Fraud protection of credit cards is the root of modern e-commerce. In some ways, Visa and Mastercard are the privatized court systems of the internet.
If I end up on a random, self-hosted ecommerce site and decide to make a purchase - what guarantee do I have that the item will show up or be as-described? If I bought something through a bank transfer, reversing that purchase would be incredibly difficult. And, suing a merchant is prohibitively slow, expensive, and arduous.
Also, modern B2C SaaS is built on credit card subscriptions. The ability for a merchant to pull payments on a recurring basis from a credit card requires an incredible amount of trust. If consumers had to push payment every month or year to continue subscriptions (instead of having it automatically debited), then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it.
So, I'm sure online merchants are happy to keep paying their ~3% fees as long as sales continue. Nobody wants to go back to "Cash on Delivery", and nobody wants to hire workers to knock on doors asking for bills to be paid.
Living in New York City, I've noticed that there are a whole lot of businesses that are either cash-only or card-only.
I always understood the cash-only ones. If you can get plenty of customers who are willing to pay in cash, why would you want to pay credit card fees?
The card-only ones were harder for me to understand, until I realized that handling cash costs money, too. Somebody needs to count it all at least once a day, if not more. Employees can steal it. Robbers can steal it. You need a safe. You need cash registers. You need to get the cash deposited in the bank, by paying someone to go do that. You need to maintain an inventory of smaller bills and coins to make change. You need to train people on all of this.
Even just the accounting costs might make up the 2-3 percent in fees. "Your register said you made $150 in cash that day, but the deposit that night was only $135." That's what you pay accountants to deal with, rather than just exporting from your Square account to Quickbooks or whatever.
I had this realization because I went to a new coffee shop that had opened up. It appeared to be owned and operated by just one lady, and she was really nice. So, as I normally do for the nice local business owners in my neighborhood, I got out some cash instead of a card, thinking it would benefit her business. But then she told me they were card-only and it dawned on me: she's just one lady running a store by herself, _of course_ she doesn't want to deal with cash.
So, I'm not sure the 2-3 percent fees are all that bad, though I could be convinced otherwise. Plenty of small business owners seem pretty happy just setting up a Square reader and not dealing with the headache of cash. I think there's a lot of value in that for them.
The other side of this is that card only businesses de facto discriminate (not in an illegal way, of course) against people who don't have/can't get cards. Not being able to buy a cup of coffee from one particular coffee shop might not seem like a big deal, but it sends a signal as to who is/isn't wanted in the shop. Further, if it becomes a trend and all coffee shops go card only, spreading to other business like grocery stores, etc., then it starts to be a problem.
The "cash only" businesses in NY are generally cheating on their taxes. A congressman was arrested a few years back for tax fraud on the profits from cash only businesses he owned in the city. His defense was that "this is a well-known common practice in the city".
I wouldn't require someone to be able to provide change, but "accepting the currency of the nation you live in" seems like it should be one of the basic requirements of civilization.
> FedNow is an instant payment service for both individuals and businesses. Once launched, the initial transaction limit will be $25,000. This means that FedNow be more useful for small businesses and retail payment needs until it is widely adopted and the transaction limit grows.
> In early 2022, the Federal Reserve released pricing and fee details for their real-time settlement network. Because FedNow is government-operated, it’s mandated to break even and not turn a profit. A possible advantage of this is that FedNow may offer more competitive pricing than other payment systems, which encourages widespread adoption at a faster rate.
Merchants can pass the CC surcharge through; I’d expect them to do so when a very low cost immediate settlement option is available. This will allow consumers to self select if they want the benefits of paying with a credit card (but paying for the privilege). Credit can be extended if needed by a financial institution, without using CC rails. Net 30? BNPL? Special financing arrangement? Pick your poison either prior to or after value transfer has occurred. The innovation is utility priced financial infrastructure, cutting out the rentseekers mentioned.
(my note: it’s about five cents per FedNow value transfer transaction)
Perhaps this is an irrational fear, but one of the reasons I like credit cards is because when a charge happens, no money leaves my personal accounts. If a charge is fraudulent, it gets cleared up without me being out some amount of money until it gets cleared up.
I assume with FedNow (same as if I were to transact using debit cards), money leaves my bank account more or less immediately when a charge happens. That means if someone manages to fraudulently charge something, I am out that money (up to $25,000!) until the dispute process is resolved.
Also, do I really want the central bank to have a record of all my transactions? Not sure I do.
> Merchants can pass the CC surcharge through; I’d expect them to do so when a very low cost immediate settlement option is available.
Canada has had low-cost Interac debit cards for a long time, and although they've been very popular, merchants generally don't impose any credit card fees.
Also, even Canadian online businesses generally don't bother implementing payments with Interac online, so for online shopping it's not even an option.
Visa/Mastercard are looking very overvalued to me. When fednow comes out, I see very little reason for people to use those legacy options anymore. Its like the market is completely oblivious to the impending doom coming for these rent seekers.
Every single app/store/site is gonna be begging you to enroll in fednow and will be offering 2-3% discounts/bonus points for any purchases made through it.
Unless things have changed in the last 20ish years, if you accept credit cards you’re not allowed to charge different prices for CC vs non-CC payments (although there are apparently some carve-outs for gas stations).
FedNow is only allowing depository institutions to participate and layers on top of them. The base price for a transfer might five cents, but I'd expect the bank to charge a fee on top of that. And if this scenario is a customer paying at a store, either online or not, there's almost certainly going to be another middle man (or multiple) between the merchant and the depository institution. Each of which will have its own set of fees, and one of which is likely to be a % of the transaction.
Can they? I was under the impression (unverified) that they are under contract to provide the same prices for CC customers as they do for cash or debit card.
In Brazil many stores are dropping credit card and allowing only PIX (instant debit transfer) cause it's cheaper for business (0,22% avg transaction fee vs 1%-2% of credit cards - src (pt-only) https://g1.globo.com/economia/pme/noticia/2022/03/23/pix-e-m...).
This should be hire up. I live in the US but went to visit family in Brazil, and after setting up my PIX payment, I was honestly kinda shocked at how incredible it seemed. It boils down to a very well implemented, super versatile, public Venmo-like system. I'd hazard a guess that startup ideas around leveraging this new infrastructure may be a great idea the moment.
"Merchants hand over some $138bn in fees each year; according to the National Retail Federation, a lobby group, it is their second-biggest cost after wages."
Unless they're talking about more than just credit card fees? From the same article:
"But credit-card fees are unregulated and meatier, usually sitting at about 2% of the transaction and rising to 3.5% for some premium-reward cards."
Are they saying that retailers pay less than 4% of the retail price to acquire their goods? They pay more for credit cards than rent?
That jumped out at me too -- so I looked up what appears to be the source [1] and it does indeed state:
> "Regardless of size, the fees are most merchants’ highest operating cost after labor"
but I'm as incredulous as you are. Obviously things like cost of goods, and also usually rent, are also going to be higher.
I can only assume it's based on some really misleading survey, and I'm honestly surprised to see The Economist, of all publications, repeat something so obviously economically questionable. (To be sure, they attribute the claim rather than state it, but they present it as if it's true.)
Not sure what criteria they used. But I totally believe this for any e-commerce store or company that doesn't have a physical presence.
You also get charged for
each chargeback, which is likely included in that $138bn number. And if you have a high enough chargeback rate you will be fined an additional amount.
according to the National Retail Federation, a lobby group
Spoiler alert: most lobbyists are professional liars. If pressed they'll put up a smokescreen of "well I meant _operating_ costs, which of course are far smaller than cost-of-goods" but the lie is still printed in the article...
I'm pretty confident Visa's dominance is a completely natural monopoly. There are plenty of 3rd party payment options (Amex and Diners' are still both fairly widely accepted) and nothing is stopping consumers from having multiple cards.
But I think the network effects are too strong and we are seeing a pretty normal Pareto distribution. Even if you added 20 new market entrants with good coverage, consumers and businesses would still prefer to have Visa as the lingua franca of payments.
I think it will also be pretty hard to get away from that 3.5% processing fee. That covers a lot of fraud prevention work that credit card companies take on for consumers and businesses. Will consumers be happy to give up those protections and reap back a percent or two on prices? And emerging payment technologies seem to create more opportunity for fraud.
Here in Japan there has been an explosion in QR code payment services over the past few years since the barrier to entry is so low (and traditionally credit card payments have had relatively low uptake compared to the west so it's seen as a wide open market)
It's extremely common to be confronted with a display like this at the register of a chain store detailing the bewildering array of supported payment options https://i.imgur.com/jmYrgHR.jpg
3.5% isn't what merchants pay unless you're tiny. Highest interchange is around 2.5 and maybe you'll pay 0.25% in settlement fees.
What interchange covers mainly is the cost of capital to give a consumer a 60 day interest free loan. Capital isn't free and this has real world costs to the bank underwriting the loans. Why you Chase or BOA debit card interchange rates are 0.05% because they aren't lending out their own money.
Not all, but a lot of fraud can be prevented with good 2FA. Chip+pin is usually hard enough for low effort fraudsters, and it's tried and tested in large parts of the world for decades.
The US has effectively no effective 2FA. Signature is never verfiied in practice, and magnetic strips are dead simple to clone.
It's not a 'natural' monopoly if they require heavy lobbying etc.
It's not the 'network effect' it's that the financial institutions i.e. the banking system want it that way, and will thwart any system otherwise.
It'll be easy to get away from the 3.5% fee we know that because of how it works in other countries.
America, shockingly, still does not use PIN chip cards, it's unbelievably nuts.
The simple addition of a PIN and a few other things can help reduce fraud substantially.
The complexity of the VISA network and disintermediation of 'ownership of the customer' creates problems for fraud tracking. At my bank the 'VISA' dept is totally separate from my other accounts - the entire customer service and data chain is separate. It's nuts.
Yeah, I think a lot of people are better off just paying 3.5% more but with the fraud protection. However, I still think this will be a huge improvement for a lot of other stuff like moving money between accounts at different banks or paying for large purchases which are guarded by a proper contract such as paying rent, buying a car, etc.
The Finance industry is especially attuned to this type of distribution mostly from dealing with pretty intense risk. The strongest players rise to the top fast and a moat of trust weeds out the rest. Crypto despite the ideological objectives is not immune to this.
European Union solved big part of the problem many years ago in 2015 with a new law. They capped the fees of Visa and Mastercard at max. 0.3% of the transaction volume on private consumer cards.
It has many upsides (especially increased acceptance). The only downside: There are no real or good cashback programs (like getting 1-2% back) in Europe because of this.
Maybe I just hate money but IMO there are no good cashback schemes. A merchant-to-consumer wealth transfer that piggybacks on every transaction? Has a smell of fraud or corruption but not stinky enough for American regulators. Good job to the EU on this one.
The whole premise of the article is dumb. Lots of small businesses like to cry about credit card fees, which is absurd given the value offered for the price charged.
Not only do they drive spending, but they eliminate the casual embezzlement and pilferage that plagues cash businesses. My grandfather ran pubs, and use to quip that he’d fire any honest bartender, because the guy was smarter than him.
When I was in college I worked for a company one summer that installed parking gates with credit card payment systems at big institutions. One customer was a hospital who reported 28% increases in parking sales… the guys who worked there were skimming the toll for years.
You also need to pay labor to count the tills, manage the cash, etc. In any case, show me someone whining about a 3% fee and you’re showing me someone who’s out of touch with their business.
For all the red-tape and corruption we have here, I still think India has done a phenomenal job with UPI payments. I mean I don't even remember the last time I used my credit card considering I have even forgotten the pin codes now.
One or two other thing I love about these UPI payments is that it doesn't seem to incur any 2 or 3% commissions(1) which is both great for the consumer and the merchant (as these costs would eventually be passed to the customer anyway). Also almost every cc machine, website and panwala has a the QR codes now so no need to carry a wallet or plastic cards. I can make payments of Rs.5 and that's fine.
I don't even carry a wallet anymore to a mall or any place since my driver's lic/reg is in the digilocker app(2) and the credit card is the gpay/phonepe app.
(1) Not really sure if there is or will be later, since I'm not a fintech person, but from what I can tell I don't see any commission on UPI payments yet.
I actually designed software that could integrate with existing POS systems (the really hard part) that allowed for interchange free commerce using a card or Apple Pay integration.
I showed it to an investor. His only response was, "This is a very fast way to end up dead."
You don't fuck with monopolies that bring in hundreds of billions to trillions of dollars in profit a year. People get killed for way less.
On a secondary note, when I was working in payments, I once met the SVP of Payments for Wells Fargo. I got him drunk. He told me that when WF internally separated out their business units P&Ls, payments/interchange made up 64% of WF's total public Net Income.
The only thing I don't want to happen is for the duopoly to be broken up into a billion different little fiefdoms each with their own unregulated space. One of the reasons credit cards are so good is because there's a fuckton of regulations built into the legislation behind them in order to give an individual consumer a fighting chance against the financial industry.
All these fintech companies wanting ACH access to my bank account? If a transaction gets fucked up (i.e. someone puts the decimal in the wrong place) it's my immediate and hard to fix problem. I have to deal with my bank's bureaucracy and their goodwill. In the meantime I have no access to my money. If someone fucks up the same using my credit card number it's one call and the company takes care of it and because it's in arrears I still have all my cash.
Nope. It'll be a cold day in hell before I give any fintech get direct access to my checking account for payments.
In India, the duopoly is already broken by UPI (Universal Payments Interface). UPI provides zero-cost transfers and mobile payments between linked bank accounts and every little streetcorner store and sidewalk vendor accepts UPI payments. Also 2FA using SMS is required and enabled by default.
You can pay by scanning a QR-code, or a mobile number, or a UPI ID. There's also an effort to allow "scanning" an audio-signal to enable non-smartphone devices.
I still haven't understood why credit cards companies need to go through this complex multi-hop "settlement" pipeline that takes almost a day for transactions to get "processed". Is it because some banks still depend on mainframes doing batch processing?
> Households that bring in more than $135,000 a year recoup in points or perks around 0.6 percentage points of the interchange fees they pay.
This is bizarre to me. When the Citibank Double Cash credit card exists for no annual fee and pays 2% back...
why does anyone ever use any card that provides less? The only cards I use besides that one are the ones that give me 3% or 5% back in special categories.
The idea that people average only 0.6% back is absurd to me. Am I missing something here?
And we're not talking college students here with no credit history. This is households making more than $135K a year. Are people just not bothering to pick up free money?
Can the duopoly be broken?
Yes, you can have Pix, the system created by the Brazilian Central Bank for instant, verified payments and some credit/installments features. It's cheaper for business but then a central bank will know all your transactions.
There are some talks of sharing the system with Canada and other countries.
Well, in Denmark you can use Dankort(https://en.m.wikipedia.org/wiki/Dankort), which does exactly the same as Visa or Mastercard, but the transactions are handled by Nets instead.
I would like to show you the national payment system in Norway, BankAxept[0]. It's used in 8/10 purchases in physical stores. The system verifies the card has a sufficient balance before the transaction is verified, and charges the account instantly on purchase.
The subscription to the network is 150 NOK/month, with each transaction costing 0,21 NOK each, before volume rebates. 1 EUR/USD is worth roughly 10 NOK at the time of writing, so about 15/0,021 for the subscription/transaction cost. I don't know much about VISA and MasterCard costs, but I would hazard a guess they're higher.
I think the only time I ever use VISA is when purchasing things online, and even then I'm not quite sure it's always VISA. Fun fact, BankAxept stopped accepting the magnetic strip in 2011. Now chip & pin or NFC are the two main ways of paying, with NFC transactions under 500 NOK not requiring the PIN to be entered, except periodically for verification.
[+] [-] beefman|3 years ago|reply
[+] [-] philip1209|3 years ago|reply
If I end up on a random, self-hosted ecommerce site and decide to make a purchase - what guarantee do I have that the item will show up or be as-described? If I bought something through a bank transfer, reversing that purchase would be incredibly difficult. And, suing a merchant is prohibitively slow, expensive, and arduous.
Also, modern B2C SaaS is built on credit card subscriptions. The ability for a merchant to pull payments on a recurring basis from a credit card requires an incredible amount of trust. If consumers had to push payment every month or year to continue subscriptions (instead of having it automatically debited), then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it.
So, I'm sure online merchants are happy to keep paying their ~3% fees as long as sales continue. Nobody wants to go back to "Cash on Delivery", and nobody wants to hire workers to knock on doors asking for bills to be paid.
[+] [-] apeace|3 years ago|reply
I always understood the cash-only ones. If you can get plenty of customers who are willing to pay in cash, why would you want to pay credit card fees?
The card-only ones were harder for me to understand, until I realized that handling cash costs money, too. Somebody needs to count it all at least once a day, if not more. Employees can steal it. Robbers can steal it. You need a safe. You need cash registers. You need to get the cash deposited in the bank, by paying someone to go do that. You need to maintain an inventory of smaller bills and coins to make change. You need to train people on all of this.
Even just the accounting costs might make up the 2-3 percent in fees. "Your register said you made $150 in cash that day, but the deposit that night was only $135." That's what you pay accountants to deal with, rather than just exporting from your Square account to Quickbooks or whatever.
I had this realization because I went to a new coffee shop that had opened up. It appeared to be owned and operated by just one lady, and she was really nice. So, as I normally do for the nice local business owners in my neighborhood, I got out some cash instead of a card, thinking it would benefit her business. But then she told me they were card-only and it dawned on me: she's just one lady running a store by herself, _of course_ she doesn't want to deal with cash.
So, I'm not sure the 2-3 percent fees are all that bad, though I could be convinced otherwise. Plenty of small business owners seem pretty happy just setting up a Square reader and not dealing with the headache of cash. I think there's a lot of value in that for them.
[+] [-] dfxm12|3 years ago|reply
[+] [-] throw__away7391|3 years ago|reply
[+] [-] conjecTech|3 years ago|reply
[+] [-] causi|3 years ago|reply
[+] [-] toomuchtodo|3 years ago|reply
> FedNow is an instant payment service for both individuals and businesses. Once launched, the initial transaction limit will be $25,000. This means that FedNow be more useful for small businesses and retail payment needs until it is widely adopted and the transaction limit grows.
> In early 2022, the Federal Reserve released pricing and fee details for their real-time settlement network. Because FedNow is government-operated, it’s mandated to break even and not turn a profit. A possible advantage of this is that FedNow may offer more competitive pricing than other payment systems, which encourages widespread adoption at a faster rate.
Merchants can pass the CC surcharge through; I’d expect them to do so when a very low cost immediate settlement option is available. This will allow consumers to self select if they want the benefits of paying with a credit card (but paying for the privilege). Credit can be extended if needed by a financial institution, without using CC rails. Net 30? BNPL? Special financing arrangement? Pick your poison either prior to or after value transfer has occurred. The innovation is utility priced financial infrastructure, cutting out the rentseekers mentioned.
(my note: it’s about five cents per FedNow value transfer transaction)
[+] [-] kelnos|3 years ago|reply
I assume with FedNow (same as if I were to transact using debit cards), money leaves my bank account more or less immediately when a charge happens. That means if someone manages to fraudulently charge something, I am out that money (up to $25,000!) until the dispute process is resolved.
Also, do I really want the central bank to have a record of all my transactions? Not sure I do.
[+] [-] nikitaga|3 years ago|reply
Canada has had low-cost Interac debit cards for a long time, and although they've been very popular, merchants generally don't impose any credit card fees.
Also, even Canadian online businesses generally don't bother implementing payments with Interac online, so for online shopping it's not even an option.
Perhaps some of this will be better at US scale.
[+] [-] tryptophan|3 years ago|reply
Every single app/store/site is gonna be begging you to enroll in fednow and will be offering 2-3% discounts/bonus points for any purchases made through it.
[+] [-] dhosek|3 years ago|reply
Unless things have changed in the last 20ish years, if you accept credit cards you’re not allowed to charge different prices for CC vs non-CC payments (although there are apparently some carve-outs for gas stations).
[+] [-] Brystephor|3 years ago|reply
Basically you get a similar cost.
[+] [-] alberth|3 years ago|reply
Consumers already have a choice that has lower interchange fees to merchants (but also has way less chargeback protections) and that’s a debit card.
[+] [-] Levitz|3 years ago|reply
[+] [-] autoexec|3 years ago|reply
My guess is that they'll just raise their prices to include the fee no matter how the customer offers to pay for something.
[+] [-] karamanolev|3 years ago|reply
Can they? I was under the impression (unverified) that they are under contract to provide the same prices for CC customers as they do for cash or debit card.
[+] [-] andersonmvd|3 years ago|reply
The President of Brazilian Central Bank recently said that "credit cards will soon cease to exist" src (pt only) https://www.poder360.com.br/economia/campos-neto-diz-que-car...
[+] [-] ChicagoBoy11|3 years ago|reply
[+] [-] pkaye|3 years ago|reply
[+] [-] novok|3 years ago|reply
[+] [-] BiteCode_dev|3 years ago|reply
[+] [-] jpollock|3 years ago|reply
"Merchants hand over some $138bn in fees each year; according to the National Retail Federation, a lobby group, it is their second-biggest cost after wages."
Unless they're talking about more than just credit card fees? From the same article:
"But credit-card fees are unregulated and meatier, usually sitting at about 2% of the transaction and rising to 3.5% for some premium-reward cards."
Are they saying that retailers pay less than 4% of the retail price to acquire their goods? They pay more for credit cards than rent?
[+] [-] crazygringo|3 years ago|reply
> "Regardless of size, the fees are most merchants’ highest operating cost after labor"
but I'm as incredulous as you are. Obviously things like cost of goods, and also usually rent, are also going to be higher.
I can only assume it's based on some really misleading survey, and I'm honestly surprised to see The Economist, of all publications, repeat something so obviously economically questionable. (To be sure, they attribute the claim rather than state it, but they present it as if it's true.)
[1] https://nrf.com/media-center/press-releases/retailers-say-sm...
[+] [-] thematrixturtle|3 years ago|reply
[+] [-] Brystephor|3 years ago|reply
You also get charged for each chargeback, which is likely included in that $138bn number. And if you have a high enough chargeback rate you will be fined an additional amount.
[+] [-] al2o3cr|3 years ago|reply
[+] [-] legitster|3 years ago|reply
But I think the network effects are too strong and we are seeing a pretty normal Pareto distribution. Even if you added 20 new market entrants with good coverage, consumers and businesses would still prefer to have Visa as the lingua franca of payments.
I think it will also be pretty hard to get away from that 3.5% processing fee. That covers a lot of fraud prevention work that credit card companies take on for consumers and businesses. Will consumers be happy to give up those protections and reap back a percent or two on prices? And emerging payment technologies seem to create more opportunity for fraud.
[+] [-] kalleboo|3 years ago|reply
It's extremely common to be confronted with a display like this at the register of a chain store detailing the bewildering array of supported payment options https://i.imgur.com/jmYrgHR.jpg
[+] [-] adrr|3 years ago|reply
What interchange covers mainly is the cost of capital to give a consumer a 60 day interest free loan. Capital isn't free and this has real world costs to the bank underwriting the loans. Why you Chase or BOA debit card interchange rates are 0.05% because they aren't lending out their own money.
[+] [-] klabb3|3 years ago|reply
The US has effectively no effective 2FA. Signature is never verfiied in practice, and magnetic strips are dead simple to clone.
[+] [-] jollybean|3 years ago|reply
It's not the 'network effect' it's that the financial institutions i.e. the banking system want it that way, and will thwart any system otherwise.
It'll be easy to get away from the 3.5% fee we know that because of how it works in other countries.
America, shockingly, still does not use PIN chip cards, it's unbelievably nuts.
The simple addition of a PIN and a few other things can help reduce fraud substantially.
The complexity of the VISA network and disintermediation of 'ownership of the customer' creates problems for fraud tracking. At my bank the 'VISA' dept is totally separate from my other accounts - the entire customer service and data chain is separate. It's nuts.
[+] [-] slaymaker1907|3 years ago|reply
[+] [-] dkobia|3 years ago|reply
[+] [-] therealmarv|3 years ago|reply
It has many upsides (especially increased acceptance). The only downside: There are no real or good cashback programs (like getting 1-2% back) in Europe because of this.
[+] [-] StayTrue|3 years ago|reply
[+] [-] morepork|3 years ago|reply
[+] [-] carstenhag|3 years ago|reply
[+] [-] Spooky23|3 years ago|reply
Not only do they drive spending, but they eliminate the casual embezzlement and pilferage that plagues cash businesses. My grandfather ran pubs, and use to quip that he’d fire any honest bartender, because the guy was smarter than him.
When I was in college I worked for a company one summer that installed parking gates with credit card payment systems at big institutions. One customer was a hospital who reported 28% increases in parking sales… the guys who worked there were skimming the toll for years.
You also need to pay labor to count the tills, manage the cash, etc. In any case, show me someone whining about a 3% fee and you’re showing me someone who’s out of touch with their business.
[+] [-] superasn|3 years ago|reply
One or two other thing I love about these UPI payments is that it doesn't seem to incur any 2 or 3% commissions(1) which is both great for the consumer and the merchant (as these costs would eventually be passed to the customer anyway). Also almost every cc machine, website and panwala has a the QR codes now so no need to carry a wallet or plastic cards. I can make payments of Rs.5 and that's fine.
I don't even carry a wallet anymore to a mall or any place since my driver's lic/reg is in the digilocker app(2) and the credit card is the gpay/phonepe app.
(1) Not really sure if there is or will be later, since I'm not a fintech person, but from what I can tell I don't see any commission on UPI payments yet.
(2) https://www.google.com/search?q=digilocker+license+valid
[+] [-] gsibble|3 years ago|reply
I showed it to an investor. His only response was, "This is a very fast way to end up dead."
You don't fuck with monopolies that bring in hundreds of billions to trillions of dollars in profit a year. People get killed for way less.
On a secondary note, when I was working in payments, I once met the SVP of Payments for Wells Fargo. I got him drunk. He told me that when WF internally separated out their business units P&Ls, payments/interchange made up 64% of WF's total public Net Income.
[+] [-] Veliladon|3 years ago|reply
All these fintech companies wanting ACH access to my bank account? If a transaction gets fucked up (i.e. someone puts the decimal in the wrong place) it's my immediate and hard to fix problem. I have to deal with my bank's bureaucracy and their goodwill. In the meantime I have no access to my money. If someone fucks up the same using my credit card number it's one call and the company takes care of it and because it's in arrears I still have all my cash.
Nope. It'll be a cold day in hell before I give any fintech get direct access to my checking account for payments.
[+] [-] 10g1k|3 years ago|reply
[+] [-] msravi|3 years ago|reply
You can pay by scanning a QR-code, or a mobile number, or a UPI ID. There's also an effort to allow "scanning" an audio-signal to enable non-smartphone devices.
[+] [-] sytelus|3 years ago|reply
[+] [-] immortaljoe|3 years ago|reply
Non affiliated video about it: https://youtu.be/B_AY4a3_-GQ
[+] [-] crazygringo|3 years ago|reply
This is bizarre to me. When the Citibank Double Cash credit card exists for no annual fee and pays 2% back...
why does anyone ever use any card that provides less? The only cards I use besides that one are the ones that give me 3% or 5% back in special categories.
The idea that people average only 0.6% back is absurd to me. Am I missing something here?
And we're not talking college students here with no credit history. This is households making more than $135K a year. Are people just not bothering to pick up free money?
[+] [-] cardosof|3 years ago|reply
[+] [-] mathiasgredal|3 years ago|reply
[+] [-] Hanschri|3 years ago|reply
The subscription to the network is 150 NOK/month, with each transaction costing 0,21 NOK each, before volume rebates. 1 EUR/USD is worth roughly 10 NOK at the time of writing, so about 15/0,021 for the subscription/transaction cost. I don't know much about VISA and MasterCard costs, but I would hazard a guess they're higher.
I think the only time I ever use VISA is when purchasing things online, and even then I'm not quite sure it's always VISA. Fun fact, BankAxept stopped accepting the magnetic strip in 2011. Now chip & pin or NFC are the two main ways of paying, with NFC transactions under 500 NOK not requiring the PIN to be entered, except periodically for verification.
[0]:https://en.wikipedia.org/wiki/BankAxept