That’s a great idea for the Europeans! This article focuses on the European gripes about data privacy (real problem to be sure), but they don’t mention the fact that Visa/Mastercard fees are a...
That’s a great idea for the Europeans! This article focuses on the European gripes about data privacy (real problem to be sure), but they don’t mention the fact that Visa/Mastercard fees are a leech on the economy! Removing those fees can make sure the whole economy is more efficient.
Visa fees are basically a tax on every transaction.
I'm curious to learn more about your thought process here. My tacit assumption is that credit card companies add a lot of value, since escrow has - throughout human history - been one of the...
I'm curious to learn more about your thought process here. My tacit assumption is that credit card companies add a lot of value, since escrow has - throughout human history - been one of the trickiest problems to solve. (In short, "how to I get money to you without handing you a precious metal? How do I trust third parties?") The revolution in finance/banking led by the dutch completely changed the world, for instance; in the historical lens paying ~2% for escrow is almost free. What's your thinking?
Escrow is much less of an issue in a world of instant electronic transactions. Those ought to be provided by the state itself to better lubricate the economy. Europe already has something like...
Escrow is much less of an issue in a world of instant electronic transactions. Those ought to be provided by the state itself to better lubricate the economy. Europe already has something like this - Swift.
A more charitable take on what value credit cards provide is that they provide liquidity. Buy that TV before your paycheck comes next week. There’s something to be said for this service. But it should be decoupled from the Point of Sale. That decoupling will introduce more competition to provide small loans to you (who can also benefit from free electronic transactions).
With respect, I think you're not really thinking through all the implications of what you're proposing. It's easy to say "oh, the state should do it" but what about tiny states like Luxembourg?...
With respect, I think you're not really thinking through all the implications of what you're proposing. It's easy to say "oh, the state should do it" but what about tiny states like Luxembourg? There are probably more compliance people working at visa than in the entire luxembourgish government, meaning visa is less likely to spill your data. Visa certainly deals in more foreign currencies than Luxembourg does, meaning they're more liquid when converting between them. And what about interoperability between states? Not to only use historical examples, here, but that would again be a step back towards money being the political domain of kings, instead of the business domain of banks.
Escrow is much less of an issue in a world of instant electronic transactions. Those ought to be provided by the state itself to better lubricate the economy. Europe already has something like this - Swift.
Instant electronic transactions are an illusion provided by mostly the credit card companies, which accept the risk in order to provide a better user experience. Have you ever looked at your statement and seen a bunch of charges listed as "pending"? That's the electronic transaction clearing, typically over hours or days. They accept this risk because they have the profit motive to want your business and for you to use their cards. It's for similar reasons that credit cards have vastly more consumer-friendly fraud protections than, say, wire transfers. They eat those costs to stay dominant.
Swift transactions take 1-5 days to clear, on average. Even peer-to-peer networks like Bitcoin take 10-60 minutes on average. Imagine waiting at the store for 10-60 minutes before you can leave with your coffee. There are cryptos purporting to be faster, but none is yet popular/stable enough to be a serious contender for a global daily currency replacement.
They don't really "eat" the costs. They balance those by charging vendors (and consumers depending on the card) fees on top of the interest on the loan to the consumer. They're not losing money on...
They don't really "eat" the costs. They balance those by charging vendors (and consumers depending on the card) fees on top of the interest on the loan to the consumer. They're not losing money on it. But yes they're willing to take a loss on one side to make all the money on the other.
We can quibble over this, but the bottom line is that it's a benefit to the consumer that wouldn't exist if credit card companies weren't there. Whether it's intended as a kindness or not -...
We can quibble over this, but the bottom line is that it's a benefit to the consumer that wouldn't exist if credit card companies weren't there. Whether it's intended as a kindness or not - obviously you're correct, it's not - is irrelevant.
I'm fairly sure that if VISA's terrible, slow and out of date system didn't exist, someone would invent a better one very quickly. I'm also fairly sure that if they hadn't been sitting on a...
a benefit that wouldn't exist if credit card companies weren't there
I'm fairly sure that if VISA's terrible, slow and out of date system didn't exist, someone would invent a better one very quickly. I'm also fairly sure that if they hadn't been sitting on a near-monopoly for so long, it would have happened long ago.
I can transfer money between my bank accounts in seconds using FPS. I can move money instantly internationally via services like Revolut or Paypal. I do not understand why visa's antiquated payment processing system is allowed to take several days. It's not accidental either. There is a delay in their system which has been programmed in. Computers don't do things slowly unless you explicitly ask them to. Nobody at my bank seems to understand why that delay exists.
Instant SEPA transfers between European bank accounts (or at least all EU and a number of non-EU countries, idk the exact set of countries included) are already a thing, even between individual...
Instant SEPA transfers between European bank accounts (or at least all EU and a number of non-EU countries, idk the exact set of countries included) are already a thing, even between individual private bank accounts. They are interoperable between all states in the SEPA system. It's even occasionally a payment option online (though in that context it does not strictly require an instant transfer, an instantly-received transfer functions identically to paying through a credit card or Paypal). Sure, you can claim that the instantaneousness is also an illusion in this case, but it demonstrates that banks themselves are perfectly capable of maintaining said illusion just as well as credit card companies without charging extra for it when required to by the state (and ignoring the existence of multi-national cooperation in a discussion about Europe while bringing up small countries like Luxembourg is... a choice). The idea that credit card companies are somehow uniquely capable of doing this is utterly absurd. It doesn't even capture basic facts about current capabilities, much less the capabilities after the creation of a new European DPS designed precisely to cover precisely the functions that Visa and Mastercard currently do, as this article describes.
The crux of your comment is this: Not only did I not say credit card companies are uniquely capable, I went out of my way to specify that the illusion is only mostly provided by credit card...
The crux of your comment is this:
The idea that credit card companies are somehow uniquely capable of doing this is utterly absurd.
Not only did I not say credit card companies are uniquely capable, I went out of my way to specify that the illusion is only mostly provided by credit card companies. My broader point is that the profit motive of commercial enterprise has successfully built a complicated system in the way that it would be much harder for a state to do. If your argument is “banks are equally capable of running such a system” then I agree.
If you find the reference to luxembourg completely undermines my fundamental point, feel free to replace it with another small European country that isn’t in the EU or EEA. Say, Albania. Or the United Kingdom, for that matter.
My comment was mostly pointing out the existence of SEPA, since it was overlooked in both your comment and from what I can tell the comment you replied to. SEPA's existence serves as a...
My comment was mostly pointing out the existence of SEPA, since it was overlooked in both your comment and from what I can tell the comment you replied to. SEPA's existence serves as a demonstration that Europe-wide cooperation through state regulation are capable of things like direct instant bank credit transfers -- something that still isn't possible between bank accounts within the US without going through separate services provided by companies that are not your bank. The existence of the overarching legal framework is an important part of this, and I think the state support involved in this system is a hugely important part of why it can exist, especially Europe-wide, in a way that's broadly beneficial to everyone. This is something that a European DPS would hopefully have in common with the existing SEPA scheme.
Also, just as an aside, Albania and the UK are both in SEPA. From what I can tell on their website, the only European countries not in SEPA are Belarus, Ukraine, Russia, and Turkey. Which makes sense, as afaik I'm not sure there are any downsides to it really.
As an American, I support this because it is disturbing how much control Visa and Mastercard have over global industries. First came to my attention when Steam removed many games due to payment...
There are a lot of examples of Japanese businesses in particular, operating in Japan and selling to Japanese citizens, having to fight payment processors about selling adult content. The demands had nothing to do with local laws, but just Visa and Mastercard's own sensibilities.
If Visa and Mastercard stop working with a digital storefront, then that store loses countless customers due to just not having a way to pay. And with the direction the US is heading, I don't know how strict their guidelines will become to appease the government. The world desperately needs non-US-based payment processors.
Yeah, as I was reading this I was thinking it was weird for the article to have this brief aside that basically goes “and here is a vastly more preferable option with fewer middlemen involved”.
Yeah, as I was reading this I was thinking it was weird for the article to have this brief aside that basically goes “and here is a vastly more preferable option with fewer middlemen involved”.
The challenge is getting there. The current solution doesn't directly contest the various national banking systems or private financial companies, which is why they're able to get it up and...
The challenge is getting there. The current solution doesn't directly contest the various national banking systems or private financial companies, which is why they're able to get it up and working. For the moment, EU independence from American financial systems seems more important to them than stripping out the EU specific middlemen.
This is incredible. Not a legal scholar in any way, but I'd love to know what the big credit card companies have done to prepare for this moment. Do they have legal footing to stop the break up?...
This is incredible.
Not a legal scholar in any way, but I'd love to know what the big credit card companies have done to prepare for this moment.
Do they have legal footing to stop the break up?
What tactics will they use to stall or interrupt the process?
How does this relate to infrastructure - from payment machines to transmission to banks - that's built up around credit companies?
Will they use people's dependence on credit cards in their everyday lives as blackmail against the EU?
I can't wait for this one so pumped to see it and the online harms stuff against tech companies play out.
Good for them, and I hope Canada joins too. Some American cards like Amex and Discovery have tried and failed to gain foothold, but like Europe, if we get a good push and incentivize, I'm sure...
Good for them, and I hope Canada joins too.
Some American cards like Amex and Discovery have tried and failed to gain foothold, but like Europe, if we get a good push and incentivize, I'm sure people are going to switch. A, offer lower fees for merchants to switch, and then B, offer enticing introduction cards for buyers, and C, make all kinds of government or infrastructure stuff Wero as well. It doesn't mean people HAVE to switch but it's nice to have an alternative for competition
This is great, though I'm curious about what their plan is for a system that works without a functional smartphone on the buyer, since this system seems to be dependent on QR codes for in-person...
This is great, though I'm curious about what their plan is for a system that works without a functional smartphone on the buyer, since this system seems to be dependent on QR codes for in-person payments.
Great news for the EU. I do hope this means they'd give US networks some competition. As far as I know, there shouldn't be anything stopping them from operating in the US since we also have the...
Great news for the EU. I do hope this means they'd give US networks some competition. As far as I know, there shouldn't be anything stopping them from operating in the US since we also have the UnionPay network here. Even though I'm not a big privacy buff, it's insane to me that every single European transaction record has traveled outside the EU to be processed.
That’s a great idea for the Europeans! This article focuses on the European gripes about data privacy (real problem to be sure), but they don’t mention the fact that Visa/Mastercard fees are a leech on the economy! Removing those fees can make sure the whole economy is more efficient.
Visa fees are basically a tax on every transaction.
I'm curious to learn more about your thought process here. My tacit assumption is that credit card companies add a lot of value, since escrow has - throughout human history - been one of the trickiest problems to solve. (In short, "how to I get money to you without handing you a precious metal? How do I trust third parties?") The revolution in finance/banking led by the dutch completely changed the world, for instance; in the historical lens paying ~2% for escrow is almost free. What's your thinking?
Escrow is much less of an issue in a world of instant electronic transactions. Those ought to be provided by the state itself to better lubricate the economy. Europe already has something like this - Swift.
A more charitable take on what value credit cards provide is that they provide liquidity. Buy that TV before your paycheck comes next week. There’s something to be said for this service. But it should be decoupled from the Point of Sale. That decoupling will introduce more competition to provide small loans to you (who can also benefit from free electronic transactions).
With respect, I think you're not really thinking through all the implications of what you're proposing. It's easy to say "oh, the state should do it" but what about tiny states like Luxembourg? There are probably more compliance people working at visa than in the entire luxembourgish government, meaning visa is less likely to spill your data. Visa certainly deals in more foreign currencies than Luxembourg does, meaning they're more liquid when converting between them. And what about interoperability between states? Not to only use historical examples, here, but that would again be a step back towards money being the political domain of kings, instead of the business domain of banks.
Instant electronic transactions are an illusion provided by mostly the credit card companies, which accept the risk in order to provide a better user experience. Have you ever looked at your statement and seen a bunch of charges listed as "pending"? That's the electronic transaction clearing, typically over hours or days. They accept this risk because they have the profit motive to want your business and for you to use their cards. It's for similar reasons that credit cards have vastly more consumer-friendly fraud protections than, say, wire transfers. They eat those costs to stay dominant.
Swift transactions take 1-5 days to clear, on average. Even peer-to-peer networks like Bitcoin take 10-60 minutes on average. Imagine waiting at the store for 10-60 minutes before you can leave with your coffee. There are cryptos purporting to be faster, but none is yet popular/stable enough to be a serious contender for a global daily currency replacement.
They don't really "eat" the costs. They balance those by charging vendors (and consumers depending on the card) fees on top of the interest on the loan to the consumer. They're not losing money on it. But yes they're willing to take a loss on one side to make all the money on the other.
That's not really a kindness to us.
We can quibble over this, but the bottom line is that it's a benefit to the consumer that wouldn't exist if credit card companies weren't there. Whether it's intended as a kindness or not - obviously you're correct, it's not - is irrelevant.
I'm fairly sure that if VISA's terrible, slow and out of date system didn't exist, someone would invent a better one very quickly. I'm also fairly sure that if they hadn't been sitting on a near-monopoly for so long, it would have happened long ago.
I can transfer money between my bank accounts in seconds using FPS. I can move money instantly internationally via services like Revolut or Paypal. I do not understand why visa's antiquated payment processing system is allowed to take several days. It's not accidental either. There is a delay in their system which has been programmed in. Computers don't do things slowly unless you explicitly ask them to. Nobody at my bank seems to understand why that delay exists.
Instant SEPA transfers between European bank accounts (or at least all EU and a number of non-EU countries, idk the exact set of countries included) are already a thing, even between individual private bank accounts. They are interoperable between all states in the SEPA system. It's even occasionally a payment option online (though in that context it does not strictly require an instant transfer, an instantly-received transfer functions identically to paying through a credit card or Paypal). Sure, you can claim that the instantaneousness is also an illusion in this case, but it demonstrates that banks themselves are perfectly capable of maintaining said illusion just as well as credit card companies without charging extra for it when required to by the state (and ignoring the existence of multi-national cooperation in a discussion about Europe while bringing up small countries like Luxembourg is... a choice). The idea that credit card companies are somehow uniquely capable of doing this is utterly absurd. It doesn't even capture basic facts about current capabilities, much less the capabilities after the creation of a new European DPS designed precisely to cover precisely the functions that Visa and Mastercard currently do, as this article describes.
The crux of your comment is this:
Not only did I not say credit card companies are uniquely capable, I went out of my way to specify that the illusion is only mostly provided by credit card companies. My broader point is that the profit motive of commercial enterprise has successfully built a complicated system in the way that it would be much harder for a state to do. If your argument is “banks are equally capable of running such a system” then I agree.
If you find the reference to luxembourg completely undermines my fundamental point, feel free to replace it with another small European country that isn’t in the EU or EEA. Say, Albania. Or the United Kingdom, for that matter.
My comment was mostly pointing out the existence of SEPA, since it was overlooked in both your comment and from what I can tell the comment you replied to. SEPA's existence serves as a demonstration that Europe-wide cooperation through state regulation are capable of things like direct instant bank credit transfers -- something that still isn't possible between bank accounts within the US without going through separate services provided by companies that are not your bank. The existence of the overarching legal framework is an important part of this, and I think the state support involved in this system is a hugely important part of why it can exist, especially Europe-wide, in a way that's broadly beneficial to everyone. This is something that a European DPS would hopefully have in common with the existing SEPA scheme.
Also, just as an aside, Albania and the UK are both in SEPA. From what I can tell on their website, the only European countries not in SEPA are Belarus, Ukraine, Russia, and Turkey. Which makes sense, as afaik I'm not sure there are any downsides to it really.
As an American, I support this because it is disturbing how much control Visa and Mastercard have over global industries. First came to my attention when Steam removed many games due to payment processors demanding they censor certain NSFW content, which took me down a rabbithole of payment processors can control content. Here's another post I made about a change.org petition relating to the situation, with links to various sources that expand on the problems with this.
There are a lot of examples of Japanese businesses in particular, operating in Japan and selling to Japanese citizens, having to fight payment processors about selling adult content. The demands had nothing to do with local laws, but just Visa and Mastercard's own sensibilities.
If Visa and Mastercard stop working with a digital storefront, then that store loses countless customers due to just not having a way to pay. And with the direction the US is heading, I don't know how strict their guidelines will become to appease the government. The world desperately needs non-US-based payment processors.
Can't wait for the digital euro too, it makes so much sense.
Yeah, as I was reading this I was thinking it was weird for the article to have this brief aside that basically goes “and here is a vastly more preferable option with fewer middlemen involved”.
The challenge is getting there. The current solution doesn't directly contest the various national banking systems or private financial companies, which is why they're able to get it up and working. For the moment, EU independence from American financial systems seems more important to them than stripping out the EU specific middlemen.
This is incredible.
Not a legal scholar in any way, but I'd love to know what the big credit card companies have done to prepare for this moment.
I can't wait for this one so pumped to see it and the online harms stuff against tech companies play out.
Good for them, and I hope Canada joins too.
Some American cards like Amex and Discovery have tried and failed to gain foothold, but like Europe, if we get a good push and incentivize, I'm sure people are going to switch. A, offer lower fees for merchants to switch, and then B, offer enticing introduction cards for buyers, and C, make all kinds of government or infrastructure stuff Wero as well. It doesn't mean people HAVE to switch but it's nice to have an alternative for competition
I can't wait. The Americans have us by the balls in so many ways... It really makes me increasingly uncomfortable.
As an intelligent American, we are also subjected to very little choice.
This is great, though I'm curious about what their plan is for a system that works without a functional smartphone on the buyer, since this system seems to be dependent on QR codes for in-person payments.
Great news for the EU. I do hope this means they'd give US networks some competition. As far as I know, there shouldn't be anything stopping them from operating in the US since we also have the UnionPay network here. Even though I'm not a big privacy buff, it's insane to me that every single European transaction record has traveled outside the EU to be processed.