's true, however whoever provided you with the card is
| responsible for ensuring you are not misusing it.
|
| I once had a trial with a company and added my Privacy.com
| card that would expire in a day. I've canceled that trial and
| forgot about it. Then some time later I had to use the same
| company, but I've totally forgotten that I had an account
| with them (I've also changed the email I use). Anyways,
| privacy.com suspended my account because using their cards to
| get trials over and over again is against their ToS.
| snazz wrote:
| Doesn't Google (Cloud and Ads) discriminate against "privacy"
| and "virtual" card numbers? I feel like I've heard of that
| being an issue with Apple Card and Privacy.com on here in the
| past.
| vorpalhex wrote:
| That I don't know about and that could be allowed depending
| on the network. I know Privacy.com has restrictions on
| their side (you can't use their cards on some porn sites
| for instance) but that would be the issuer doing the
| limiting which is almost always allowed.
| paulmd wrote:
| Google will never actually give you a stated reason for
| account closure, people have just deduced that it's privacy
| cards that are getting closed. So yeah even if it's against
| terms-of-service (based on what's been said here) they're
| smart enough not to just say it.
|
| Your only recourse would be filing a complaint with Visa,
| and hoping they investigate, but "google closed my account"
| is not gonna be something that's _super_ high on their
| priority list to investigate, I 'm guessing.
| kergonath wrote:
| > The website for X1 advertises "End free trials automatically
| with auto-expiring virtual cards" [0] - if that takes off,
| would services just start blocking folks from signing up for
| free trials with X1 cards?
|
| I use a Revolut card exactly that way, and it made my life so
| much easier. No need to phone someone between 8:30 and 9:45 on
| the first Saturday of the month to cancel subscriptions. No
| risk of paying for a month extra or lose access for a week
| after in-subscribing (all of this happened to me). So there are
| real benefits to this approach.
|
| Now, I use Revolut because I like my online purchase to be
| completely isolated from my main bank accounts, but both my
| French and my British (traditional and old-fashioned) banks
| offer the same single-use virtual cards for a modest fee. So
| filtering by issuing bank would not be really effective.
|
| I don't know if these cards have numbers that can be used to
| recognise them, though, but I never had any trouble using them.
| datavirtue wrote:
| Sounds like our monstrous government consumer protection
| industry has dropped the ball. The main use of this feature
| is to bat down scammers that are masquerading as legitimate
| businesses.
| kergonath wrote:
| Indeed.
|
| To be fair, though, even without the subscription thing,
| it's a useful element of defence in depth when buying stuff
| online: how secure a random e-commerce website is becomes
| much less relevant if they haven't a working card number in
| the first place.
| csomar wrote:
| I was expecting this about disrupting the MasterCard/Visa duopoly
| and sure was I disappointed.
|
| All fintech relies on two things: A bank and a payment network
| (Mastercard/Visa). This makes fintech an inferior product and
| most fintech I have tried have an abysmal customer service. Also,
| because fintech does its verification thing over the Internet, it
| seems that they rely more on their AI to block/ban people than a
| phone call. Fintech also seems to be more down to lick
| regulation, banks and mastercard feet at the expense of their
| customers.
|
| This explosion of credit cards/offers/rewards is hardly
| innovation. It has already happened with banks (every big store
| has its own credit card) and it's usually a bad deal for customer
| as it requires "loyalty" to that brand.
|
| That's it folks. The market has been cornered by a couple guys
| and it seems the regulatory barriers have been lifted high enough
| that nobody can enter again. Remember when MasterCard/Visa used
| to send these cards for free without any KYC whatsoever?
| avianlyric wrote:
| > That's it folks. The market has been cornered by a couple
| guys and it seems the regulatory barriers have been lifted high
| enough that nobody can enter again. Remember when
| MasterCard/Visa used to send these cards for free without any
| KYC whatsoever?
|
| It's a fundamentally hard market for anyone else to enter
| because Mastercard and Visa basically have natural monopolies.
|
| The value that both Mastercard and Visa bring to the table is:
|
| 1) if you're a bank, most merchants accept their cards
|
| 2) if you're a merchant, most banks provide a card from one of
| them.
|
| So any new network has the classic chicken and egg problem. How
| do you convince merchants to accept your card (and potentially
| additional payment processing terminals) when none of the
| merchants customers have the card. And in the inverse, how you
| get a bank to invest in integrating with your network, when no
| merchants accept your card?
|
| The EU tried to force a fox on this issue by creating EuroPay.
| Which ultimately failed and was bought by... Mastercard. But on
| the upside, part of the purchase deal require that Mastercard
| provide "at-cost" access to its network for a new card network
| to piggy back off, to help solve the above chicken and egg
| problem. But atlas's, even that doesn't reduce the barrier to
| entry enough, especially when coupled with the EU rules capping
| maximum interchange fees.
| CharlesW wrote:
| > _All fintech relies on two things: A bank and a payment
| network (Mastercard /Visa)._
|
| Fintech is much bigger than credit card networks. Bitcoin may
| be the most obvious fintech example that requires neither, but
| there are many others.
| csomar wrote:
| I don't think Bitcoin is categorized as fintech but rather
| crypto/blockchain.
| CharlesW wrote:
| Fintech encompasses all financial technologies.
| Cryptocurrency is a cornerstone financial technology.
|
| https://en.wikipedia.org/wiki/Financial_technology
| Godel_unicode wrote:
| Cryptocurrency is a niche hobbyist area within fintech,
| nothing more. If it all turned off tomorrow, virtually
| nobody would notice. Compare that with Visa or SWIFT,
| which are actual cornerstones.
| CharlesW wrote:
| Let me rephrase -- the type of people (consultants, VCs,
| industry analysts, blockchain bros, etc.) who use the
| term "fintech" on a regular basis consider
| crypto/blockchain technologies to be a key area of
| fintech innovation.
|
| From https://en.wikipedia.org/wiki/Financial_technology:
| "[Fintech] is the technology and innovation that aims to
| compete with traditional financial methods in the
| delivery of financial services. Artificial intelligence,
| Blockchain, Cloud computing, and big data are regarded as
| the 'ABCD' (four key areas) of FinTech."
|
| In contrast, the credit card networks which have been
| with us for decades are considered to be "traditional
| financial methods". Even Visa thinks about itself as a
| company that partners with "fintechs" and "fintech
| enablers" rather than being a "fintech" itself, e.g. "Our
| worldwide network helped fintechs like Chime, Rappi and
| Airwallex deliver on their vision".
| (https://usa.visa.com/partner-with-us/info-for-
| partners/info-...)
| seydor wrote:
| Yep, more middlemen is not innovation.
|
| True progress would be CBDC or actual usage of cryptocurrency
| jjoonathan wrote:
| > regulatory barriers
|
| Because markets are never anti-competitive on their own,
| oligopolies are only ever due to big bad regulators, right? Uh-
| huh. Some alternate ideas about why the CC payment processors
| are an oligopoly:
|
| 1. They have a card in every wallet and a reader in every
| aisle.
|
| 2. They can force merchants to hide the fees they charge.
|
| 3. They don't just process payments, they arbitrate disputes.
|
| (1) could be addressed by standardization (see: Europe). (2)
| could be outlawed. (3) could be replaced with better consumer
| protections or smoother small-claims process.
|
| Most markets have a substantial undergrowth of perverse
| incentives and anti-competitive strategies. Killing the
| gardener doesn't make the weeds disappear.
| jjtheblunt wrote:
| Diners and AmEx too, no?
| CharlesW wrote:
| Yes, and Discover (which owns Diners).
| telchior wrote:
| Do they really have any presence? I spend almost all of my
| time internationally and basically never see AmEx. Had a
| Discover card years ago when I began traveling but got rid of
| it because its presence was spotty in the US and nonexistent
| elsewhere.
|
| I'd expect more out of UniPay at this point -- I do actually
| see that quite often.
| ChuckNorris89 wrote:
| AmEx is pretty big in Europe for corporations and big
| businesses to issues to their workers for business
| expenses.
| anonporridge wrote:
| This sounds exactly why people like Jack Dorsey are pushing for
| bitcoin + lightning network adoption. They've experienced first
| hand how much gatekeeping has developed in the space (via
| Square + CashApp in his case) that make true innovation almost
| impossible.
|
| An open, permissionless, and GLOBAL monetary network for final
| settlement and small payments (and micropayments) which no
| single competing nation state has unilateral control over would
| be a game changer for fintech innovation. The function of
| everything from Visa/Mastercard, Fedwire, SWIFT, Paypal,
| Western Union, etc, all rebase onto one global network with
| countless businesses competing on top of it to provide the most
| appealing user experience.
| metadat wrote:
| It's been 45 minutes and I'm still waiting for my Bitcoin
| transaction to go through.
|
| BTC and Crypto at large don't seem like a viable alternative
| solution, or even a solution to any real problem at all.
| jonathan-adly wrote:
| very uninformed take - they specifically mentioned the
| lighting network where transactions happen as fast as
| VISA/Mastercard.
| metadat wrote:
| What good is a transaction without guaranteed settlement?
| hinkley wrote:
| I mean, I'm no crypto-as-in-currency fan (but am an
| actual crypto fan), but Visa is maintaining an elaborate
| illusion. It breaks down any number of ways, which you
| find out the moment you try to spend 40% of your credit
| limit on one thing, and someone screws up the transaction
| so it has to go twice. Then you start getting declined at
| the grocery store for being over the limit when you are
| in fact at 61% of your limit, but the vendor has reserved
| 80% of your limit for that 40% transaction.
| jonathan-adly wrote:
| Visa/Mastercard are not guaranteed settlements...
| metadat wrote:
| Visa/MC have phone numbers you can call for support and
| dispute resolution. What happens for BTC lightning?
| kelseyfrog wrote:
| You still call a number for support: 988.
| metadat wrote:
| 988 is the suicide hotline..
| kelseyfrog wrote:
| Anyone who overcommits to crypto should have a crisis
| plan in place in the event of disaster.
| kevinak wrote:
| So... you want guaranteed settlement but at the same time
| the ability to reverse a transaction? How do you propose
| that would work?
| xur17 wrote:
| > This sounds exactly why people like Jack Dorsey are
| pushing for bitcoin + lightning network adoption.
|
| The solution was in the message you replied to.
| anonporridge wrote:
| Do we seriously still have to deal with this criticism in
| 2022? Come on man. Educate yourself about the bitcoin layer
| 2.
|
| https://www.youtube.com/watch?v=7bOo3zLFhEk
|
| For small payments, lightning is instant and extremely low
| fee. For larger payments that you want certainty of
| settlement, even a few hours confirmation time is
| drastically superior to traditional settlement networks
| that take days if not weeks internationally. FYI, your
| credit card payments are instant, but not finally settled.
| That happens in periodic bulk batches between banks.
|
| https://www.swanbitcoin.com/a-look-at-the-lightning-
| network/
|
| Even the Fed is on top of trying to understand this, https:
| //www.clevelandfed.org/~/media/content/newsroom%20and%...
| avianlyric wrote:
| Eh, in the UK I already have instantaneous bank transfers
| that are free for normal retail customers to use.
|
| Money arrives instantly, and as far as a retail customer
| is concerned, it settles instantly. Under the hood their
| regular batch settlement between banks, but that doesn't
| matter to a retail customer, because the money is
| instantly withdraw-able, and covered by government
| deposit protection the moment the faster payment appears
| on your bank statement (which is milliseconds after the
| payment is initiated by the sender).
|
| Why would I want to mess around with Bitcoins, when I
| already have access to fast, secure, cheap, money
| transfers to any UK bank account?
| ipaddr wrote:
| Sometimes you need to pay someone outside of the UK.
| Maybe you want to purchase something online. Perhaps you
| don't want to share your bank account with a stranger.
| ceejayoz wrote:
| People did all this long before Bitcoin.
| tossl568 wrote:
| Digitally, without fees, with a fair exchange rate? With
| no limits on transaction sizes, with complete finality?
| tossl568 wrote:
| You are not the protagnist of reality. And one day even
| you might want to send money easily to somewhere other
| than a UK account, without jumping through any hoops of
| middlemen.
| SkinTaco wrote:
| Sheesh, what a eurocentric post.
| [deleted]
| spaceman_2020 wrote:
| Have you considered that people want to transfer money
| outside the country too? And that this volume is
| incredibly massive? And is critical to global trade? And
| that it has been used as a weapon to keep non-compliant
| countries out of international trade?
| lifty wrote:
| What if you want to buy something from outside UK?
| Kwpolska wrote:
| Then I'll pay with my credit card, since it's the safest,
| easiest, and pretty much instantaneous as far as I'm
| concerned.
| metafunctor wrote:
| Sellers obviously want certain settlement for all
| purchases regardless of amount.
|
| If bitcoin needs a similarly hierarchical trust-based
| settlement systems as banks, how is that different from
| traditional banking?
| kevinak wrote:
| That is not what the lightning network is though - it is
| trustless, just like the baselayer.
| fshbbdssbbgdd wrote:
| What factors are holding back adoption of lighting? I've
| come across Bitcoin as a payment option before when
| making some purchases, but I don't think I've ever seen
| lightning.
| tossl568 wrote:
| Exchanges are more interested in running their shitcoin
| casinos and making money off gambling trading fees. Some
| even skim off their users for withdrawal fees like
| crypto.com. There's not much incentive to implement
| something that won't make them money.
| hinkley wrote:
| Do you seriously think that's an educational video?
|
| The second link follows the Wadsworth Constant in
| fabulous fashion.
|
| https://www.swanbitcoin.com/a-look-at-the-lightning-
| network/... is almost exactly 30% of the way down the
| page.
|
| > 1 hour 31 minutes read
|
| In rhetoric we call this 'assigning homework' and it's
| considered deflecting, aka, trying to get out of jail
| free, aka, poor form, aka, you lost the argument.
|
| I'm sure we can do better than either of these for
| educational material. If that's the best that exists,
| which I hope is far from the case, then this is
| essentially a "git gud scrub" situation and you have
| yourselves to blame for the unwashed masses still not
| understanding things.
| colechristensen wrote:
| > An open, permissionless, and GLOBAL monetary network for
| final settlement and small payments (and micropayments) which
| no single competing nation state has unilateral control over
| would be a game changer for fintech innovation. The function
| of everything from Visa/Mastercard, Fedwire, SWIFT, Paypal,
| Western Union, etc, all rebase onto one global network with
| countless businesses competing on top of it to provide the
| most appealing user experience.
|
| This is not ever going to happen.
|
| Witness today the Ethereum tumbler getting sanctioned. When a
| payment method gets significant enough it will either be
| regulated or squashed by the state.
| anonporridge wrote:
| States are welcome to try to exclude themselves and their
| citizens from the network, as many nation states attempt to
| do now with the open internet.
| colechristensen wrote:
| Some people do compare the relatively free exchange of
| information on the Internet with cryptocurrencies, but
| modern democracies regulating commerce isn't anywhere
| near the intent of dictatorships regulating information.
|
| It is also quite easy for a state to exclude themselves
| from cryptocurrency networks, to the extent that the only
| transactions taking places are enabled by black market in
| person exchanges for cash, and no legal business entity
| could use that currency so you're left with the only
| thing bitcoin was really ever good for, evading legal
| controls to do trivial things or illegal things. Nothing
| more.
| warkdarrior wrote:
| > The function of everything from Visa/Mastercard, Fedwire,
| SWIFT, Paypal, Western Union, etc, all rebase onto one global
| network with countless businesses competing on top of it to
| provide the most appealing user experience.
|
| Even if they do rebase on top of one global network, what
| incentive do these companies have to change their product
| offerings or their fees? Consumers will not care what
| Visa/Mastercard or Western Union use on the backend, could be
| carrier pigeons as far as most people are concerned.
|
| What would cause fintech to become more competitive? I'd love
| to see every transaction fee, loan rate, etc. go to zero. But
| would "one global network" lead to that?
| AlexandrB wrote:
| I'd rather have a bunch of gatekeepers than losing money with
| no recourse if my credit card number is stolen. The trade-off
| for crypto-style decentralization is complete loss of
| consumer protection.
| anonporridge wrote:
| Then you won't ever use raw bitcoin.
|
| You'll continue using a service that obfuscates their use
| of bitcoin and lightning, like you do now with services
| that obfuscate their use of Fedwire and SWIFT. They'll
| provide you with consumer protection services, either for a
| fee or in exchange for harvesting and selling your data,
| like they do now.
|
| I'm not suggesting that everyone is going to use raw
| bitcoin and have to manage their own keys. I'm suggesting
| that nation states and corporations (and many individuals)
| will all rebase their money operations on an open network,
| digital protocol. Bitcoin.
| alxhill wrote:
| So there's a bunch of existing intermediaries, which is
| bad, and to fix that we're going to add the exact same
| set of intermediaries, but on top of bitcoin, which means
| its good?
| gamblor956 wrote:
| Your argument to all of the problems affecting bitcoin
| is...don't use bitcoin. Use this other thing, lightning,
| which is sort of built on bitcoin, but not really. And also
| not actually used anywhere, yet, even though it's supposed to
| be so amazing at fixing bitcoin's problems that crypto
| merchants should have embraced it over night.
|
| That bitcoin's biggest proponents still haven't embraced
| lightning is a pretty clear admission of defeat by bitcoin
| apologists that bitcoin doesn't actually solve anything, and
| isn't actually very useful for anything, even with the fix
| that was supposed to finally bring bitcoin into the promised
| land.
| tossl568 wrote:
| Every lightning transaction (or channel update) is a valid
| Bitcoin transaction that can be broadcasted to the Bitcoin
| network and settled at any time. Lightning capacity and
| transactions are growing fast. "Crypto"'s biggest
| proponents haven't embraced lightning because they have
| shitcoins to sell.
| AviationAtom wrote:
| Congress is poised to force Visa and Mastercard to allow their
| branded cards to be processed through alternate processing
| networks. That should be an interesting shakeup, if it pans
| out.
| anonporridge wrote:
| Sounds like Congress is feeling like Visa/Mastercard haven't
| been spending enough money on lobbying recently.
| mgaunard wrote:
| I always thought that credit cards were for poor people, since
| why would I ever need a loan with 15-20% interest.
|
| Then recently I hired a car and they forced me to take the zero-
| excess insurance (50% of the cost of a one week hire for a
| convertible) because I didn't have a credit card.
|
| I'm now in the market for a credit card, but I have no interest
| in any of the credit features, I just need it to be accepted as a
| credit card worldwide. Unfortunately all comparisons online focus
| on the interest rate that I couldn't care less about.
| twblalock wrote:
| Just get a card with wide acceptance and no annual fee: any
| basic Visa or Mastercard from any bank.
|
| Keep it simple and just get one from the bank you already use
| for checking -- then you will only have one online banking
| portal to use for both your card and your checking account.
|
| Set up autopay for one of your monthly bills to use the card.
| Set up another autopay from your checking account to pay off
| the card's balance every month.
|
| Do that, and you will have a credit card that is regularly
| used, with a history of paying the bill on time, without
| spending any money you would not have spent anyway.
| cwkoss wrote:
| I think nearly every credit card will be able to support
| "accepted as a credit card worldwide".
|
| So, I think you can just pick whatever card doesn't have an
| annual fee, maybe choose one with rewards you'd use if you
| care.
| light_hue_1 wrote:
| Wow. The X1 card is a terrible deal in a nice looking package.
|
| Compared to the Chase Sapphire Reserve, it's just a step down in
| every way. You have lower rewards (about half) and fewer perks.
| snazz wrote:
| You should compare the X1 against other cards with no annual
| fee, not against the CSR with its $550 annual fee.
| nilespotter wrote:
| I've never had a card with an annual fee, honestly never
| really even considered it. I am FLOORED people are willing to
| get one that's $550. How does it work, if I go to sleep on
| 12/31 with a $0 balance, do I wake up on 1/1 owing $550?
| ac29 wrote:
| Those ultra high annual fee cards tend to have
| substantially better rewards than cheaper cards. For the
| sort of person who might spend $50,000 or more on travel in
| a year for example, it can make sense.
| snazz wrote:
| Exactly. In the case of the CSR, there's a big general
| travel credit (maybe $200 or $300 off the top of my
| head), so that makes the net price less ridiculous. The
| target market with that kind of travel rewards card
| spends enough on travel for the rewards and statement
| credits to easily outweigh the annual fee. I don't spend
| anywhere near enough for it to make sense for me, but
| it's not quite as crazy as the $550 price tag makes it
| seem.
| bern4444 wrote:
| You pay annually like any recurring subscription.
|
| That chase card and its american express equivalent (the
| platinum card) give pretty nice rewards for people who
| travel often. This includes airport lounge access, credits
| for dining or taking uber/lyft, access to helpful services,
| status at hotels etc.
|
| There are rewards cards across the price spectrum (some are
| free, some have an annual fee of $100, $250 etc).
|
| Often for anything except the higher cost credit cards,
| making up the fee in rewards is trivial. American express
| has a CC that gives 6% back on groceries up to $6,000
| annually. The annual fee is $100. That's pretty easy to
| make back and then some as an individual let alone as a
| couple or even a family.
| junar wrote:
| One thing to note is that X1 points have fairly limited
| redemption options [1].
|
| There are several cards that offer no annual fee + straight
| 2% cash back, like PayPal Mastercard, Citi Double Cash, Wells
| Fargo Active Cash, etc. Also, they tend to have better sign
| up bonuses ($100-$200) compared to just a few more points.
|
| [1] https://frequentmiler.com/x1-card-too-good-to-be-true-
| heres-...
| jldugger wrote:
| That citation is from 2020, and
| https://x1creditcard.com/legal/program-terms#x1-card-
| rewards... indicates you can redeem points 1point:1cent as
| statement credits.
|
| And of course reddit points out they have cut that down to
| 0.7 cents
| jldugger wrote:
| > You have lower rewards (about half) and fewer perks.
|
| I'm not sure you're reading it right. From what I can tell, I
| can make tax and rent payments and get 3% statement credits.
| These two categories are typically at the lowest tier, and come
| with convenience fees. But at 3 percent, that cancels out and
| then some.
| praveen9920 wrote:
| India has done a phenomenal job of getting rid of the
| mastercard/visa duopoly in India by introducing Rupay. Some
| people may say it is just another monopoly but being owned by
| govt has its own perks for both consumers and merchants AND
| Banks, end of the day everyone wins. They are simplifying and
| inviting newer technology to spread credit products across India.
|
| Just like UPI, Rupay is taking over India like wildfire. US can
| take a page out of India's technology adoption ( except may be
| for crypto )
| cudgy wrote:
| "It's [a credit card] a way to pay for things that's a loan, but
| it doesn't have to be a loan if you pay it back on time but it
| can be a loan if you need money in an emergency."
|
| This seems overly pedantic. It's still a loan regardless of
| whether one pays it back within the grace period. A better way to
| describe it is a 0% interest loan that escalates to a usurious
| rate once the grace period date is reached.
| t_mann wrote:
| > This has been the competitive dynamic within banking, when it
| comes to product innovation - tiny variations on a theme.
|
| > Fintech is painting way outside the lines and consumers are
| benefiting from the resulting innovations.
|
| I am baffled at both assertions - that banks have barely invented
| any new financial products in the past century, and that Fintechs
| are creating new financial products. Both statements seem so far
| out of line that I suspect the author has little to no knowledge
| of the financial sector and believes the tiny number of products
| used by most retail consumers represent the full universe of
| financial products.
|
| The reality is that banks have been extremely creative in
| creating new products in the decades up to the financial crisis
| (MBSs, CDOs, CDSs,...). And if you look what happened to those
| products, you'll be thankful that they've mostly been kept away
| from retail clients. The 1.5 decades since the crisis have seen
| less innovation from banks because regulators put their foot
| down. I've yet to see a genuinely new product offered by a
| Fintech (unless you count crypto/DeFi among Fintech, which is
| usually considered to be separate).
| llaolleh wrote:
| None of those are really "innovative".
| datavirtue wrote:
| Because there is a littany of regulations that narrowly define
| what is possible...and ALL innovations have to comply. The most
| innovative solutions require a backing bank that can
| expand/adapt their underwriting--the only place where there is
| wiggle room.
| rurp wrote:
| > if you ever try to explain how a credit card works to a
| 14-year-old, you'll quickly remember just how complicated and
| strange they are.
|
| Are credit cards really as complicated for most people as this
| article claims? The explanation I got as a teenager was something
| like, "Instead of paying with cash you can use credit from a
| card, then at the end of the month you pay off all of those
| charges to the bank at once. Technicaly you don't have to pay it
| off immediately, but if you wait you'll also pay a horrible
| amount of extra fees; which you never want to do".
|
| It was pretty easy to grok at the time, and is how people should
| approach credit cards 99.999% of the time.
|
| Once a person gets older and has built up some credit they can
| look for a card with good rewards, which for most people will
| just be looking for the highest cash back percent they can get.
| alxhill wrote:
| I think the complexity arrives when the 14-year-old asks the
| follow up question "why?"
| asdff wrote:
| Because if you get scammed its easier dealing with a credit
| card company than your bank
| dotopotoro wrote:
| Why? (5 "why"s in total)
| graypegg wrote:
| Though couldn't a teenager (older than 14, but still)
| understand the value that deferring paying for something is
| useful in context to a part time job? I would only get paid
| at certain days, and knowing generally what I'll get at the
| end of the month after tips and hours, I could budget for
| that number rather than what I have in the moment.
| personjerry wrote:
| Did you know in most parts of the world, credit cards aren't that
| popular?
|
| From what I've seen, in Latin America and much of the EU debit or
| even cash is the default.
|
| Even in the UK, there are no weird, arbitrary reward points
| programs like in the US - it's standardized.
|
| In my experience only the US and Canada have these crazy credit
| card deals and programs. Which is good for me I guess, I get my
| points as I can still use my Visa credit card around the world.
| But man, unless you do the research and understand your card,
| credit cards can really be shady (especially exploitative for
| those with low financial understanding) and I do think we should
| get rid of them.
| browningstreet wrote:
| I was just in IT, HU and DE and used Apple Pay for 99% of all
| transactions, and it was normal.
| nyokodo wrote:
| > credit cards can really be shady (especially exploitative for
| those with low financial understanding) and I do think we
| should get rid of them.
|
| Or, promote better financial literacy.
| Nextgrid wrote:
| Just because a specific skill can help you avoid the pitfalls
| doesn't mean those pitfalls should be kept around. Just
| because OSHA and health & safety rules exist doesn't mean we
| intentionally make power tools and machines have blunt
| electrified edges to cut/electrocute anyone who isn't
| "literate" enough and accidentally touches the thing. I'm
| personally tired of everything in the world being
| intentionally hostile.
| nyokodo wrote:
| > Just because OSHA and health & safety rules exist doesn't
| mean we intentionally make power tools and machines have
| blunt electrified edges to cut/electrocute anyone who isn't
| "literate" enough and accidentally touches the thing.
|
| The OP called for the abolition of credit cards, whereas
| you're describing the regulation of power tools which is
| all well and good albeit inadequate as people still cut
| their fingers off and break things all the time with power
| tools. Power tools are still around and no one is calling
| for them to be abolished, although there are efforts to
| train people in power tool safety. People need financial
| safety training too, and not just for credit cards.
| Nextgrid wrote:
| Power tools cut off limbs and cause accidents because
| those tools are designed to cut hard materials that are
| much harder than human flesh. You could technically make
| a completely safe angle grinder by completely covering
| the cutting wheel but that would make it pretty useless.
|
| On the other hand, credit cards' pitfalls are intentional
| rules that have no other purpose other than to explicitly
| be "sharp" and "cut" careless people.
| nyokodo wrote:
| > On the other hand, credit cards' pitfalls are
| intentional rules that have no other purpose other than
| to explicitly be "sharp" and "cut" careless people.
|
| You already mentioned one way to ameliorate this that
| worked for power tools, regulation, that doesn't involve
| abolishing them. That might work, but far better is to
| reduce the number of careless people through education.
| Nextgrid wrote:
| What makes credit cards "credit cards" is not some
| technical difference but the fee schedule and repayment
| terms, which are currently intentionally obtuse and
| "sharp" so that people who get "cut" subsidize perks for
| those who know how to play the system to their advantage.
| If you regulate those away it will just become the
| equivalent of a debit card with an overdraft attached,
| essentially abolishing them.
|
| > far better is to reduce the number of careless people
| through education.
|
| Maybe. If there's no safer way to achieve the task at
| hand (like with power tools - the tool is inherently
| designed to cut things and will cut limbs if misused),
| sure. But when the danger is intentionally introduced
| into the system with no other purpose than to subsidize
| perks for the well-off, is it worth keeping?
|
| Why not also extrapolate this and make fraud and scamming
| legal and instead blame victims for their lack of care
| and education?
| nilespotter wrote:
| I like your optimism. It's not clear to me your average
| American and his public education are capable of
| understanding them, regardless of what financial literacy we
| may or may not be able to inculcate.
| nyokodo wrote:
| > It's not clear to me your average American and his public
| education are capable of understanding them
|
| Basic financial literacy sufficient to manage credit is
| well within the abilities of those with average
| intelligence. If the Public Schools are unable to teach
| that then we should reform them. It's not like credit cards
| are the only financial pitfall that people desperately need
| help to avoid.
| maccard wrote:
| > Even in the UK, there are no weird, arbitrary reward points
| programs like in the US - it's standardized.
|
| That's not true. Amex have a full family of rewards cards
| available. There's a bunch [0] of non-amex cards available too.
|
| [0] https://www.moneysavingexpert.com/credit-cards/best-
| credit-c...
| avianlyric wrote:
| Only Amex can do this, because they're both a card network,
| and card issuer. Allowing them to charge higher interchange
| fees to merchants than Mastercard or Visa are allowed to in
| the EU.
| antihero wrote:
| In the UK we have cashback for some debit, airmiles, and the
| various types of cards Amex do.
| avianlyric wrote:
| The EU strictly limits the interchange fees that card networks
| and banks can charge. So it's not possible to offer valuable
| (and profitable)reward programs in the EU, because banks simply
| can't earn enough money on transactions fees to provide those
| rewards.
|
| In the US, interchange is up to 10x higher than the EU. And
| interchange + reward programs act as a form of regressive tax
| where people with low credit scores have to pay the full cost
| of those high interchange fees. Whereas high value customers
| with good credit scores (who are normally the most wealthy in
| society) get a rebate on those interchange fees in the form of
| rewards.
| schroeding wrote:
| > The downside to these cards' safe design is that the use of
| these cards doesn't generate repayment data that is all that
| useful for lenders
|
| Oh no! Anyway[1]... :)
|
| But on a serious note, personally I'm glad that those fintech
| pseudo credit card products exist. I would be happy to be able to
| just pay with my normal bank / debit card everywhere on the web.
| I can't, not even with a third-party like PayPal, but I can with
| a virtual fintech "credit card", without needing a "real" credit
| card.
|
| [1] https://www.youtube.com/watch?v=9S8eNZ4fw5I
| TheLoafOfBread wrote:
| From my experience PayPal sucks for paying anything as (at
| least for me) it constantly triggers fraud alerts and then
| blocks whole account for days.
|
| Currently I have virtual Visa card provided by my bank in EU. I
| can load this card into Google Pay and pay with NFC in phone,
| use it on Amazon/AliExpress/other eshops etc.
| em-bee wrote:
| paypal can be problematic for receiving money, but i have no
| problem with paypal to pay my hosting and i used it for
| airbnb from my debit-card/bank account. the only time i had a
| problem was when i received money, and paypal wanted to see a
| bank statement to verify my identity i think.
|
| where is your money coming from? and where is it going?
| TheLoafOfBread wrote:
| Boss in company had setup following chain: company bank
| account -> PayPal debit card -> Digi Key order.
|
| Worked once, payment refused ever since. Randomly locked
| and needed to call support to unlock it, so it can be
| locked again after few days. Similar problem with all other
| eshops for ordering parts/material.
|
| After an argument with the boss, I have forced using of
| virtual debit card directly from a bank account, never had
| any problem since.
|
| From experience which I got, I don't even understand how
| anybody can take PayPal seriously.
| Spivak wrote:
| Unless this is something different I think most people want to
| generate that information -- "look I'm a trustworthy borrower,
| give me good credit score!"
|
| Like the credit score system is dumb, sure, but I don't make
| the rules and playing the game can save me about a hundred
| thousand bucks off my mortgage.
| bee_rider wrote:
| Yeah it benefits the users, by in some sense artificially
| inflating their credit scores.
|
| Also benefits society in general -- injecting junk into the
| credit agencies data should reduce the viability of their
| parasitic business model (although unfortunately it is only a
| tiny amount of junk).
| schroeding wrote:
| But they do generate that information - they just don't have
| a _choice_ to decrease their score, as they can 't be behind
| their payments (thus "isn't all that useful for lenders") -
| right? That's the whole schtick behind "credit builder
| cards", use them to build _up_ your credit score, isn 't it?
|
| The cited part in the article "mourns" that part, that
| consumers get better scores even though they didn't have an
| "actual" credit card, doesn't it?
| YawningAngel wrote:
| The author's criticism of these cards is _not_ that they don
| 't build an individual's credit record, but that they reduce
| the decision-making power of the credit scoring system as a
| whole. Given the unpleasant and coercive nature of the credit
| scoring system, that seems like a good thing
| DubiousPusher wrote:
| > Rewards are great.
|
| No they're not.
| jimt1234 wrote:
| The explosion of credit cards over the last 25 years reminds me
| of an article I once read about the psychology of casinos, in
| particular the mental detachment of money. Basically, casinos
| figured out a long time ago that a person will gamble a lot more
| in chips than actual cash, because cash is emotionally connected
| to food, rent, clothes, etc., whereas chips are detached from
| that emotional connection, and thus casino customers are more
| inclined to gamble more with chips than actual cash.
|
| I'm probably being Captain Obvious, but seems to me the credit
| card industry took this psychology and ran with it, essentially
| creating the modern consumer experience, which is basically this:
| https://www.youtube.com/watch?t=64&v=EAyJmIXcyMg
| mise_en_place wrote:
| The article didn't mention hybrid banks/credit builder for new
| businesses. Brex used to be in this category and they helped me
| build my business credit score. Unfortunately they now only
| support customers with $1 MM+ revenue per year. I am grateful to
| them though, for helping me build credit for my business and
| having great customer support
| robocat wrote:
| > Americans opened 233 million new credit card accounts during
| the second quarter
|
| The Internet says "US adults age 18 and over, grew to 258.3
| million in 2021" (paraphrased).
|
| I presume there is some power law where some residents have many
| cards, but there is presumably a constraint on the most cards
| (bank credit checks, number of different cards).
|
| Aside: i wonder who in the US has the maximum number of credit
| cards assigned to them in one year, or concurrently?
| NavinF wrote:
| Personally I have 20 cards, most of which were aquired over a
| couple of years ~8 years ago. You can apply for 6 cards every 6
| months or so (2 per bureau assuming they only do one hard pull)
| without significantly reducing your credit score for the next
| year.
|
| I'd guess the limit is ~400 right now since you'd have to start
| collecting decades ago.
| yabones wrote:
| There exists a very strange group of people who practice
| "churning", something I don't fully understand. It involves
| opening as many accounts as possible to get sign-up bonuses,
| promotions, etc, then transferring balance back and forth
| between accounts, then closing accounts.
|
| https://old.reddit.com/r/churning/
|
| I would imagine those people are in the 99th % of cards per
| capita...
| alexashka wrote:
| Just make it so anyone with an internet connection can transfer
| any amount anywhere else, online, without any transaction fees,
| within seconds.
|
| There, there's your fucking fintech. I don't know what everyone
| else is doing.
| humanistbot wrote:
| Tell me about your plans for fraud.
| tmpz22 wrote:
| No good, you need a capable party for KYC/KYB to ensure
| compliance with international sanctions, terrorist watchlists,
| crime investigation, etc. This is an expensive apparatus to
| maintain.
| alexb_ wrote:
| All of these assume you need the government to keep track of
| who spends what money - something that MANY people would
| heavily disagree with.
| pc86 wrote:
| Many people perhaps, but nobody serious or worth listening
| to.
|
| We can disagree on the extent of regulation and KYC
| requirements, but preventing people from laundering money
| is an objectively Good Thing.
| egypturnash wrote:
| Also this transfer should be handled by a branch of the
| government - in the US, this would probably be a new Bureau of
| E-Bucks that sits alongside the Mint and the Bureau of Printing
| and Engraving as parts of the Department of Treasury.
|
| Running all this transaction infrastructure and dealing with
| fraud and whatnot costs money, but so does making coins and
| bills. There's no reason the digital equivalent should be for-
| profit business aside from "this is how it happened and now the
| companies occupying this niche have a lot of money to wave at
| elected officials who could deprive them of their ability to
| skim a couple percent off of 75% of the transactions in the
| entire US economy".
|
| "I don't want the government to know what I'm doing with my
| money" is not a valid objection to this plan unless you can lay
| out a convincing argument that a couple of entirely for-profit
| companies knowing what you're doing with your money is any
| better, and that they will not roll over and provide
| transaction records the instant the government asks them to.
|
| edit: oh wow it looks like this is finally coming in the next
| year or two, according to another reply to the parent comment!
| https://www.moderntreasury.com/learn/what-is-fednow I will be
| delighted to stop giving the credit card companies a few
| pennies of every single transaction I make, and return them to
| their original role of providing a line of credit _if_ I want
| one.
| zhoujianfu wrote:
| I thiiink it's maybe finally sort of happening/possible with
| USDC on polygon?
|
| https://www.circle.com/en/usdc-multichain/polygon
| Ensorceled wrote:
| > Just make it so anyone with an internet connection can
| transfer any amount anywhere else, online, without any
| transaction fees, within seconds.
|
| No fees? Who is building this product and why?
|
| Why aren't you building it ... sounds like you'd get a massive
| percentage of the market?
| matkoniecz wrote:
| Feel free to provide it.
| vorpalhex wrote:
| No good. Money doesn't move instantly, and you need someone to
| handle disputes.
|
| Some reading:
|
| https://bam.kalzumeus.com/archive/the-alchemy-of-deposits/
|
| https://bam.kalzumeus.com/archive/no-payments-are-final/
| falcolas wrote:
| Not counting the myriad regulations that need to be followed
| the moment you cross country lines.
| toomuchtodo wrote:
| > Money doesn't move instantly
|
| It will shortly (testing phase is in progress since 2022Q1).
| FedNow instant payment rails go live next year and payments
| are required to settle within ~8 seconds. Transaction cost
| the Fed charges is 5 cents, up to $500k per transaction
| ($100k while it shakes out initially).
|
| (Tangentially, [Transfer]Wise is very compelling for moving
| value internationally, and is instant in a lot of cases; they
| also plug into instant transfer rails in local currencies
| whenever possible)
|
| https://www.federalreserve.gov/paymentsystems/fednow_about.h.
| ..
|
| https://news.ycombinator.com/item?id=32098635 (see citations
| at bottom of comment)
| egypturnash wrote:
| Oh wow, I just wrote a reply to the parent comment opining
| that the government should be providing electronic
| transactions instead of letting a handful of private
| companies skim a few percent off of every transaction in
| 75% of the economy. I'm looking forwards to this!
|
| (https://www.moderntreasury.com/learn/what-is-fednow, from
| your second link, is a description of FedNow that's
| attempting to explain it with less financial jargon.)
| [deleted]
| vorpalhex wrote:
| So the flow would still be:
|
| You > Bank/Financial Corp > Fed > Receiving Bank >
| Destination
|
| right? Would banks still be able to hold transactions as
| pending until they do daily settlement?
| toomuchtodo wrote:
| No, settlement must be immediate (unless fraud, AML, KYC,
| US sanctions/OFAC, or a similar exception).
|
| https://www.federalregister.gov/documents/2022/06/06/2022
| -11... (control-f "Immediate Funds Availability")
| vorpalhex wrote:
| Ah, I see it.
|
| For anyone following along:
|
| > The FedNow Service is designed for the end-to-end
| transfer to be completed in a matter of seconds, as
| described in the 2020 Notice. This means that the
| beneficiary's bank would agree, as provided in proposed
| subpart C, that it will make funds available to the
| beneficiary immediately after it has accepted the payment
| order.
| alexb_ wrote:
| These are interesting reads - I wish HN had a save feature so
| I could keep track of them.
| vorpalhex wrote:
| Wallabag/Pocket is what you are after.
|
| "Bits About Money" is always worth a read imo. I knew of
| these ideas but it is both a clear explainer and a good
| guide to the "why".
| pc86 wrote:
| You don't need HN to save links to a blog.
| hadrien01 wrote:
| I use HN favourites as reminders and read-later list
| alexashka wrote:
| Feel free to address what I've actually typed. You can
| address the imaginary person who wants to discuss instant
| money transfers some other time, perhaps.
| vorpalhex wrote:
| > Just make it so anyone with an internet connection can
| transfer any amount anywhere else, online, without any
| transaction fees, within seconds.
|
| I can only read what you type. You seem to be talking about
| instant (seconds is instant in finance) money transfers.
| alexashka wrote:
| We already have 'instant' transfers, it's called paying
| with a debit card at a grocery store.
|
| Now extend that to the internet, any amount (cap it to
| under a few thousand if you wish), no transaction fees (I
| already pay taxes).
|
| That'd be fintech, aka using technology to actually
| improve the finance industry for the people, but that's
| just me :)
| vorpalhex wrote:
| > We already have 'instant' transfers, it's called paying
| with a debit card at a grocery store.
|
| Actually not instant! Debit transactions can not settle
| for several hours, and even up to a few days (though
| usually much faster). Though your bank is typically able
| to say that they have the available money, settlement may
| not occur for quite some time.
| ska wrote:
| > no transaction fees (I already pay taxes).
|
| This connection seems ... tenuous.
|
| As you note, you already broadly have the ability to do
| this via debit card for most day-to-day things (with
| fees, for seller). What can't you do that want to?
| [deleted]
| balderdash wrote:
| All credit card business models seem to be a variation of:
|
| 1) payment for volume (I.e. sharing some of the transaction fees
| generated with customers in the form of points/miles/etc), and/or
|
| 2)credit underwriting (I.e. extending credit to profitably (in-
| excess of the sun of their default risk and your funding costs))
| johndhi wrote:
| Thought about this at the gas pump yesterday that told me I'd pay
| more if I used a 'credit card' versus a 'check card.' I thought:
| why can't I just have one card that can do both?
| CharlesW wrote:
| Don't all debit cards support this? Mine always have, and I've
| always assumed that was a universal capability.
|
| https://www.credit.com/blog/what-happens-if-i-swipe-my-debit...
| asib wrote:
| > The reality of credit card adoption - and we have decades of
| data to demonstrate this - is that young consumers don't like
| credit cards until, suddenly, they do. Older Gen Z consumers are
| reaching this point.
|
| For me, this is only because I will be locked out of access to
| certain essential financial products as the result of having no
| credit history. The advice I hear is to get a credit card and use
| it like a debit card, always paying off on schedule. Why can't
| decades of debit card use and living within my means demonstrate
| the same thing? It seems ridiculous to me. The starter credit
| cards also offer, in my opinion, rather measly rewards, so there
| is very little upside. It really feels like I'm just being forced
| to do a dance for the banks.
|
| And can someone explain why credit scores aren't just visible in
| every bank's (web) app? I acknowledge that it is ultimately
| possible to obtain your credit score free of charge, but how is
| it not anti-consumer that doing this requires you to jump through
| hoops and use a service like ClearScore?
|
| I believe there's a strong case for saying that credit scores
| exist in a similar space to criminal records, in that they're
| often used to further marginalise those most vulnerable in
| society. Or at the very least, that is the result of their
| existence.
|
| For the avoidance of doubt, I do not believe myself to be a
| vulnerable member of society and I do not feel as though credit
| scores are wielded against me in the way I describe in the
| paragraph above. I also do not think that the marginalising
| effect due to credit scores is as great as that of having a
| criminal record.
| starwind wrote:
| > this is only because I will be locked out of access to
| certain essential financial products as the result of having no
| credit history.
|
| Pretty much every bank offers a credit card with a 1% cash-back
| rewards rate and their underwriters are more generous to their
| customers with no credit history to help address this exact
| problem. Get one, use for like 6 months and build up a credit
| history then go get an AmEx or whatever
| colinsane wrote:
| > And can someone explain why credit scores aren't just visible
| in every bank's (web) app?
|
| my 90-years-old credit union shows FICO score in both the web
| and mobile app (mobile app even plots this over time). actual
| scores too, from one of the big three: not some second-order
| estimate.
|
| not namedropping because discussion of this article in
| particular seems at risk of devolving into promo/self-
| interested discussion. but if this is a thing you care about
| when choosing a bank it absolutely is possible to find with a
| bit of searching.
|
| as for regulations, and why aren't banks _required_ to display
| FICO scores prominently: as the article discusses, the link
| between FICO score and borrowing rates /eligibility isn't
| always direct (an 850 FICO doesn't magically open the door for
| a $1M home, business, or personal loan: you still need proof of
| income, etc). i don't know that FICO is actually encoded into
| law anywhere: more relevant would be requiring lenders to
| justify why they do/don't approve loans, and at what rates,
| IMO. many _do_ this already to some degree, but i'm not sure to
| what extent that's regulated.
| reportingsjr wrote:
| Both banks I've used for credit cards recently, Capital One
| and U.S. Bank, both show regularly updated credit scores.
| This is a relatively new thing and quite welcome!
| SOLAR_FIELDS wrote:
| Chase does as well.
| throwaway0a5e wrote:
| >For me, this is only because I will be locked out of access to
| certain essential financial products as the result of having no
| credit history.
|
| You mean like, crappy consumer credit products?
|
| Solution: Don't use credit. The double plus extra gold platinum
| card with cashback isn't really improving your life that much
| anyway.
|
| A credit card isn't gonna make that big of an impact on the
| kinds of purchases you truly need credit for
| (land/housing/business/capital). You're not locked out of
| accessing those products. They just cost a little more. God
| forbid that you be forced to be more selective about the kinds
| of things you buy on credit as a result of this.
|
| Edit:
|
| Unlike most people who spew internet advice my money is where
| my mouth is. My only credit is my mortgage and my rate was
| refinanced to the low 2s a couple years ago. The initial loan
| was low 3s ~6yr ago and I did 20% down by pulling money out of
| investment funds I had contributed to over the years. "Costing
| tens of thousands of dollars over the life of the loan" my ass.
| nend wrote:
| Not having credit history will absolutely require you to take
| on a higher interest rate for your mortgage. It's probably
| 10's of thousands of dollars difference over the length of
| the loan, depending on how big the mortgage amount is.
| AdrianB1 wrote:
| Mortgage is credit, you are contradicting the scenario.
| twblalock wrote:
| > A credit card isn't gonna make that big of an impact on the
| kinds of purchases you truly need credit for (land/housing).
|
| Yes it will.
|
| I know a few people who avoided credit cards well into their
| 20s. They ran into trouble with credit checks for renting
| apartments and buying cars. Imagine being nearly 30 years old
| with a good income and no debts, but needing to ask your
| parents to cosign on a car loan simply because you have no
| credit history of any kind. That does happen.
| abfan1127 wrote:
| "Avoiding credit" means no car loans either. Paying cash
| for such things. Arguably the only loan one should consider
| (imo) is a home loan. And while many banks are dumb, there
| are plenty of lenders which will underwrite a loan based on
| limited credit. Especially, when you can show income with
| 20% down, etc.
|
| source: dave ramsey.
| twblalock wrote:
| Debt is a useful tool for people who can control
| themselves.
|
| Dave Ramsey caters to people who need unusually strict
| financial discipline to avoid getting in trouble. For
| everyone else, responsibly using debt is often better
| than paying cash.
|
| For example, paying cash for a car is often worse than
| taking a low-interest loan. Liquidity is important --
| locking up a bunch of money in a car means you can't use
| it for other things, like investments or emergency
| savings.
|
| Another example: taking out a loan for a large purchase,
| rather than liquidating investments to pay cash, can cost
| less overall because the interest paid on the loan might
| be lower than the capital gains taxes on the investments.
| Mandatum wrote:
| It is insanity that the US still works on a positive credit
| system. Literally every other developed country in the world
| has it the other way round, prove you have negative or bad
| credit with failed payments.
|
| The US system is both inequitable and exploitative.
| lupire wrote:
| Can I get a 1million Euro loan with no credit history?
| formerkrogemp wrote:
| > It is insanity that the US still works on X Literally every
| other developed country in the world has it the other way
| round, X
|
| I think the attitude is known as American exceptionalism or
| naivete or ignorance. Take your pick.
| wvenable wrote:
| There is an upside to credit cards over debit cards -- you
| haven't given up your own money until you pay the credit card
| balance. This is an important way to keep yourself safe.
|
| My wife had her debit card compromised and some money taken and
| that money is _gone_. She filed a police report and disputed it
| with her bank and, after sometime, was able get her money back.
| If there is fraud on a credit card, the situation is very
| different because you haven 't lost any money. There may be
| some fraudulent charges that need disputing but during that
| time you're still entirely whole.
|
| And that applies to any number of goods and services as well.
| If you paid cash for something and didn't receive what you paid
| for, you're out that money. On credit card, you're whole until
| you make a payment.
|
| In my opinion, nobody should be using debit cards if they have
| the option to use a credit card. It's safer, there's usually
| some rewards, and there's often added purchase insurance. I
| broke an expensive phone one week after purchasing it and the
| repairs were covered by my credit card.
| aaronax wrote:
| > The advice I hear is to get a credit card and use it like a
| debit card, always paying off on schedule. Why can't decades of
| debit card use and living within my means demonstrate the same
| thing?
|
| Having a history of using a debit card to only spend as much
| money as you have does not really reflect much about how you
| will behave when given the ability to spend money that you
| don't have (credit).
| brutal_chaos_ wrote:
| I disagree. As someone with a history of blowing past my
| debit card allotted overdraft amount (though more recently am
| much better), I think my history with a debit card would show
| that I was young and foolish, but I have learned better and I
| wouldn't be a problem now. But I'm only spit balling, you may
| have more insight to shoot this down.
| krono wrote:
| Could also be interpreted to indicate a lack desire to even
| have the ability to spend beyond their means.
| jedberg wrote:
| Having the ability and not using it is a much more powerful
| signal than not having the ability.
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