[HN Gopher] DOJ accuses Visa of monopoly that affects price of '...
___________________________________________________________________
DOJ accuses Visa of monopoly that affects price of 'nearly
everything'
Author : pseudolus
Score : 291 points
Date : 2024-09-24 18:42 UTC (4 hours ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| sublinear wrote:
| > More than 60% of debit transactions in the U.S. run over Visa
| rails, helping it charge more than $7 billion annually in
| processing fees, according to the DOJ complaint.
|
| Is that really a monopoly though?
| eagerpace wrote:
| As with many things, it's a duopoly with Mastercard that has
| another 30% of the market.
| ethbr1 wrote:
| Duopoly scenarios are why the trifecta of historical anti-
| trust criteria were one of more of: -
| Monopoly market share - Negative impact to customers
| (e.g. higher prices) - Collusion to thwart competition
|
| Prosecuted under a variety of laws, but all illegal at scale.
|
| The latter two are more relevant to modern global enterprise
| competition. A duopoly isn't really optimally lowering prices
| for anything, as there's limited risk of defection and price
| signaling is pretty easy.
| HideousKojima wrote:
| That works out to ~$22 per American per year. Not sure what
| Visa's operating costs for their network are, and I'm no big
| fan of them (or any other credit card company) but that's far
| cheaper than I would have expected given the convenience
| provided by almost never needing cash or checks. So as far as
| its impact on prices go, it doesn't sound like it's really a
| huge amount.
| popcalc wrote:
| >far cheaper than I would have expected given the convenience
| provided by almost never needing cash or checks
|
| Is there no alternative system that succeeds in affording
| both convenience and low (even state-subsidized) costs?
| egypturnash wrote:
| Visa acts as a censor, too. If you are making perfectly legal
| porn, for instance, then every few years you need to find a
| new way to take payment because your old one got big enough
| for Visa to notice it and say "hey no porn".
| ethbr1 wrote:
| This. Especially back in the 90s, it was disgusting how
| easily the US government leaned on the major payment
| networks and banks, absent any law or illegality, to
| disconnect the porn industry.
|
| Call me old fashioned, but if that's a thing you want to do
| in a democracy, there should be a legal basis passed
| through the legislative branch...
| mrguyorama wrote:
| >it was disgusting how easily the US government
|
| It was never the US government? It was always done by
| advocacy groups with good law firms suing Visa for
| _whatever_ until Visa """voluntarily""" censored porn
| payments.
| ethbr1 wrote:
| The DOJ under Bush W absolutely prosecuted explicit
| pornography for political optics.
|
| (WARNING: Some pretty nasty stuff mentioned; text, not
| pictures) https://web.archive.org/web/20060321172250/http
| ://www.thestr...
|
| Primarily through leveraging the power of the AG to apply
| on-the-books obscenity laws to material which previously
| hadn't been targeted as such.
|
| When the courts took a dim view towards that, they
| decided they could get quicker wins by making it clear to
| Visa et al. that things would be uncomfortable if they
| didn't "voluntarily" choose to stop doing business with
| pornographic companies.
| MBCook wrote:
| While I understand your point, doesn't adult stuff _also_
| have very high rates of fraud and chargebacks? Even if a
| fair bit may have been correct but reported as fraud for
| personal reasons?
|
| Avoiding a category like that (or holding it to stricter
| standards) seems rather reasonable.
| lxgr wrote:
| Maybe so (I have no idea), but the risk of fraud and
| chargebacks is not borne by the network.
|
| There are many other high risk industries they don't seem
| to have a problem with.
| quesera wrote:
| Visa sets merchant policy, and they do not allow high
| chargeback rates.
|
| The merchant bears the brunt of the economic loss, but
| chargebacks are a relatively expensive hassle for the
| network too, and ultimately they will drop merchants who
| cannot keep chargebacks low.
|
| Around 0.5% is considered reasonable. Anywhere in the 1%
| area for more than a few months will get a merchant
| dropped.
| pkaye wrote:
| Isn't that because of high chargeback rates?
| candiddevmike wrote:
| That number seems really low. At least 1-2% of all my
| purchases have fees associated with them, that's way more
| than $22. Small businesses, especially with lower priced
| items are hit with .50 + % fees too. It all adds up.
| ejstronge wrote:
| > That works out to ~$22 per American per year. Not sure what
| Visa's operating costs for their network are, and I'm no big
| fan of them (or any other credit card company) but that's far
| cheaper than I would have expected
|
| You're assuming quite a few things - the most significant are
| that the cost is borne equally among Americans. Instead, many
| Americans use credit card networks instead of debit cards,
| and those who use debit cards may have no option to avoid the
| fees.
| metaphor wrote:
| > _Not sure what Visa 's operating costs for their network
| are, and I'm no big fan of them (or any other credit card
| company) but that's far cheaper than I would have expected
| given the convenience provided by almost never needing cash
| or checks._
|
| Of the $32.653 billon in revenue Visa pulled in last year,
| 2.3% was network and processing opex, while 53% was pure
| bottom line profit[1].
|
| Furthermore, squaring 17.9% tax provision line item: if your
| household had simple married-filing-jointly tax return with
| an AGI greater than ~$139.5k, you paid more in 2023 taxes
| than Visa...and that assumes you live in a state _without_
| income taxes.
|
| Think about that for a hot minute while recalibrating
| expectations.
|
| [1] https://www.sec.gov/Archives/edgar/data/1403161/000140316
| 123...
| s1artibartfast wrote:
| What are we supposed to take away from a high the high
| profit?
|
| How much did visa pay in taxes? Less than a single 140k
| family? Why are we comparing corporate taxes and individual
| taxes? They are completely different.
| NetOpWibby wrote:
| Why do families pay less taxes than corporations? I'm not
| a money guy or a lawyer but that seems extremely *off*.
| s1artibartfast wrote:
| Because corporations pass profits on to individuals who
| also pay income taxes.
|
| It is a bogus comparison. Visa might "only" pay 17%, but
| if you are an owner, you are paying 17% and then another
| 20% on what's left.
| NetOpWibby wrote:
| Ahh, thanks for the clarification! The more I learn about
| how things _actually_ work, the more irritated I get of
| the media for playing us.
| metaphor wrote:
| For well capitalized and advised players, here's an idea
| of how things _actually_ work[1][2].
|
| [1] https://www.nber.org/papers/w28542
|
| [2] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3
| 089423
| s1artibartfast wrote:
| NBER finds 1% of fiscal income is unreported from pass
| through tax evasion. If anything, this highlights that
| Individuals should be the relevant level of income tax
| assessment.
| metaphor wrote:
| Your arguments come off as incrementally disingenuous and
| intentionally misleading.
|
| That's +1% share of a pie on the order of _$TRILLIONS_
| between 2006-2013 to which the top-1% directly benefited
| from by under-reporting and playing pass-through
| games...and this was retrospective analysis long before
| the TCJA corporate tailwind went into effect.
| s1artibartfast wrote:
| How is it disingenuous and misleading. It is a clear and
| accurate summary. The bottom line is 1% of income.
|
| Im not saying it is zero dollars. Just pointing out that
| it is 1% for context. 50% of income would be a very
| different context.
| roughly wrote:
| > What are we supposed to take away from a high the high
| profit?
|
| If you're the sort to buy into conventional economic
| theory, that VISA faces no effective competition.
| s1artibartfast wrote:
| I would agree with that, but that does not make it a
| monopoly. That depends largely on the reasons for lack of
| competition. e.g Is Visa using its position to freeze out
| others, or is it government regulation, or customer
| preference, ect.
| metaphor wrote:
| > _How much did visa pay in taxes? Less than a single
| 140k family?_
|
| No...the proportional equivalent impact of ~150,300 $140k
| families.
| s1artibartfast wrote:
| seems remarkable given that visa doesnt send 150,000X
| children to send to school or collect 150,000X Medicare
| benefits.
|
| I guess this is a way of highlighting the idea that
| individuals should be fundamental unit of tax assessment,
| collection, and evaluation. It is humans that receive
| government benefits, and it is humans that should pay for
| it.
|
| Other methods of analysis run the risk of double counting
| benefits or payments.
| hnburnsy wrote:
| >Think about that for a hot minute while recalibrating
| expectations.
|
| My hot minute is that corporations don't pay taxes,
| consumers do via higher product\services prices, investors
| do via lower investment returns, or the employees do via
| lower wages.
|
| And the bonus, the government gets less taxes from those
| lower investment returns and lower wages.
| m3h wrote:
| Yes, when taken in this context, the Monopoly argument makes
| sense:
|
| > The DOJ said Visa imposed "exclusionary" agreements on
| partners and smothered upstart firms.
| jellicle wrote:
| Luckily for the government, the law doesn't say "monopoly" or
| require them to prove there is only one company operating. The
| law just says that anyone that has market power (which one
| might have with only a tiny percent of the whole market) can't
| do certain things.
| sunflowerfly wrote:
| Every terminal should be required to run any legitimate card on
| its own network.
| chinathrow wrote:
| And every transaction should have a fixed cost, no matter what
| the amount is.
| milesskorpen wrote:
| Risk & value scale with transaction size
| yxhuvud wrote:
| And with account type.
| s1artibartfast wrote:
| Why? If I want to make a terminal, why should that be illegal.
|
| What regulators should really focus on in my opinion is any
| uncompetitive contractual obligations visa is imposing on
| vendors.
| zug_zug wrote:
| Because interoperability is key to competition...?
|
| Imagine a universe where different hardware doesn't
| interoperate (e.g. androids can't call iphones, Macs can't
| use google.com, ChatGPT is only accessible to Comcast
| subscribers) I hope we can all agree it's a nightmare
| scenario. Sometimes the free market gets it right without
| intervention, sadly sometimes it does not.
| cmeacham98 wrote:
| > androids can't call iphones
|
| Oh, you mean like how iOS has a private text chat system
| Androids can't access, and they're only kinda partially
| giving access to some of the features a decade later?
| Wouldn't that be crazy.
| matwood wrote:
| > androids can't call iPhones
|
| Nextel had exactly this with the walkie talkie feature and
| the market sorted it out.
| s1artibartfast wrote:
| I can imagine a universe where payment systems selectively
| interoperate. It is pretty common now. tells can have
| multiple pieces of hardware.
| MBCook wrote:
| Or we could, you know, just have a reasonable government
| option. Like ACH for debit cards.
|
| This seems like a _perfect_ opportunity for a common good.
| Something to make transactions easier and cheaper and help keep
| the economy running.
|
| But that would be big-government-communism-anti-jobs-whatever-
| people-are-mad-at. So that's not how we do it.
|
| We're getting FedNow (eventually). Seems like you could built a
| debit card processor on top of that.
|
| You may still need Visa/MC/whatever for international customers
| to use debit. But American has a lot of Americans doing debit
| from American bank accounts.
| JumpCrisscross wrote:
| > _We're getting FedNow (eventually)_
|
| It's technically live [1].
|
| [1] https://www.frbservices.org/financial-
| services/fednow/organi...
| MBCook wrote:
| Right, I knew it had launched in the last few months. But
| most people don't have it yet. None of the big banks are on
| that list.
|
| It'll just take time.
| throwway120385 wrote:
| They do, sort of. What happens IME is that the terminal is
| linked to a gateway, and then the gateway links to a processor,
| and then the processor contacts the issuer through the payment
| network. Most gateways can contact many processors, and many
| processors can contact any issuer through several payment
| networks.
|
| What seems to be happening is that the payment networks are
| making exclusive deals with big issuers like banks and these
| deals are allowing specific payment networks to have a lot of
| pricing power with merchants, who have to pay a fee to everyone
| involved in the transaction(gateway, processor, etc).
| YawningAngel wrote:
| You can't process a Mastercard transaction over Visanet even if
| you wanted to: * The network won't know who to route the BIN
| range to * Even if it did, they may not be connected * Visa and
| Mastercard, although very similar, put different pieces of data
| in different places and have different business rules, so
| you're not necessarily going to have the information you need
| to process a transaction where you expect to find it nor is
| your processing of that transaction necessarily acceptable to
| Visanet. * Visa doesn't know Mastercard's PEK, so they cannot
| encrypt the PIN as the issuer would expect it even if they
| wanted to * The EMV crypto _might_ not work, although I 'm not
| sure
|
| These are just the problems that occur to me off the top of my
| head. They are solveable, but it would require a decade-long
| regulatory commitment with serious weight behind it.
| donatj wrote:
| Why now is the real question?
|
| Hasn't this basically been the state of things since the late
| 1990s? What changed that they're going after them now?
| BobaFloutist wrote:
| FTC is staffed with people that think monopolies are bad.
| roughly wrote:
| Because the Biden administration has effective antitrust
| regulation as a policy goal and has staffed the FTC with
| competent people empowered to pursue that.
| lolinder wrote:
| And, notably, it's an election year and the Biden
| administration wants everyone to see what's at stake in the
| election.
|
| Yes, they probably also believe in what they're doing and
| yes, they've been putting this together for a while, but it's
| not a coincidence that we've had a regular cadence of these
| announcements for the past few months.
|
| Edit: Recognizing when your party is playing a political game
| is a healthy part of the democratic process even if you agree
| with their goals. Pretending your preferred party is above
| political showmanship isn't even party loyalty, it's just
| naivete. Everyone needs to put on the show to accomplish
| their goals.
| mtswish wrote:
| Lina Khan has been at this for the past four years. Would
| you mind demonstrating why you think this is for election
| brownie points?
| lolinder wrote:
| What does Lina Khan have to do with this DOJ case? That
| they're both doing similar stuff?
|
| I'm not sure why people get so offended at the idea that
| political appointees on their side time their actions
| around election cycles. It's easy to believe about the
| $other party (for whatever value of $other), but for some
| reason we're very hesitant to acknowledge that our own
| people play the same game by the same rules.
|
| Acknowledging that doesn't imply anything about the
| policy or about the motives of the actors, it's simply an
| acknowledgement that they're good at their jobs and know
| how to time things. But I guess it must feel slimy and we
| like to believe our guys are above that sort of thing?
| fckgw wrote:
| There's been a "regular cadence of these announcements" for
| the past 4 years. Should they just pause all enforcement
| actions when it's X number of months from an election?
| Shouldn't the politicians be actively earning our vote by
| doing things like this?
| lolinder wrote:
| Yes, they should!
|
| I'm not implying anything is broken about the process,
| but they're clearly timing their actions around the
| election. As just one example: out of the 36 Antitrust
| press releases from the Attorney General's office (the
| tags on this press release) [0], 13 (36%) were in 2024
| and 7 (19%) were just in the months of August and
| September of this year. A regular cadence of 36 Antitrust
| announcements since the administration started would be
| <1 per month, so 3.5/mo over the past two months (one of
| which isn't even over) is a clear outlier. There's some
| allowance to be made for the time it takes to put a
| lawsuit together but not enough to account for that large
| a difference.
|
| Again, that's not to imply anything about the ethics or
| motives of the people involved, nor to say they were
| sitting on their hands until now. All I'm saying is it's
| a reality of our political system that sometimes the
| answer to "why now?" is "because we saved it up for the
| election".
|
| [0] Using filters here, unfortunately I can't directly
| link to a filter view:
| https://www.justice.gov/news/press-releases
| legitster wrote:
| > More than 60% of debit transactions in the U.S. run over Visa
| rails, helping it charge more than $7 billion annually in
| processing fees, according to the DOJ complaint.
|
| 60% seems pretty well short of monopoly. Also, if you factor in
| that cash is an option, and the significant inroads being made by
| options like Square and Venmo, Visa doesn't actually even have a
| majority in the market.
|
| I'm skeptical of this action overall. I love competition as much
| as the next guy, but Visa, Mastercard, and Discover's primary
| value they provide is fraud detection and prevention. There are
| enormous economies of scale at play, and it's hard to believe
| that breaking up the big guys into dozens of independent, fly-by-
| wire cut-rate providers is in the public's best interests long
| term. That is, unless the federal government wants to come in and
| actually pursue small-time fraud.
| advisedwang wrote:
| I think of it this way: does a business have an option not to
| do business with Visa? Realistically no. They have all the
| market power that a monopoly has.
| legitster wrote:
| > does a business have an option not to do business with
| Visa?
|
| Absolutely. There's Discover, Mastercard, Google Pay, Apple
| Wallet, crypto, checks, and good old-fashioned cash.
| madeofpalk wrote:
| Apple Pay and Google Pay are not payment networks. Those
| are just Visa and Mastercard.
| legitster wrote:
| It depends on your payment gateway. I can setup a POS
| payment system with any payment gateway processor I want.
| Depending on the system you can essentially run direct
| deposit into Google Pay, and as a vendor I can direct
| deposit the money into my checking via my gateway.
|
| But that's not the issue being contested because there
| are hundreds of payment gateway processors available.
| mattzito wrote:
| Right, you CAN set that up, but in the US, not accepting
| visa and Mastercard is essentially untenable if you are a
| retailer or restaurant. You might be able to avoid
| accepting AmEx, but from talking with restaurant owners,
| the biggest spenders are often AmEx holders and are
| annoyed at having to use a backup card.
| bluGill wrote:
| Which of those is realistic though. They exist but you turn
| away customers with money who cannot pay.
| lxgr wrote:
| That's not how the payment market works, though.
|
| If a customer walks into your store and has exactly one
| (type of) card on them that they want to use to pay, you
| have a choice of accepting that card or losing their
| business.
|
| This makes competition between payment methods at the POS
| structurally very hard.
| jamie_ca wrote:
| Costco (in Canada at least) doesn't work with Visa. It's
| cash, bank debit cards, or Mastercard. (No AmEx/Discover
| either.)
|
| It can be done, at scale, but definitely a business risk.
| lolinder wrote:
| Costco in the US doesn't accept Discover but does accept
| Visa. Heck, they even offer a Visa credit card which stands
| in as your official membership card.
| frumper wrote:
| They used to only accept Amex and had a branded card. It
| worked fine for them that way too.
| 8note wrote:
| This change happened in 2015, for anyone who remembers
| Costco and amex being inseparable:
| https://www.costco.ca/_ax-faq.html
| BeefWellington wrote:
| In part this is because of the existence of Interac though.
| If Interac didn't exist it's possible they would feel they
| need to use VISA to not turn away too much membership.
| Having debit as a fallback means they can partner with
| whomever gives them favourable terms. I doubt Costco is
| paying Mastercard a % of the transaction the way most other
| retailers are.
|
| Despite it existing since the 80s, there's been constant
| pressure / lobbying to get rid of it.[1]
|
| [1]: https://www.theglobeandmail.com/report-on-
| business/interac-i...
| toast0 wrote:
| In the US, bank debit cards are commonly Visa, although
| they can often be run on multiple networks, debit is
| confusing.
| lxgr wrote:
| Costco is membership-only, so everybody shopping there is
| strongly incentivized to do so bearing the payment methods
| they accept.
|
| A random corner store or online retailer does not have that
| luxury; they have to accept whatever their prospective
| customers have on them (and to a lesser extent prefer, if
| they have multiple brands' cards).
| redwall_hp wrote:
| Costco in the US _only_ accepts Visa. I have a membership,
| and it 's an annoyance because all of my credit cards are
| Mastercard or Discover, so I have to use my Visa debit
| card.
|
| Bank debit cards in the US all also use Visa or Mastercard
| networks.
| lumb63 wrote:
| There are tons of cash-only businesses.
| indymike wrote:
| There are also a lot of businesses that take cash because
| their owners have been banned from taking credit cards.
| ethbr1 wrote:
| Don't both Square and Venmo still have to interface with the
| Visa / MC / Discover / Amex networks? And therefore pay some
| fees?
| legitster wrote:
| Venmo gives you the option of direct deposit or using the
| network to instantaneously transfer the money for a fee. As
| for the merchant, unless they are getting their payment
| gateway directly from Visa they usually just deposit the
| money directly into their bank account.
| ethbr1 wrote:
| The interesting metric would be what percent of
| Square/Venmo transactions come through legacy payment
| cards.
|
| I'd guess it's pretty high in the US...
| cortesoft wrote:
| Square is part of that $7 billion VISA makes.
| madeofpalk wrote:
| Anti-trust/monopoly doesn't actually hinge on a magical
| percentage number.
|
| The quote from the DOJ:
|
| > _"We allege that Visa has unlawfully amassed the power to
| extract fees that far exceed what it could charge in a
| competitive market,"_
|
| This is the thing that's illegal, not some forbidden percentage
| of market share. Illegally using your position in the market to
| distort it to your advantage, to prevent competitors from
| existing, and (generally) to raise prices.
|
| From the actual legal complaint
| https://www.documentcloud.org/documents/25173584-visa-lawsui...
|
| > _Visa is a monopolist in the general purpose debit network
| services and general purpose card-not-present debit network
| services markets in the United States with market shares of at
| least 60% and 65%, respectively, by payment volume. Mastercard
| is the second largest debit network in the United States and
| processes less than 25% of debit transactions in either
| relevant market. No other competitor has more than a single
| digit share of debit transactions in either market._
|
| > _Visa has monopoly power in the relevant debit markets
| because it has the power to control prices and exclude
| competition in each market._
|
| Of course, the whole court case will be arguing whether Visa
| has the power to control prices and exclude competition. DOJ
| thinks they do, I'm guessing Visa thinks they're fine!
| matthewdgreen wrote:
| Whether 60% technically comprises a "monopoly" is a technical
| legal question that will be determined by the courts. Whether
| Visa carries an enormous amount of traffic and charges too much
| is an opinion, and it certainly feels like they do. Keep in
| mind that some percentage of fraud detection and prevention is
| determined by the vulnerability of the underlying technology
| used: fraud from card skimmers should not be a thing in 2024,
| yet it still is, and these payment networks are responsible for
| that.
| yxhuvud wrote:
| It probably won't, because it is irrelevant. What matters is
| that it is clear beyond reason that VISA have a lot of power
| in the marketplace. What the courts will decide if they used
| that power to do naughty things to further cement their
| position or earnings.
| visualphoenix wrote:
| Cash is not necessarily an option. Did you know there is no
| federal requirement for a business to accept cash?
| glitchinc wrote:
| eCommerce is inherently cashless by design. Confined /
| captive environments (e.g. airplane cabins) are cashless.
| Concessions and merchandise counters at large events
| (sporting events, concerts, etc.) are cashless. Self-service
| kiosks for anything (or vending machines) are increasingly
| cashless. And if memory serves me correctly, I believe that
| using cash to purchase real estate via arms-length
| transaction is prohibited in the USA by law, even if the
| buyer and seller agree on the use of cash (and if it was
| logistically feasible to do so).
|
| I would argue that cash is not an option in more cases than
| it is an option.
| bthrn wrote:
| > Also, if you factor in that cash is an option
|
| Lots of places stopped taking cash. In many places my only
| option is to pay with a card.
| DidYaWipe wrote:
| Come on. When you combine Visa and MasterCard, you have clear
| oligopoly and near-monopoly. And the situation is terrible for
| businesses, who are getting ripped off on every credit-card
| transaction with ever-escalating and variable percentages. A
| lady running a small diving shop told me that Capital One is
| the worst, jacking them for 4.5% or so. They are now out of
| business. Some businesses' entire profit margin is being wiped
| out by monopolistic middlemen.
|
| A business can't be cash-only and survive today; so no, cash is
| NOT an option.
|
| As for your assertion of fraud-prevention as a benefit, it's a
| joke. Credit-card issuers have, for some reason, ENABLED fraud
| in the USA. First they dragged their asses on issuing chip-
| based credit cards for what, a decade or more after the rest of
| the world had adopted them. And now that we finally have them,
| what did the issuers do? Defeat their purpose by neglecting to
| implement PINs. WTF. "Chip & PIN" is standard operating
| procedure across the industrialized world except in the USA.
|
| You could drastically curtail fraud overnight by simply
| implementing the PIN requirement. But we've gone the other way,
| with a lot of retailers giving up on ANY attempt at validation.
|
| There must be some tax benefit of fraud for the card issuers.
| Or they're clinging to the extra profits out of fraudulent
| transactions that are perpetrated but not caught. Regardless,
| there's no excuse for abetting it, or tolerating this consumer-
| and business-harming oligopoly.
| indymike wrote:
| > Also, if you factor in that cash is an option, and the
| significant inroads being made by options like Square and Venmo
|
| The real competition is the NACHA's ACH system. Square and
| Venmo ride atop existing payment networks. The innovation is
| adding another level of ease of use over another layer of rent-
| seeking largely because Visa is slow to innovate and ACH is
| effectively a government product.
|
| > Visa, Mastercard, and Discover's primary value they provide
| is fraud detection and prevention.
|
| Most of this value is provided by the MSP and merchant banks,
| not by the card associations. ACH fraud protection is mostly
| reversable transactions.
|
| > independent, fly-by-wire cut-rate providers is in the
| public's best interests long term
|
| That is what we have today - tons of small MSPs and a few big
| ones. Square, for example, is a big one.
| legitster wrote:
| > Most of this value is provided by the MSP and merchant
| banks, not by the card associations.
|
| Not necessarily accurate. My bank does not offer the ability
| to reverse transactions or replace funds lost to merchants.
| They also can't remove fraudulent merchants from the payment
| network.
| indymike wrote:
| > Not necessarily accurate
|
| Actually accurate. "Merchant bank" is not the card holder's
| bank - it is the bank that actually settles transactions
| with the issuing bank (i.e. your credit card) and then
| deposits money into the merchant's actual bank account.
| Money flows through the merchant account. Incidentally, the
| merchant bank is at risk for fraudulent merchants as they
| are often advancing money (a few days early) to the
| merchant in anticipation of settling. Merchant banks can
| shut down merchants and they also have the power to require
| the merchants to leave an amount of money on deposit with
| them to mitigate risk.
|
| > My bank does not offer the ability to reverse
| transactions or replace funds lost to merchants
|
| Correct. Your bank does not have that power - you have to
| initiate a chargeback, and that is ultimately handled by
| the MSP. Incidentally, if you have a credit card, the
| issuer (often a bank) initiates the chargeback process.
| jellicle wrote:
| Luckily for the government, the law doesn't say "monopoly" or
| require them to prove there is only one company operating. The
| law just says that anyone that has market power (which one
| might have with only a tiny percent of the whole market) can't
| do certain things. It's anti-trust law, not anti-monopoly law.
| ilaksh wrote:
| The only reason fraud is such a huge problem (and resolving it
| is such a 'benefit') is because credit cards are an obsolete,
| insecure model.
| geodel wrote:
| And what is secure model?
| lxgr wrote:
| Credit cards in the US, in particular.
|
| Almost everywhere else in the world, physical cards require a
| PIN, and online payments (above some amount/risk threshold,
| at least) require 3DS authentication.
|
| Both methods are pretty secure.
| MBCook wrote:
| Monopoly is about far far more than market share. That's a bit
| of it, but you can be abusing a monopoly at far far less than
| 95%.
| ethbr1 wrote:
| It's nice to see the DOJ taking a more aggressive approach
| towards monopoly charges again.
|
| ~1900... ~1950... ~1980... ~2000...
|
| About time for the wheel to turn around.
| jmyeet wrote:
| If you ever encounter someone who says that companies can't be
| policed or that government is ineffective, I want you to point
| them to the FTC.
|
| For context, the current chair of the FTC is Lina Khan who is
| only 35 years old. She became famous while a student at Yale Law
| School for writing Amazon's Antitrust Paradox [1], which has come
| to revolutionize the thinking on antitrust.
|
| A recent example is asthma inhalers. An asthma inhaler in the US
| costs ~$500. In France it's $7. Now we can't just import from
| overseas. That's illegal (because reasons). So how are generic
| inhalers blocked? By tricks to extend patents. In this case, the
| patent holder justifies a patent extension with a small piece of
| plastic on the cap so you don't lose it.
|
| That's all capitalism does: it builds enclosures, on this case on
| "intellectual" property and by buying the government to create a
| monopoly by banning imports and banning Medicare from negotiating
| prices.
|
| Just the threat of FTC action and a Senate investigation has
| created concessions by (so far) 3 of the 4 inhaler makers
| agreeing to cap inhaler costs at $35. From $500. With just a
| threat.
|
| Companies are so concerned about this that big donors to the
| Harris campaign want Lina Khan fired [2] (she is, of course,
| history in the event of a Trump victory in November).
|
| This should be a lesson in both the necessity of regulation and
| how easy it can be if you halfway try. The idea that the
| government is bloated and ineffective is propaganda by those who
| want to poison the water supply to make a slightly higher profit.
|
| Personally, I want the FTC to go after national ISPs.
|
| And I fully support investigation and regulation of the Visa
| payment network.
|
| [1]: https://www.yalelawjournal.org/note/amazons-antitrust-
| parado...
|
| [2]: https://www.bloomberg.com/news/articles/2024-09-06/kamala-
| ha...
| anon291 wrote:
| > That's all capitalism does: it builds enclosures, on this
| case on "intellectual" property and by buying the government to
| create a monopoly by banning imports and banning Medicare from
| negotiating prices.
|
| Patents and import restrictions are orthogonal to capitalism as
| an economic system. They're obviously not the invisible hand of
| the market, but the actions of the very draconian hand of the
| government
| jmyeet wrote:
| That's ahistorical. The enclosure movement is seen by many as
| the origins of capitalism [1].
|
| Private property is an enclosure. Intellectual property is an
| enclosure [2]. All of this is rent-seeking behaviour.
|
| The story of Tetris is such a great example of all that
| capitalism actually does in practice: licensing and sub-
| licensing deals. The game was actually created by a few
| Russians. Everything else was just enclosures.
|
| [1]: https://www.joewrote.com/p/the-origin-of-capitalism-the-
| encl...
|
| [2]: https://www.marxist.com/intellectual-property-
| rights221105.h...
| madeofpalk wrote:
| > With just a threat.
|
| This is actually the ideal state of regulators. That they take
| action against a select few, which in turn 'scares' everyone
| else into complying with the law. Self regulation is much
| better than actual regulation.
| sangnoir wrote:
| > Self regulation is much better than actual regulation.
|
| This not self-evident, and is very subjective.
|
| Also, if regulator has to make san example of someone first
| before the rest fall into line, that is not self-regulation
| in my book, just plain regulation. Actual self-regulation
| ensures there are no triggers to activate governmental
| regulation.
| jmyeet wrote:
| > Self regulation is much better than actual regulation.
|
| There's absolutely no evidence of this and plenty of evidence
| to the contrary.
|
| A great example that springs to mind is the Grenfell Tower
| fire [1]. Grenfell Tower is a council block in England. These
| were historically housing for poorer people and were
| typically built cheaply and badly in the postwar era.
|
| So what happened? Some cladding was improperly applied to the
| building. That allowed a fire to spread. Often these blocks
| only have one stairwell. They're concrete buildings so
| generally fires are contained to a single unit. As such, the
| safety advice is, in case of a fire, to stay in place. The
| cladding fire was different because the fire rapidly spread
| ato
|
| At the time of the fire, the UK government was moving towards
| self-regulation by the UK building industry. The Grenfell
| Tower fire kinda ruined that plan.
|
| Self-regulation is no regulation. Deregulation is no
| regulation. Corporate shields limit liability. By the time a
| problem is discovered, those responsible might be long gone
| or the proceeds of their negligence might be irrecoverable.
|
| The only reason this idea exists is to increase profits
| because regulation hurts profits. That's literally it. It's a
| completely silly idea (like libertarianism).
|
| A strong government is completely necessary to a well-
| functioning society.
|
| [1]: https://en.wikipedia.org/wiki/Grenfell_Tower_fire
| JackFr wrote:
| So the patent system and medical device regulations that
| prevent imports, _two things specifically controlled by the
| government_ , create a situation which allows the maker to
| charge a ridiculous price.
|
| I would rather they reformed patents for pharma and medical
| devices, and fought regulatory capture more than intervening
| more.
|
| Small government types are often caricatured as being blindly
| pro business, but they realize that every new regulation is a
| chance for regulatory capture and help businesses to build a
| moat.
| ChrisArchitect wrote:
| Official release: https://www.justice.gov/opa/pr/justice-
| department-sues-visa-...
| hnburnsy wrote:
| It looks like Visa debit fees are about $0.21 + 0.05%. Compare
| that to cash handling...
|
| >The idea that accepting cash is cheap is actually a myth. While
| some business owners might think the 3 percent fee for processing
| credit cards is a burden, research from IHL Group shows that cash
| handling costs many retailers between 4.7 and 15.3 percent. This
| means for every $100 sale, a business is paying between $4.70 and
| $15.30 just to manage their cash. And, the cost is only
| increasing as more businesses and consumers trend away from cash.
|
| >Handling cash also comes with many unwanted risks. The process
| business owners must go through to manage cash is a clear burden.
| They have to account for it; count the drawer nightly and rely on
| employees to use the honor system when doing so; package it up
| and either hire a courier or send an employee to transport it to
| a bank; pay fees for processing and handling; and ultimately run
| the risk of exposing the employee, cash, and the business to
| liabilities that may not be recoverable.
|
| https://www.plainscapital.com/blog/the-cost-of-accepting-cas...
| sunshowers wrote:
| Well, the comparison is not cash but a counterfactual market
| that's more competitive and where fees are lower.
| axus wrote:
| The cost of handling cards is more than the fees, obviously the
| machinery and network needed to use them costs something. It's
| always going to beat cash, but cash should always be available
| as a fallback for disaster situations and "off-grid"
| individuals.
|
| I don't think government should be setting prices. But
| disrupting monopolies is one of those things governments are
| good for.
| chaostheory wrote:
| One big reason that it's still favored is because it allows
| some tax evasion
| lolinder wrote:
| The DOJ explicitly isn't comparing using Visa to handling cash,
| they're comparing it to what it would cost if Visa didn't
| allegedly manipulate the market.
|
| Buying from Standard Oil was more efficient than trying to
| stick with non-oil-based alternatives, but that doesn't mean
| that Standard Oil didn't illegally manipulate the market to
| maintain a monopoly that hurt consumers.
| hnburnsy wrote:
| Agreed, just adding it as a data point to those who think
| cash is a solution.
|
| I looked through the lawsuit and this is about stifling
| alternative payment methods.
| KennyBlanken wrote:
| Nobody is suggesting cash as a "solution" except you.
|
| The issue isn't the solution, the issue is the staggering
| cost of the service in the US vs everywhere else. It's 2x
| higher in the US, for no good reason other than having a
| monopoly. In Europe near-instant wiring of money is trivial
| so for large purchases, businesses can just accept a
| transfer - so MC/Visa have competition there.
|
| Here, wire transfers are a royal pain in the ass, slow, and
| expensive, so there's no competition. Zelle and others are
| slowly changing that, but they mostly compete against
| paypal for p2p payments, not b2c etc.
| legitster wrote:
| > Standard Oil didn't illegally manipulate the market
|
| FYI, Standard Oil was never actually charged with market
| manipulation. The court determined that all of their
| acquisitions were legal, but that it was within the scope of
| the Sherman Antitrust Act to break them up just by virtue of
| their market power.
| KennyBlanken wrote:
| Also, those numbers are for the US market. In Europe,
| merchant credit card fees are half what they are in the US.
|
| https://www.lendingtree.com/credit-cards/articles/na-vs-
| eu-i...
|
| Grandparent commenter was engaging in a false dilemma fallacy
| (cash handling vs US merchant cc fees...and not US merchant
| CC fees vs what the rest of the world pays.)
| Dylan16807 wrote:
| > This means for every $100 sale, a business is paying between
| $4.70 and $15.30 just to manage their cash.
|
| I'm pretty skeptical of that number, but more importantly
|
| > And, the cost is only increasing as more businesses and
| consumers trend away from cash.
|
| That should be excluded here. We want to look at the baseline
| cost of cash as a major payment method, not the effects of a
| payment method becoming overly niche.
| Animats wrote:
| > I'm pretty skeptical of that number.
|
| The actual study is here.[1] "Depending on the segment and
| current processes, retailers can recoup upwards of 200-500
| labor hours a month per store." It's related to ads for cash
| handling systems and armored car services.[2] It's not
| promoting card use.
|
| [1] https://www.ihlservices.com/product/the-cost-of-cash-
| handlin...
|
| [2] https://player.vimeo.com/video/441475326
| psyklic wrote:
| Additionally with cash, people often just don't buy things.
| If they're running low of cash on-person, don't want to lose
| a certain type of bill (e.g. for the bus/tips), or simply
| don't want to carry coins.
| CryptoBanker wrote:
| That only makes sense if cash is the only form of payment a
| business accepts
| psyklic wrote:
| True, but if they accept credit cards then customers will
| rarely pay with cash. We assumed here cash is a major
| transaction method, since otherwise their cash management
| costs are minimal.
| yxhuvud wrote:
| The question is not how much better it is to pay by debit card
| than cash, but how high the margins are compared to the costs.
| If the margins are high there may be possible to improve the
| competition of the market.
| lxgr wrote:
| That's the interchange (i.e. what the issuing bank earns), not
| Visa's fees.
|
| Visa charges both the acquiring and the issuing bank on top of
| that; that's then called "scheme fees".
|
| The issuers pays these out of the interchange; the acquirer
| charges the merchant for them, so they end up paying a bit more
| than the figure you've quoted.
| objclxt wrote:
| > It looks like Visa debit fees are about $0.21 + 0.05%.
| Compare that to cash handling...
|
| Debit fees are that low because of the Durbin Amendment, which
| legislated caps on debit card fees (amongst other things).
| Credit card fees are where the real money is made, and the meat
| of the complaint here.
| jonwachob91 wrote:
| >>> Credit card fees are where the real money is made, and
| the meat of the complaint here.
|
| From the DOJ Press Release [0]:
|
| "Justice Department Sues Visa for Monopolizing Debit Markets"
|
| "Filed in the U.S. District Court for the Southern District
| of New York, the complaint alleges that Visa illegally
| maintains a monopoly over debit network markets by using its
| dominance to thwart the growth of its existing competitors
| and prevent others from developing new and innovative
| alternatives."
|
| 0 mentions of the word "credit" 27 mentions of the word
| "debit"
|
| I'd love for this lawsuit to be about Credit Card fees, but
| it appears be limited in scope to debit card fees.
|
| [0]: https://www.justice.gov/opa/pr/justice-department-sues-
| visa-...
| devilbunny wrote:
| Relatedly, I know of an excellent local bakery that only takes
| cash or check. A regular birthday cake of generous-but-not-huge
| size is around $60, and it's worth it.
|
| But when you go in to pay, the price after sales tax ends up
| being something like $57.63 (or whatever, you get the idea). So
| for checks, not an issue, but for cash... they now have to keep
| loads of coins on hand, lots of small bills, and presumably
| reload those often.
|
| Either raise or lower your price. Someone buying a $57.63 cake
| isn't going to balk at paying an extra $2.37. And if you make
| it $60 even, after tax, you don't have to keep anything but $10
| and $20 bills in stock for your best-selling cake, because
| you'll get a mix of bills in, but the only way you give change
| will be from a $100 bill (2 x $20) or a $50 and a $20 (1 x
| $10). You will still get other bills in sometimes, and some
| coins, and of course they do sell other sizes (but they don't
| do a lot of small-scale things like cupcakes). Most sales
| require an order in advance.
|
| Just cutting down on all that cash handling would be
| advantageous (and that's why one of the owners is always at the
| register).
| OptionOfT wrote:
| I am from a country where there are 2 economies. One above
| water and one below.
|
| Cash allows you to hide revenue. You do not forward the sales
| tax / VAT of the item you sold, and you don't declare the
| revenue of the cake.
|
| Added to that you need the cash to pay your suppliers, as
| they need cash to pay their employees partially in cash, as
| employment taxes are sky high.
| greiskul wrote:
| The reason cash sucks like this on the US is because of the
| tradition it has of listing prices before taxes. In countries
| that list prices after taxes, the cake would be priced in a
| way so that the final number would be something round like
| 60. (Although they would likely do 59.99 or 59.95).
| psyklic wrote:
| Merchants are able to price things to result in exact
| numbers, and some do especially if they sell individual
| items.
|
| However, many customers (1) throw odd change in the tip
| jar, and (2) an exact amount might discourage add-on
| purchases.
|
| In this case, an exact amount would certainly result in
| zero tips. The customer would need appropriate bills and
| wonder how much would be appropriate (since 15% of $60 is
| too much).
| kasey_junk wrote:
| No. It all has to do with retailers belief in
| "Psychological pricing". Whether that belief is well
| founded or not is an open question but pre or post tax
| pricing is irrelevant.
|
| https://en.m.wikipedia.org/wiki/Psychological_pricing
| devilbunny wrote:
| It's not hard to set the price so that, after tax, it's
| exactly $60. It's a local shop. They aren't dealing with a
| bunch of locations or planning to move any time soon. They
| are good enough that you will seek them out in their low-
| rent back-street suburban mini-strip-mall. They don't rely
| on walk-ins or visibility to sell. You will drive there
| just to eat their cake, and they are well-known enough that
| they do most of the high-end cakes in town for weddings and
| the like.
|
| So instead of advertising a $55 cake that sells for $57.62
| or whatever, advertise a $57.33 cake that sells for exactly
| $60.
| Natsu wrote:
| I don't think that a lot of people realize that this is why
| cashback exists, to get physical cash out of the drawers and
| electronic cash into the retailer's account where they can
| spend it.
| BadHumans wrote:
| I think it is great that the DOJ is finally interested in
| breaking monopolies but unfortunately a lot of these cases are
| going to be pending the election. Depending on who wins there is
| a high chance we see all antitrust action die.
|
| And let me be very blunt so people aren't confused, I think if
| Trump wins, the people he installs in the DOJ will be less than
| motivated in pursuing these cases.
| sapphicsnail wrote:
| I think this could happen even if Harris wins. There are a lot
| of big donors to her campaign that want Lina Khan out.
| alaxhn wrote:
| I'm not completely convinced Lina Khan would be out if Trump
| wins. JD Vance has mentioned support for her by name on
| several occasions.
| JumpCrisscross wrote:
| > _JD Vance has mentioned support for her by name on
| several occasions_
|
| JD Vance has approximately as much policy control in a
| Trump administration as Kamala Harris would.
| skissane wrote:
| > JD Vance has approximately as much policy control in a
| Trump administration as Kamala Harris would.
|
| VPs don't have "policy control" but they do have access
| to the President and the opportunity to influence them.
| If Trump wins, Vance will be meeting with Trump
| regularly, and have the opportunity to try to talk Trump
| into things - I doubt Vance will always succeed, but he
| probably will sometimes. Whereas a defeated Harris won't
| be meeting Trump regularly and so will lack the same
| opportunity.
| Sysreq2 wrote:
| I don't think the modern Democratic Party the same pro-worker,
| anti-corporate greed version a lot of us grew up with. Don't
| take this as an endorsement for Trump mind you. Hardly.
| Democrats still have basic human rights on their side.
|
| Corporate greed and military spending aren't up for debate
| though. We can bicker about guns and immigration policy all we
| want but some topics aren't even on the table for discussion.
| BadHumans wrote:
| To a degree you are right, but fully agreeing with this is
| ignoring reality given the thread we are commenting in. There
| has been more antitrust legislation under the current
| administration than there has been in a decade so while they
| aren't the Dems of old, I feel we are heading in a good
| direction.
| throwway120385 wrote:
| There are several different caucuses within the Democratic
| Party. Some of them are the pro-corporate types you're
| referring to. But there is also a Progressive caucus that is
| pretty pro-worker pro-tax that I think you're missing out on.
| throwway120385 wrote:
| It's not just the political appointees. One pillar of Project
| 2025 is that OMB will make a rule by which almost any employee
| of any executive agency can be ruled a "political appointee"
| and fired and replaced by the president at any time.
| SpicyLemonZest wrote:
| I feel like this article is leaving out the important parts.
| You'd think from the text that it's purely a price thing, where
| DOJ has some subjective idea of what a transaction ought to cost
| and are mad that Visa charges too much. The actual complaint and
| the DOJ statement on it both make it clear that the real problem
| is specific steps Visa has allegedly taken to stop people from
| competing with them.
| bryanrasmussen wrote:
| I mean that is what I would assume (specific steps allegedly
| taken) given the title has the word "monopoly" in it.
| JumpCrisscross wrote:
| > _what I would assume (specific steps allegedly taken) given
| the title has the word "monopoly"_
|
| That's a bad assumption. Being a monopoly isn't illegal. You
| have to also behave anti-competitively.
| vdfs wrote:
| If you are not anti-competitive you won't be a monopoly.
|
| "I didn't get rich by writing a lot of checks" -- Bill
| Gates
| soperj wrote:
| That's a quote from the character Bill Gates in the
| Simpsons, not actually Bill Gates. A true quote from Bill
| would likely be much worse.
| ilaksh wrote:
| I know I will get absolutely thrashed and buried for saying this
| on this website, but I am going to say it anyway. The starting
| point for any modern money system should be cryptocurrency. It
| should not be necessary to have a middleman at all. This will
| eliminate most of the types of 'fraud' where thieves or scammers
| charge a card in an unauthorized way, because cryptocurrency does
| not require giving away credentials with that capability.
| Instead, specific transactions are authorized. There is no such
| thing as giving out your whole master card number for a
| transaction.
|
| If you want to add middlemen as companies built on the
| cryptocurrency, you can and for some things they might be useful.
| But you absolutely should not need them by default in the
| contemporary era where we have cryptography and the internet.
| benced wrote:
| Part of the design of modern credit cards is that even
| authorized purchases can be reverted if the customer is not
| delivered the promised goods. My understanding is that crypto
| people think that is a design flaw, not a feature, but most
| folks disagree and that's what counts when trying to get most
| people to adopt your solution.
| ilaksh wrote:
| That is in there because of the core obsolete design flaw I
| pointed out -- credit card credentials are master keys
| authorizing arbitrary transactions. This is because it is an
| obsolete design that predates modern ubiquitous cryptography.
| lxgr wrote:
| Dispute resolution, for non-fraud disputes, is completely
| orthogonal with fraud that happens due to insecure
| cardholder authentication.
|
| What if the seller goes bankrupt after accepting payment,
| but before shipping an order? What if they're an outright
| scammer? What if the buyer says they are, but the real
| scammer is the buyer?
|
| Somebody's got to figure all of that stuff out. The
| established card schemes provide a framework for that. It's
| flawed, it's taking a ton of automated and manual
| resources, nobody in their right mind would rebuild the
| same thing if given the opportunity from scratch, but it's
| there and it kind of works. That's a lot better than what
| crypto has to offer.
| lolinder wrote:
| > This will eliminate most of the types of 'fraud' where
| thieves or scammers charge a card in an unauthorized way,
| because cryptocurrency does not require giving away credentials
| with that capability.
|
| Please get back to us when the cryptocurrency ecosystem has a
| lower rate of fraud than the mainstream ecosystem. Until then
| it looks like you've just traded each episode of one kind of
| fraud for twenty episodes of another kind.
|
| > If you want to add middlemen as companies built on the
| cryptocurrency, you can and for some things they might be
| useful.
|
| Moxie's article on why centralization is inevitable resonated
| with me [0], and all the evidence I've seen suggests that
| crypto is just as vulnerable to it as anything else. The
| middlemen who are initially optional inevitably become a core
| part of the ecosystem that you can't get away from. See Gmail.
| The decision you get when building an ecosystem isn't whether
| there will be middlemen, it's whether to plan around them or
| not.
|
| [0] https://moxie.org/2022/01/07/web3-first-impressions.html
| lxgr wrote:
| Not having any middleman at all is a non-starter if buyer and
| seller don't know each other yet. (Note that any form of escrow
| service, even if "on-chain" or "trustless", is a middleman,
| whether overt or covert.)
|
| Bootstrapping trust is a hard problem and arguably by
| definition requires some middlemen, some of the time.
| gus_massa wrote:
| I'm old enough to remember
| https://en.m.wikipedia.org/wiki/The_DAO
| ilaksh wrote:
| This whole thing is similar to neural networks. They were
| almost universally sneered at for many years. But it turned
| out that the neural network advocates were 100% correct.
|
| The DAO getting hacked many years ago does not refute the
| idea of using math and the internet to transform money rather
| than relying on private middlemen companies.
| dzonga wrote:
| if 'crypto' wasn't used for scams / crime. it would have been the
| perfect candidate to break the Visa / Mastercard duopoly.
|
| but alas....
| goda90 wrote:
| I'd say the bigger issue was the speculative trading. Why would
| you use it to buy things that will depreciate in value if you
| think the currency itself will go up in value? Likewise, why
| would you buy currency if tomorrow its value can tank really
| hard?
| beaglesss wrote:
| The reason floating crypto isn't viable as a domestic currency
| is it's a taxable capital gains/loss event every transaction,
| and not directly useful in paying those taxes. A recordkeeping
| nightmare, intentionally created by the tax masters.
| cubefox wrote:
| > Visa and its smaller rival Mastercard have surged over the past
| two decades, reaching a combined market cap of roughly $1
| trillion.
|
| In the US there actually exists (begins to exist) now a cheaper
| alternative to credit card payments: FedNow. See
| https://en.wikipedia.org/wiki/FedNow
|
| It's an instantaneous bank transfer, without a credit card
| company in the middle extracting rents.
|
| For dodgy/disreputable online shops, credit cards will still be
| better, due to the possibility of chargeback. And of course for
| actually buying things on credit. But for most regular cases,
| this shouldn't be necessary.
|
| Systems like FedNow are already highly successful in India (UPI)
| and several other countries.
| wslh wrote:
| Pix [1] is super successful in Brazil though.
|
| [1]
| https://en.wikipedia.org/wiki/Pix_(payment_system)?wprov=sft...
| drawnwren wrote:
| Pix is so prevalent in Brazil that it's quite inconvenient to
| do even simple transactions there without the requisite ID
| because they expect everyone to just have it.
| cubefox wrote:
| I think you mean "also", not "though". (UPI in India was just
| one example.)
| mmooss wrote:
| Can ordinary people use FedNow right now? How?
| financetechbro wrote:
| You would need to go through a participating bank or fintech
| nobody9999 wrote:
| >Can ordinary people use FedNow right now? How?
|
| IIUC, your (and the counterparty's) financial institutions
| will need to participate[0] in the FedNow program.
|
| My bank (one of the big ones) does not participate. Which
| isn't too surprising as they issue lots of credit and debit
| cards, with which FedNow directly competes.
|
| Hopefully, one of these days FedNow will be ubiquitous. While
| I'm not holding my breath, I'm also optimistic that it can
| and will work.
|
| [0] https://www.frbservices.org/financial-
| services/fednow/organi...
| loeg wrote:
| FedNow is cool but it has nothing to do with B2C payments.
| Think: wires, but cheaper. Or ACH, but faster. Do you
| frequently pay for goods or services with wires or literal ACH
| transfers? (No.)
| jasonjayr wrote:
| No, but only because the technology + processes for Wires +
| ACH are pretty complicated and slow. If they can be sped up,
| simplified with the same or better protections for account
| holders, then it would would be a game changer.
|
| Of course Visa/Mastercard/Amex/Discover are very well moneied
| interests, positioned pretty tightly in the market and have
| no incentive to help it's success along.
| loeg wrote:
| I think it's likely people will build useful user
| experiences on top of FedNow. Or migrate existing uses
| (Zelle?). But it's just the boring settlement system in the
| background; not what end customers or businesses interact
| with directly.
| tyre wrote:
| As a consumer, I also have no incentive to help FedNow.
| Unless they are offering cash back on my taxes.
| throwaway48476 wrote:
| Visa charges 3%. Everything you buy could be 3% cheaper,
| that's better than cash back.
| sandmn wrote:
| Or since prices are set up by retailers, they'll get
| extra 3% profit.
| AnthonyMouse wrote:
| The obvious incentive is that Visa is giving you 1-2%
| cash back while charging the merchant 3%+, so the
| merchant will give you a >2% discount to use FedNow. Or
| charge you the extra 3% to use Visa.
|
| But this is where we get into antitrust issues. Visa
| imposes a 3% cap on the surcharge you can add, but then
| typical processing fees (e.g. Stripe) are 2.9% + $0.30.
| For a $1 transaction that's > _30%_ , but Visa caps the
| amount exposed to the customer at 3% -- and low value
| transactions are the exact market where the lower-fee
| competition would gain the most ground from having a
| price advantage. How is that not an antitrust violation?
| doomrobo wrote:
| In Europe, this is not uncommon for online purchases. You put
| in your IBAN number and authorize the transaction
| cubefox wrote:
| Yes. In Germany there is Giropay, where you get redirected
| to your online banking (it remembers your bank), you have
| to log in, and submit the already pre-filled transaction.
| It's literally a normal bank transfer from the user
| perspective. Not something that happens on the server side.
| loeg wrote:
| FedNow is analogous to SWIFT, not applications like
| Giropay / iDEAL / wero.
| cubefox wrote:
| I don't know about the others, but Giropay just does a
| redirect to your online banking account and prefills the
| bank transfer form. The actual payment is literally the
| instant bank transfer solution. (I think it's called
| TIPS, not SWIFT.)
| loeg wrote:
| FedNow is not launching in Europe.
| cubefox wrote:
| Instant bank transfers already exist in Europe.
|
| > TIPS is a harmonised and standardised pan-European
| service with common functionalities for the settlement of
| Instant Payments across different countries and
| jurisdictions. It is based on the Single Euro Payments
| Area (SEPA) Instant Credit Transfer scheme.
|
| https://www.ecb.europa.eu/paym/target/target-
| professional-us...
|
| > In 2020, Lael Brainard announced the upcoming FedNow
| service would provide "a neutral platform on which the
| private sector can build to offer safe, efficient instant
| payment services to users across the country",[20] after
| 2018 the European Central Bank launched the TIPS instant
| payment settlement system.[21]
|
| https://en.wikipedia.org/wiki/FedNow
| alemanek wrote:
| Pretty much all of South America has some version of this as
| well. Colombia has "transferencia" which is awesome and even as
| a foreigner I could pay someone using cash at an ATM machine.
| brookst wrote:
| > without a credit card company in the middle extracting rents.
|
| This is way too reductive. In the US, credit cards are
| complicated. For instance, I get about 2.5% of every purchase
| back, either in cash or kind. Yes, the merchant pays 4%, and
| VISA/matercard take a bit, and my issuing bank takes a bit, but
| calling that "extracting rents" feels like pure rhetoric.
|
| FedNow is awesome and will make the market more efficient, but
| merchants aren't going to lower prices due to lower fees,
| especially while there's a mix of fee-less transactions and
| credit card transactions. At least in the short term, adopting
| FedNow is just giving money to the places you buy from (for
| retail transactions).
| jessriedel wrote:
| That you are getting a kickback does not mean they aren't
| extracting monopoly rent. The rents, and your kickback, is in
| fact supported by slightly higher prices, which for you will
| roughly cancel out, but which are paid in full by people not
| using credit cards.
|
| One can certainly argue that this system is net positive due,
| e.g., to greater credit availability for people who need it,
| chargeback discipline, etc. It's a very complicated system
| that impacts a bunch of stuff. But it being merely a ~3%
| surcharge (on most retail transactions nationwide!) does not
| deflect the monopoly charge.
| wlesieutre wrote:
| And anyone that ever uses cash for anything is overpaying,
| because prices everywhere have been jacked up to include
| headroom for "give back 2.5% as credit card rewards"
| AngryData wrote:
| Well for corporate stores yes. Still a good number of rural
| area small businesses that give a discount for cash, or
| only accept cash.
| nixosbestos wrote:
| > but calling that "extracting rents" feels like pure
| rhetoric.
|
| How? Because you just spelled out oligopolistic rent seeking
| behavior to a T...?
|
| Oh but you like it because you get a kickback. Jeez. Credit
| cards are literally a tax on the poor but people don't want
| to hear that. Don't get me wrong, I use the hell out of my
| credit card, and feel guilty knowing that system specifically
| means less well off folks are paying higher prices to
| subsidize card usage.
| Loughla wrote:
| I see you edited your comment.
|
| How is credit a tax on the poor? My very poor family
| members all are able to access credit cards. They have
| lower limits, and higher interest because of their credit
| scores. But they can use them exactly how I do for gas and
| groceries.
|
| How?
| blharr wrote:
| Because when you have decent savings. It's easy to never
| pay a credit card late fee in your life.
|
| When you are living paycheck to paycheck, it's a lot
| harder to avoid going over. Then, even a small amount
| over can incur late fees, and if you can't pay it off for
| even a month, it results in a decent amount of interest.
| yunwal wrote:
| Do they get 4% back on dining? Do they take advantage of
| the 3x rewards on flights and hotels?
|
| Every advantage of credit cards is designed to attract
| credit-rich customers and ward off liabilities.
| brookst wrote:
| That was kind of a whirlwind. You seem to be saying 1)
| "rent seeking" is specifically about passing savings on to
| third parties, 2) credit cards are bad because they're a
| tax on the poor, 3) you use them because (like me) you are
| incentivized to, but 4) you "feel bad".
|
| I don't think I can unpack all of the social good / feel
| bad stuff, but there is no way credit cards are the
| definition of "rent seeking" unless we combine the HN dogma
| that "rent seeking = bad" and your opinion that "credit
| cards = bad" to get "credit cards = rent seeking". Which I
| don't buy.
| BeetleB wrote:
| > This is way too reductive. In the US, credit cards are
| complicated. For instance, I get about 2.5% of every purchase
| back, either in cash or kind. Yes, the merchant pays 4%, and
| VISA/matercard take a bit, and my issuing bank takes a bit,
| but calling that "extracting rents" feels like pure rhetoric.
|
| You just described "extracting rents".
|
| For people like me who treat a credit card as a debit card, I
| see no reason for vendors to pay that "tax" if there are
| almost free alternatives. I'm ok losing the cashback which
| you and I are paying for anyway.
| frumper wrote:
| Almost no retailers offer a discount for using cash or a
| debit card. You're paying the retailer either way. Whether
| they pay a transaction fee or pocket it isn't much of a
| difference to you.
| evilfred wrote:
| FedNow is for institutions not individuals
| cubefox wrote:
| Not true
| segmondy wrote:
| The key thing to remember about credit cards is "credit",
| "CREDIT" You can have literally no money to your name but if
| you have a credit card, you can spend up to whatever the
| balance is. Someone is loaning you money, someone is taking
| risk that you will pay. You are protect by government
| regulation so that if you file a dispute, you are protected
| until it's proven that you actually did spend the money. With
| debit card or FedNow, you need to have the money, you don't
| have dispute protections.
| ensignavenger wrote:
| There is no reason why a bank couldn't allow customers to use
| FedNow to access a revolving credit line.
| Loughla wrote:
| The main reason I use credit cards is having my account
| compromised.
|
| It happened once to my debit card when I was 20, and I went
| without food for a few weeks. Thank God for food pantries.
|
| Ever since, I've used MasterCard for everything. They might
| be an evil monopoly, but fixing fraud is stupendously easy,
| and becomes not my problem with one mouse click.
| seizethecheese wrote:
| I'm not sure this is still true. Debit cards have a similar
| dispute process to credit cards.
| wccrawford wrote:
| But the money is already gone. You will probably get it
| back, but you don't have it until then.
|
| With a credit card, you haven't lost anything yet.
| loeg wrote:
| They may, if the issuer wants to be generous. They are
| not entitled to the same legal protections that credit
| cards are.
| ponty_rick wrote:
| UPI requires a one time password sent to your phone to work
| (via an app or text message, app being obviously more
| secure). Now, if you lose both your phone and your card, you
| would need to apply for a new card - hopefully your phone is
| password protected.
| cubefox wrote:
| Credit card companies make absurd profits. This means: In
| expectation, you are paying more than you benefit. It's
| basically an insurance. Buying insurance only makes sense for
| sums so large they could easily bankrupt you. But credit
| cards are used mainly for small to medium sums.
| HAL3000 wrote:
| The US seems to be so far behind. For example, in Poland,
| Europe, you've had online instant bank payments for over 10
| years. You'd go to a merchant's site, click 'pay with my bank,'
| and an OAuth-like mechanism would log you into your bank to
| confirm the payment. Now it's even easier with the introduction
| of BLIK, which lets you pay in shops, online, etc. Online
| payments are super simple: you click 'pay with BLIK' on a
| merchant's site, go to your bank app (web or mobile), click the
| BLIK icon, and get a six-digit code valid for 60-180 seconds.
| You enter that code on the merchant site, and your mobile app
| shows 'Do you want to pay [xxx amount] to [merchant Y]?' You
| click yes, and that's it.
| hnav wrote:
| Regulatory hurdles from incumbents aside, it's generally the
| case that a less developed, up-and-coming economy will have
| new stuff quicker. The US is arguably the birthplace of
| credit but was one of the last to get chip and then tap.
| Right now the US is putting internet relays in low earth
| orbit and teaching computers to generate text on the fly, but
| the wired internet offerings are inferior to some third tier
| city in Bulgaria and customer service is abysmal.
| markus92 wrote:
| SEPA is well established all across the eurozone though,
| even in countries with considerable legacy infrastructure.
| lend000 wrote:
| Reminder that Visa isn't really the problem: [0]
|
| [0]
| https://www.reddit.com/r/stocks/comments/1dyb7t0/whats_going...
| dotnet00 wrote:
| I've been waiting for this for a while, this has been pretty
| blatant for a while now.
|
| Credit card processors end up having unjust influence over every
| business that has a significant online component, and the
| processors don't hold back from using that influence to force the
| hand of many businesses that aren't big enough to fight back.
| They simply threaten to block the business for having X
| objectionable but legal content.
| loeg wrote:
| This article seems to specifically be talking about debit
| transactions, rather than credit cards (unless I misunderstand
| it).
| dotnet00 wrote:
| I tend to use the two interchangeably, since most websites
| don't really differentiate between them on the user-facing
| side.
| killjoywashere wrote:
| My wife runs her own occupational therapy business (OT is
| consistently assessed to be one of the jobs _least_ likely to
| ever be automated). Credit card processors still rule her life.
| Cclayt1123 wrote:
| It's easy to forget the long-term economic damage monopolies can
| cause... but hey, this might be the perfect time for the new
| open-source payment rails to rev up new, real competition.
| killjoywashere wrote:
| Uh, who do I use if not Visa (1.15 to 2.4%) or Mastercard (1.15
| to 2.5%)? Square (2.6 to 2.9%)? AMEX (up to 3.3%)? Paypal (3 to
| 3.5%)?
| m463 wrote:
| It is more the others that don't exist.
|
| visa was able to "impose a web of exclusionary agreements on
| merchants and banks. These agreements penalize Visa's customers
| who route transactions to a different debit network or
| alternative payment system."
| chemmail wrote:
| This sounds good, but i can't help but feel is Visa is brought
| down, we will have a hundred hydra heads feed on us instead.
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