Official release: https://www.justice.gov/opa/pr/justice-department-sues-visa-...
> 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.
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.
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.
Not saying this is who you are, but this is the argument I hear from Americans who have a vested interest in defending the illegal business practices of its cartels and monopolies. "This country is so big, that innovation is hard and will be slower."
I don't believe them. I think innovation is stymied either by monopoly, regulation or both. I think specifically we allowed monopoly to encroach in an unprecedented way since the Reagan era. I think there are a lot of rich guys breaking the law, the Sherman Act and its kin are real, the DOJ and the FTC have teeth again, America can be innovative in every field and it's time for action.
Enforcing antitrust law is the path to better products and services and maybe even a restoration of wealth equality to some degree, because historically starting businesses was what kept the fruits of the American economic pie more distributed than they are today.
A startup that I worked at that worked on municipal water infrastructure often had to sell to rural areas first because they didn't have a rollout of complex existing systems to decouple and migrate. I suspect that's analogous to what OP is describing; a situation where the entrenched system is difficult to replace because the operations of it are now engrained and well-understood.
For what it's worth, I think you're both right to some degree.
To agree with your point; if the entire EU, with country having completely different level of developpement and banking infrastructure and currency and language, managed to standardize and deploy unified SEPA wires including instant wires, then that argument cannot be accepted for the US.
It's easier and faster (and probably cheaper) for me to instant wire money from one euro to several thousand to any random Bulgarian person or business in their own currency, or for said business to take money from my account, while retaining all banking protection, than it is for two silicon valley Californian to do it short of using a private business solution.
Overall the state of the banking and payment infrastructure in the US compared to their advancement level always weirds members out. Well, not infrastructure not the right word, I'm sure the backend is great but what is exposed to people seem to suck.
It's your money you should be feeling in charge not finding solution to be able to use it.
Someone who defends the insanely slow speed of US innovation with consumer finance has not spent any amount of time talking to folks outside of the US.
There is this wild myth that the US is the only true developed economy.
The US is incredibly insular with how it approaches financial innovation.
As many of us deal with software, it’s the equivalent of “N-I-H Syndrome”.
We’re only just now starting to get Fedwire after India, Australia, the Eurozone, and countless other countries have had instant payments for a while.
> The US is incredibly insular with how it approaches financial innovation.
Financial innovation is more than debit transactions.
The US has thousands of financial products that don’t exist in Europe, far more widespread access to credit and a better credit scoring system, better fintech (For example it’s pretty trivial to get a competitively priced loan instantly approved online in a matter of minutes). Plus Europeans have absolutely garbage real estate products, most people are holding short term variable rate mortgages. I’m sorry but Id take the US system over that any day.
> unified SEPA wires including instant wires
Just to clarify a detail, SEPA bank transfers are not instant yet and until very recently could take 6 days, even between banks in the same country and small amounts.
SEPA Instant has existed since 2017, and in 2025 it will become mandatory for all banks to support for free.
Despite it existing for a long time, support for it is far from universal still.
In Sweden there is only a single bank in the entire country that has proper SEPA instant support. Some banks still charge extra for it as well.
My own bank required some coercion before they would let me send money to my European friends (to pay for shared travel expenses).
> In Sweden there is only a single bank in the entire country that has proper SEPA instant support. Some banks still charge extra for it as well.
> My own bank required some coercion before they would let me send money to my European friends (to pay for shared travel expenses).
Hence the new legislation to make it mandatory next year.
Coincidentally, this point came up in another HN thread about California enacting a rule that forces companies to make subscriptions cancelable with one-click.
I suspect you both actually agree. What they are highlighting is that the incumbents are actually slower to update or adopt newer technologies, often because they enjoy a position as you described where they don't feel normal market pressures due to a position as a monopoly or as a member of a cartel.
The problem isn't innovation, it's adoption. A general "if it ain't broke don't fix it".
> A general "if it ain't broke don't fix it".
It's much more "will this cost us even a tiny bit more to implement compared to the status quo? Then no". US companies don't hesitate to innovate if it will save them money, especially in the short term (line must go up).
I don't think your argument is all that sound
(1) the way to define up and coming economies seem to fit into confirmation bias and/or survivor bias.
(2) why is size such a strong variable?
(3) US had massive rollout of dial up, why/how did broadband get established if size of existing infrastructure is inversely correlated to adaption of new tech? (If I understand your argument correctly). Broadband should never really have rolled out. For that matter, there is a large deployment of satellite internet in the US, wouldn't your low earth satellite example also be a counterexample?
(4) why would advancement in one sector be counter evidence for market capture and regulatory hurdles in a different sector? The examples just seem unrelated.
(5) US internet speeds have been pretty slow for a long time. Could it be that market capture and lack of competition is a larger factor rather than the cost of adoption? Another example, Japan has been pretty far ahead of mobile phone tech for a while. If the cost of adaption of new tech were the biggest issue, wouldn't they have stagnated some time ago? That was an already saturated market for over a decade, yet still moved forward.
(6) could it be more important that new markets lack existing monopolistic capture?
Though, I will agree that existing infrastructure/deployments do create an inertia for stagnation. I have that view for US road infrastructure. It is all going to last many decades more, and with it the single occupancy vehicle.
Addendum/edit: strike the word "new" on point 6.
> it's generally the case that a less developed, up-and-coming economy will have new stuff quicker.
My credit card in the UK had chip-and-PIN in 2004 - it was probably around earlier too, though less common. Almost every bank card issued has had contactless for over 10 years too. Simply being a developed economy is not the only reason!
I was using something called "cash" (I think? Not sure) I think here in Sweden in the 90s, probably around 1998, which was chip but NO pin, ie. just like cash, if you lost your card you lost the cash.. That was supported in a very few places but I was constantly nagging shops to support it.
This was then gone for a good while, whereas today I guess its back in a way, you get some kinds oy payments (food etc) without pin, and a few others, until it will require a pin, then allows a few more pin-less buys, but I think it also depends on the sum.
Oh come on! Everybody knows the UK didn't even have banking until Oasis released their first single! Sometimes it gets hard living in the USA, where we have to invent everything for everybody else all the time.
SEPA is well established all across the eurozone though, even in countries with considerable legacy infrastructure.
Right but those countries are comparable in size and GDP to US states. The US had wire transfers since the 19th century, credit cards as we recognize them today since the 70s, online shopping since the 90s and online money transfer like Paypal since the 2000s. That eurozone countries would want to standardize on something and happen to largely escape regulatory capture is fairly predictable.
Many European countries had online banking in the 80s. Largely because banks were focused on efficiency, and they wanted to replace checks with wire transfers and domestic debit cards. In order to do that, they had to make wire transfers as convenient as possible.
When online shopping first appeared, wire transfers were the obvious form of payment. Few people had credit cards, because most shops didn't accept them. And shops didn't accept them, because they were too expensive.
(When I got a credit card in the early 2000s, one of the things they emphasized in the marketing was that you could withdraw money from foreign ATMs. And you usually got a better rate than by exchanging cash. It's kind of funny that you are not supposed to use an American credit card for that.)
And then how do you reverse a wire transfer? What's the liability split?
You don't reverse it. It's like a cash transaction in the sense that it's irrevocable, which means people understand it intuitively. But unlike cash, there is an effectively permanent record of the transaction, connected to the participants' legal identities. That tends to discourage scammers. And it all happens within a single jurisdiction.
This is not true, you can reverse SEPA transfers via your bank. You do need a reason though and there are time limits but if a seller just runs away with your money you don't have to go through the courts in the general case.
So as a consumer this sounds like it sucks compared to using Visa.
As a consumer, certain businesses not existing because Visa doesn't like them sucks infinitely more.
> Right but those countries are comparable in size and GDP to US states
Yes? So in theory it should be significantly harder to implement a EU wide system when it’s much more decentralized than the US. Yet it only took a few years for SEPA and later instant payments to become universally supported across the EU.
Also developed European countries had all of those things you’ve listed in similar timeframes.
The US is very behind on a lot of areas financially, but their gdp is bigger than all of Europe combined
https://tradingeconomics.com/country-list/gdp?continent=euro...
Cool. And how is that even remotely relevant to anything related to the topic of hand?
If your argument made any sense, you'd be using GDP per capita. And there the US is beaten by e.g. Switzerland, Ireland, Norway (skipping microstates) and all of them are around a decade ahead of the US in banking, at least.
Everything you list existed in Europe at the same time or few years later in the worst case scenario.
> the world's biggest payments network, saying it propped up an illegal monopoly over debit payments by imposing "exclusionary" agreements on partners and smothering upstart firms.
Is it the size of the US or the exclusionary agreements? I think without these agreements new payment systems would proliferate faster
The size allows for these kinds of cartels.
The size of the us also allows PR organizations (paid for by these cartels) to influence both voters and law makers all the time.
It’s called “lobbying.”
> Regulatory hurdles from incumbents aside, it's generally the case that a less developed, up-and-coming economy will have new stuff quicker
SEPA is Eurozone wide and has existed for 15+ years. Instant payments were only introduced in 2017 but it didn’t take much time for banks in Germany, Italy, Spain etc. to support them.
US is an economic powerhouse due to land/population sizes, but if you look at attention is all you need paper (for example): https://arxiv.org/abs/1706.03762 majority of it is imported talent.
It's like saying that because Apple is paying a Chinese factory to build phones that Apple "builds phones".
> up-and-coming economy will have new stuff quicker
And the key for this is competition and regulation not (yet) captured by entrenched players.
Bruh, the only thing the US excels at is high income / cost of living, and making cool infrastructure for the rest of the world, which for some reason it doesn’t adopt.
This system is really subpar, because it excludes people that don't have a local bank account. I remember in Estonia not being able to book a doctor appointment because the website only had those means of payment, but no "pay with credit card" option.
On the contrary, credit cards are a neutral standard, which is interoperable. It can be improved but it's vastly better than bank OAuth.
I have trouble imagining how you'd get a credit card without a bank account.
Foreign bank account that isn't part of the scheme.
We're right next door and have been emailing money to each other since 2003: https://en.wikipedia.org/wiki/Interac_e-Transfer
Even Cambodia has had instant bank transfers for years now. They are trying to figure out how to get tourists into the system because locals hardly use cash anymore.
Except that US commerce dwarfs pretty much all other countries. Visa & Mastercard arguably play a major role in such dominance.
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.)
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.
> with the same or better protections for account holders, then it would would be a game changer.
This is really the one we need to fix on both ends.
Right now we have a system where fraud is really easy, e.g. an incompetent merchant gets breached and the attackers get thousands of credit cards to use at innocent unrelated merchants. Then the attackers steal goods from those merchants and the merchants get chargebacks from the cardholders. This is crazy.
What you want is a system where the merchant submits a payment request which is then either manually approved by the customer on their bank's website (e.g. for immediate delivery of goods) or has to be submitted and displayed on the customer's statement at least 30 days before the transfer, giving the customer that long to dispute it (e.g. recurring payments/subscriptions). That would eliminate the vast majority of fraud and also make it simple for customers to cancel subscriptions they don't want (just go to your bank's website and ban that merchant).
The reason we don't have this is that the banks like getting credit card fees and chargeback fees, so they have no incentive to build it, and use regulatory capture and anticompetitive practices to keep anyone else from building it.
> What you want is a system where the merchant submits a payment request which is then either manually approved by the customer on their bank's website (e.g. for immediate delivery of goods)
That's how it works with my current bank and my previous one as well here in Italy: the first few transactions require manual approval via app, then the system "learns" that it's you and just notifies you there's been a transaction with your card.
It never happened to me so I'm only speculating, but I suspect that, as soon as it detects suspicious activity, confirmation is requested again.
We don't have this because it would increase friction per transaction, which is a bad thing. Our high-trust system largely works, despite the susceptibility to some level of fraud.
There is no reason it would need to increase friction per transaction. Right now to make the first purchase at a merchant you have to type your bank account or credit card number into the merchant's website. Instead the merchant would redirect you to your bank's website and you would authenticate with your bank. How is that any more difficult? It's just more secure, because the merchant is no longer in possession of everything someone would need to make fraudulent charges to your account at any other merchant.
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.
Zelle is an alternate payment schema by consortium of major banks. It was introduced a little head of time just to avoid fednow from gaining traction. I'll bet a few years from now they'll attack fednow for being bloated and unused and lobby to marginalize it. Fednow basically means no more overdraft fee. they wont let that happen.
As a consumer, I also have no incentive to help FedNow. Unless they are offering cash back on my taxes.
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?
It depends for some of us, though. I have a credit card that gives me 5% back on Amazon purchases. Another card gives me 4.5% back on travel and dining expenses. That card also gives me 15% back on Lyft rides. Even if those businesss were to offer me a 2% or 3% discount to use FedNow, I would stick with the credit card.
And on top of that, I really do value things the credit cards offer, like fraud protection. If I pay for something with a credit card and never receive the goods, I can get the card company to issue a chargeback, and pay nothing. If I buy something with FedNow and never receive the goods, that money is just gone.
> I have a credit card that gives me 5% back on Amazon purchases. Another card gives me 4.5% back on travel and dining expenses. That card also gives me 15% back on Lyft rides. Even if those businesss were to offer me a 2% or 3% discount to use FedNow, I would stick with the credit card.
These are promotions. The card company is gambling that most of your purchases won't be in the promotion category, so they'll come out ahead even if they have to eat 2% when you buy something on Amazon as long as they make 2% when you buy anything else and less than half of your purchases are on Amazon. But if they're making out on net then you're losing out on net, which has to be the case on average or they'd stop offering it.
Many of the promotions are also deals with the merchant. Maybe they're not eating 2% when you buy something on Amazon, maybe Amazon is offering that extra 2% to cause you to perceive a 5% discount and then buy from Amazon instead of Walmart. In which case they're not trying to get you to use FedNow for that.
> And on top of that, I really do value things the credit cards offer, like fraud protection. If I pay for something with a credit card and never receive the goods, I can get the card company to issue a chargeback, and pay nothing. If I buy something with FedNow and never receive the goods, that money is just gone.
The converse of this is buyer fraud. Fraudulent buyers dispute the charge even though the goods were delivered. Merchants then have to incorporate the cost of this into the prices you pay whether you use a credit card or not -- which is another reason why capping the surcharge at 3% is anti-competitive. A competing payment method which is less susceptible to buyer fraud should cost less to use, and then you can decide if you want to pay for the insurance or not. But Visa makes you pay even if you trust the merchant not to defraud you and would rather have the discount than have a greater ability to defraud them.
>even if you trust the merchant not to defraud you
I understand that your point is to do with personal choice, and being able to navigate pros and cons oneself, so I'm not exactly contradicting anything you said; but after an experience I had with Best Buy a couple of years ago, I wouldn't trust any business not to defraud me (or at least, not to put me in a position where I need to dispute a charge).
I ordered a Samsung Galaxy S22 Ultra for delivery from them. When I received the package, it was an S22 Plus instead. I explained the situation to their customer service, who told me to ship it back to them for a refund. Then they shipped it right back to me, with a note saying that they couldn't accept the return because it was the wrong item. (Yes, because they shipped me the wrong item! That was the point!)
I don't think Best Buy was intentionally trying to defraud me -- it was presumably just crossed wires on their end -- but a credit card dispute saved me a lot of aggravation, and perhaps money. My credit card company informed me that when they reached out to Best Buy to get their side of the story, they just repeated that I'd returned the wrong item. Since I'd already explained that to the credit card company, they understood that wasn't a satisfactory explanation, and resolved the dispute in my favor.
> after an experience I had with Best Buy a couple of years ago, I wouldn't trust any business not to defraud me (or at least, not to put me in a position where I need to dispute a charge).
I wonder if that's really true.
Suppose you're making a modest monetary donation to a charity you've been volunteering at for years. You're not even expecting anything in return and the charity is operated by your best friend who would refund the money if you simply asked.
Suppose you're buying a car. You've signed a contract to buy it and owe the money regardless of which payment method you now use for the down payment. Doing a chargeback doesn't get you out of the contract. If the car isn't as described you would have to sue them and then if you won the court would order them to refund your money regardless of which payment method you used. Also, if there are problems you might not discover them within the chargeback window anyway.
Suppose you're paying for lunch at a cafe. You've already eaten the food by the time the check comes. You know whether you were satisfied with it or not before you transfer the money.
Do you really need a percentage to go to a payment processor and to pay higher prices to cover chargeback fraud just to buy the ability to do a chargeback in these cases?
Meanwhile Best Buy would still accept Visa but the price to use it would be a few percent higher than the alternative and then you get to decide if you want to pay extra for the insurance or not.
The protection offered by credit cards has real value.
Some anecdotes from this year:
I attempted to use LetsRoam over a year ago. It was a spectacular failure and offered no value. Cancelled and all was well. Over a year later they started charging me two monthly fees for who knows what reason. I called them, they bumbled around, and referred it asynchronously to some other department. I’m three months into these mysterious charges. All have been clawed back.
I tried educative.io and frequently encountered non-sense that was objectively, demonstrably false being presented with high confidence. I asked for a refund, and they said they don’t do that. I wasn’t really asking…
I paid a $2k deposit for a Harley that the dealer didn’t have in hand yet. There were unreasonable delays (I suspect they sold the bike to someone else for more), and the dealer’s policy was to not refund the deposit, but to only allow me to apply it to another motorcycle. Guess who else has policies. Because of the amount and timeframe, this was a little more involved, but still only took 15 minutes of my time.
I paid to park, but it appeared to fail. So, I tried again. I was doubled billed. Idk who I’d contact to request a refund. So, dispute it is.
I open my banks app, click dispute, and am refunded. It’s saved me untold hours of dealing with incompetence and/or maliciousness.
I simply don’t deal with this BS. I behave ethically (as best as one can judge that for themselves), but as soon as I hit abusive commercial sociopathy, I disengage. As far as I’m concerned, Visa / Chase are earning their 3%.
Nobody is saying that it has no value. The issue is that it has a finite value and the consumer should have the ability to choose how much they value it in a given context, instead of Visa prohibiting merchants from pricing the cost of that system into the customer's decision to use it.
If the total cost of processing fees and chargeback fraud in some industry is 10% and you want to pay the extra 10%, that's fine -- as long as people who don't think it's worth that much have the option to opt out of the insurance and pocket the 10%.
>But this is where we get into antitrust issues. Visa imposes a 3% cap
Do you have a source for this? Anecdotally, I have seen >3% charges on card payments in B2B transactions.
https://www.afslaw.com/perspectives/alerts/visa-reduces-its-...
B2B transactions often have different rules. You can also nominally get around it by casting it as a "cash discount" instead of a "credit card surcharge" but that's designed to be anti-competitive too. You then have to advertise the higher price (eliminating the business merchants who accept lower cost competing payment methods would get from advertising the lower price) or produce cluttered ads full of asterisks and caveats, likewise designed to burden merchants who want to present competing payment methods as the default without refusing to accept Visa whatsoever.
Visa charges 3%. Everything you buy could be 3% cheaper, that's better than cash back.
Gas is already more than 3% cheaper with cash, rent tends to not accept credit, and for me at least the only significant other expense is dining out. If your goal with a tip is to put $X money in their hand, cash will do that more than 3% more efficiently, saving you the delta.
Not to defend the system, but just FYI to you and whoever reads this:
* the Bilt mastercard will let you pay your rent via ACH and get points for it (for my ~$2k/month rent, I probably get $150 a year)
* There are several cards that will give you 5% cashback on gas
You can't pay with cash on the Internet, though.
Where I'm from you can. There are services that give you a code and then you go to some store that offers the service and hand the cash. Similar to what you can do with Western Union
Cash in the literal sense, sure. But not the practical sense, where it is more a euphemism for “no middleman”.
I pay for things from China using Brazilian Pix quite often.
The easy solution is to not buy things on the internet. I can’t think of the last thing I bought online.
(which is a money saving trick in an of itself: if buying X thing requires you to get up and move your body to the store and look at it and pick it up and check out and haul it back, you’re going to buy a lot less things than if all you have to do is move your index finger 0.25mm once. This is why Amazon made with one click purchasing, to the extent people paid amzn for a license to implant “buying it now”)
Not buying things on the Internet is not a great solution for when you want to buy things on the Internet.
Doctor, it hurts when I put a gun to my foot and pull the trigger.
Don’t… do… that…?
But I want to!
Are you lost? Why are you on this website?
Or since prices are set up by retailers, they'll get extra 3% profit.
Luckily stores are in competition with each other.
That's true for online stores but not necessarily offline, where it's hard to compare prices and it's much more convenient to go to store nearby even if they charge 10% more unless you're buying something expensive.
I'd take my chances with some stores passing on the 3% in cheaper prices (thanks to competition) and others pocketing the profit over the status quo any day.
It'd still be a net win for many people, and the end of what is effectively a redistribution from low-credit to high-credit (i.e. effectively poor to rich).
A lot of offline stores have website with prices.
Not necessarily. Not everyone uses credit cards and not everyone gets cash backs. Effectively those people are subsidizing you, so if you have a generous plan it will be significantly less than 3%.
No one cars about the speed in most payments. FedNow is as complicated as ACH and has even fewer protections.
speak for yourself, travel outside of US to see how well its implemented by even 3rd world countries like India. payment in seconds basically means you can use it (or a derivative) at PoS. that basically mean for vast majority of people who pay of their balances monthly, no income from visa transaction fees which can be 3%+ for small/mid retailers.
I'm speaking from 25 years of first-hand experience. The money doesn't need to move instantly at 99% of POS scenarios, just the understanding that the money will eventually move.
In Europe, this is not uncommon for online purchases. You put in your IBAN number and authorize the transaction
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.
FedNow is analogous to SWIFT, not applications like Giropay / iDEAL / wero.
Wouldn’t it be closer to SEPA? i.e. both are single currency, low cost and instant(?), effectively the opposite of SWIFT.
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.)
It's a scheme layered on top of regular SEPA bank transfers. As such, it does not work across borders, for example, and not even with all German banks.
You can also pay with SEPA directly, although not everyone supports.
However I consider that highly unsafe.
FedNow is not launching in Europe.
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]
Unfortunately not every country in Europe. Zero banks in Ireland have implemented SEPA Instant and transfers still take at least a day. Thankfully though they have a deadline to implement this that's coming up soon and will be forced to comply.
Sometimes it can be worthwhile to see what other countries have been successfully doing for decades. It won't prevent anyone from reinventing the wheel if they still have their mind set on it :)
The culture is different and solutions will be different. Again: not super relevant here.
FedNow does look an awful lot like SEPA Instant to me (down to banks not being eager to offer it to consumers without a legal requirement).
Walmart is preparing to release pay by bank functionality in their app next year, running on FedNow rails. They currently spend $1B+/year in interchange fees. Moving money is just moving information, and the marginal cost of doing so today is zero.
It does.
A2A / Pay By Bank is a growing payment method.
Merchants will begin incentivizing it due to the cheaper costs relative to cards.
We’ve implemented it and I’ve presented to the largest websites in the world about the opportunity as we are one of the early adopters.
You’ll start to see it much more frequently.
In EU I can pay my company's taxes with a FedNow/UPI/Venmo-like system. Just punch a passcode in the bank's app when prompted by notification. Settled within 5 seconds.
Not sure that speed is so important for such transactions. I just paid my 3rd quarter estimated taxes in the USA (both federal and state). Both transactions came straight out of my bank the day after I submitted the payments. Perfectly fine.
It is retail transactions where I and someone/something else trade money for goods that need the "instant" aspects of this.
Oh yea we have this too of course.
Doesn't seem impossible that a Venmo like service could be built on top of FedNow with instant bank settlement.
That's exactly what Zelle already is: Settlement can optionally happen via RTP (which is roughly The Clearing House's alternative to FedNow).
Yes. I pay my landscaper via ACH. I pay my kids school lunch via ACH.
No, you don’t. You put your bank account numbers (or theirs) and a dollar amount into some application that uses ACH in the backend.
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.
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.
I’m not sure this is still true. Debit cards have a similar dispute process to credit cards.
When you dispute a credit card charge, the money is still in your bank account, and you can spend it on food.
When you dispute a debit card charge, the money is completely inaccessible until the dispute is resolved.
When a dispute is filed the bank will issue a provisional credit the same or next business day if the dispute meets certain criteria. I forget the exact details on when you do and don't get a provisional credit right off the bat but basically boils down to the only situation in which you wouldn't get a credit would be where it's not a dispute over whether the charge was authorized but one over whether the goods/services were delivered because in those cases the bank has to give the merchant a chance to tell their side of the story or make good or whatever. I forget if this is a Visa/Mastercard network policy (they homogenized the rules between credit/debit cards awhile back and it might have been part of that) or a regulatory one but the end result is that you're only without money for a day if there's an unauthorized charge.
They do but usually your money is gone until the dispute is resolved. With a credit card, some fabulously wealthy company’s money is gone and literally nobody is gonna cry over that.
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.
Well sure you have, you've had your available credit reduced by that amount. If you have a surplus of cash or available credit then this makes no major difference in either case. If you don't and then try to make a transaction, you get whacked with penalties etc.
There is a distinct and appreciable difference between having a lower credit limit and not having the actual money in my bank account.
One of those involves me not having money. One does not.
If you have money in your bank account, you can swipe your card at the store and get stuff. If you have available credit, you can swipe your card at the store and get stuff. These are both money.
In the second case you may have borrowed the money and are then expected to pay it back later, but in general this is the method to be avoided unless you have a need for it, because borrowing money incurs fees/interest charges (whether directly or indirectly).
Unless if you only have enough available credit for a couple of purchases (e.g. maybe your first credit card or bad credit credit card), this distinction is pointless. Almost no fraud will touch the thousands of dollars of available credit, especially if on different or multiple cards.
Losing some available credit is not even a nuisance for most people who have any semblance of decent credit history.
Regardless, your last paragraph is also wrong. If the price is same when using a debit or credit card, it's better to use the credit card. You can keep the money in your account (and could be used in event of emergencies) and also earn interest until statement due date. There are no fees or interest when you pay your statement balance in full every month, which means you've gained 5% interest for about a month's worth of credit spending in your HYSA for the same price.
That second paragraph is just as wrong as yours. You're both right in some cases. The average American has several thousand dollars of credit card debt [1]. They are paying interest.
[1] https://www.cnbc.com/2024/03/27/how-much-credit-card-debt-am...
Check those numbers. I looked at the original data, and it seems that in the report you linked, debt is defined as a credit card balance.
I don't know about others, but I always float thousands on my balance and pay it off by the end of the month; the payment is all automatic. Often, for large sums, I pay it off online right away when I get home.
In my opinion, this is not debt—as long as you have the money, don't overspend, and pay it off within the grace period of 30 days, as long you are using the credit card as an intermediary for convenience and as a service that gives you various protections. There is benefit to the customer.
Stepping back, I think this is getting silly. The upstream comment stated to prefer cash over credit to avoid fees. You called that wrong and state there is a benefit to using credit. My claim is that you are equally wrong if the first person is wrong because interest and fees are often payed (data in peer comment)
If someone has cash, and is using credit to float the amount monthly, is there even really a distinction? If so, then the first commenters second paragraph could be amended to state to prefer credit only if you have the cash. Which is exactly what you are arguing.
I chafe at this thread since you are eager to call others wrong while actually arguing the same thing in the end.
That there is a benefit, can be a benefit to CC users is not in dispute. Meanwhile, the implications and practical effects of a duopoly are the interesting things. Notably, fir example, all prices being 3% higher. Yes that can be offset by cashback rewards, but sometimes is not and is certainly not when paying cash.
Credit card debt and credit card balance are the same thing.
> I don't know about others, but I always float thousands on my balance
This is the operative part. People on this forum tend to be in tech, and floating thousands is possible. A quick google search showed average US income is 60k/yr. Less 10k for taxes, less 20k for housing, that allows a float of less than 3k per year. The source previously stated an average debt of 6k, which is a balance more then the monthly income, and ergo is being carried over.
Looking for more direct data on how many Americans are paying credit card interest, I found this data:
"Half of credit cardholders surveyed in June (2024) as part of Bankrate's latest Credit Card Debt Survey said they carry balances over month to month. That is up from 44% in January – and the highest since since March 2020, when 60% of people carried debt from month to month" [1]
I thereby stand by my statement that your second paragraph was equally wrong (and equally right) as the second paragraph you were calling wrong.
[1] https://www.usatoday.com/story/money/2024/08/10/credit-card-...
Credit card debt and credit card balance aren’t the same thing, in practice.
If I had long standing debt on a credit card, I’d be paying an extremely high interest rate on that debt even with a >800 credit score.
If I have a balance that’s completely paid every month, I pay no interest on that “debt”. And while that money is floating, it’s in a 4.5% high yield savings account (Sallie Mae).
In the former situation, I am losing money. In the later, I’m making money. (Compared to paying with cash / debit).
This subthread is about fraud. If someone steals your debit card the money is gone from your bank account until the dispute resolution has happened. In contrast, if someone steals your credit card you dispute the transactions and until it's resolved you just have a lower available credit. But the point is you had money in your bank account anyway and were just paying with the credit card for the fraud and/or rewards reasons and that money is still there.
A debit card with 100$ on it can only be frauded to 0$.
A credit card with 100$ on it can be frauded to -10'000$ or whatever the limit is. You think a fraud will stop before reaching the limit?
If you have a debit card with no money, but a regular income, the bank will be happy to issue a new credit card to you. Where I live (EU), I can request it via internet banking and it takes ~3 days until the card arrives in the mail. Virtual cards are available immediately.
> You think a fraud will stop before reaching the limit?
Yes. Credit card issuers block transactions they believe are fraudulent. Being liable for fraud motivates them strongly.
Anecdotally I've had a couple of credit cards compromised in my life. On each occasion the thief got less than a couple hundred dollars before being detected.
A thief will usually try a couple smaller transactions first to see if the card is good. Large unusual transactions get flagged for review quickly.
> Credit card issuers block transactions they believe are fraudulent.
They do? I never had a CC and I don't know if that's the case where I live.
Maybe I'm being paranoid, but I don't trust banks: I don't trust them blocking fraud transactions, and if they do, then I wouldn't trust them to not block my transactions and leave me stranded on vacation somewhere, and finally I don't trust them to revert fraud transactions if they ever happen.
> I wouldn't trust them to not block my transactions and leave me stranded on vacation somewhere
I have multiple credit cards. And a debit card, and cash. It's advisable to notify the credit card company if you plan to travel. Most card websites and apps have a feature for this.
> I don't trust them to revert fraud transactions if they ever happen.
This might be a European thing. In the US credit card issuers are liable for any fraudulent transactions by law.
> If you don't and then try to make a transaction, you get whacked with penalties etc.
No you don't. Your card just gets declined.
This seems like a weird argument anyway. Sure, in some cases you will get hit with credit card fraud and will also at that time have no further available credit, and no cash on hand. But I expect that's the exception, not the rule.
If we're talking about debit card fraud, every single time that happens, the money will be gone while you're waiting for the dispute to be resolved.
> No you don't. Your card just gets declined.
Credit cards work how your agreement says they work. If you exceed your credit limit they can offer to extend you more credit but charge you a fee/penalty for doing that. Conversely, you can have a bank that will decline debit transactions instead of extending overdraft protection.
Credit card companies are less likely to extend overdraft protection, because if you're already at your credit limit they may not want to risk lending you even more money, but that's why there's typically a fee to offset the risk when they do offer it.
> If we're talking about debit card fraud, every single time that happens, the money will be gone while you're waiting for the dispute to be resolved.
The amount of money you have available to you is the sum of your positive balance and your available credit. If you have $1000 in available credit and $1000 in your bank account, you can spend up to $2000. If you have to dispute a new $100 transaction, you can now only spend $1900 more dollars until the dispute resolves, regardless of whether the dispute was on your credit card or your debit card.
And even if you hit your credit limit, the money is still in the account, so you can spend it -- just not by using your credit card -- but you can still go to the ATM and get cash, for example. You cannot spend it when fraud happens with a debit card.
You can very much get a cash advance against a credit card, if you require physical cash. But that's an extremely unusual outlier anyway -- needing enough physical cash that it exceeds the balance of your bank account. If you had a $1000 balance and then have a $100 dispute and have to immediately make $1000 in payments, you don't need a cash advance unless over 90% of the payments are required to be in cash, because the remainder can be on credit.
Yes but my credit limit is a very large buffer to the amount of cash in my bank account.
But what does that matter?
Suppose you have a $10,000 credit limit and $100 in your bank account, and then you have to dispute a $100 transaction while also needing to buy something else that costs $20. If the dispute is over your bank balance then you put the $20 on your credit card. That causes you to have a $20 credit card balance, but in the alternative you have a $100 credit card balance -- and may or may not win the dispute.
We're arguing about credit card versus debit card. If you decide debit cards are better and, as a result, you don't have a credit card, you don't have that $10,000 credit limit.
Also, available credit limits are much less valuable to me than actual money, so I will preferentially risk part of my credit limit before risking actual money. If the bank reduced my credit limit by $1000, I wouldn't mind nearly as much as if they reduced my checking account balance by $1000. I think most financially responsible people would feel the same way. Likewise if the bank increased my credit limit by $1000, I wouldn't be nearly as excited as I would be if someone gave me $1000 in actual money.
If it's just a question of what you're going to use for one particular transaction, sure, you can use your debit card sometimes. I do.
And part of the issue is that credit lines and actual money aren't perfectly fungible. For instance, I can't use my credit card to pay my credit card bill. I also can't use it to pay my mortgage.
They may, if the issuer wants to be generous. They are not entitled to the same legal protections that credit cards are.
That's largely a myth these days:
Scheme rules mostly require issuers to extend a zero-liability policy to consumer debit cardholders.
Even if they wouldn't, there is a little-known debit counterpart to Regulation Z (which is the federal regulation affording you all the nice credit liability protections you might be used to) called Regulation E:
As long as you notify the issuer/bank within 60 days, your losses are also capped to $500. But since most banks don't want to lose a customer over a deductible in an edge cases (usually they can recover the funds themselves via a chargeback), the real loss is usually zero.
It's no myth. The bank will keep the money in many cases by claiming you were negligent. You have no recourse.
You say you're disagreeing with me but the text of your comment substantiates what I wrote.
I think we agree on the outcome, but not the mechanism.
I'm saying that debit protections have nothing to do with the issuer "feeling generous", and a lot with market forces and legal regulations, just like for credit cards.
Nope. My brother was on the hook for $900 because his debit card got skimmed.
I ate over 1000 when I got skimmed.
It was what made me realize that Banks, even hometown small banks, are not your friend. They screwed me all over.
I don’t think ‘skimmed’ still works? Chip and tap must respond.
I fully agree with you & upstream - on the other hand there are specific (~local) shops which I use often and I'm 99% sure that I would not need the Credit Card (CC) protection with them, so having a CC-alternative for those cases is nice.
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.
Visa made $17-$18 billion in profits in 2023 for handling transactions worth $12 trillion. Is that an absurd number for maintaining an instant payment system on a planetary scale?
It would be an absurd amount for a payment system, yes, because we already have a secure worldwide communications network that we pay to maintain and there's nothing special about Visa's encrypted bits.
The value that credits cards provide isn't the network, it's the insurance (chargebacks). And while I appreciate payment insurance when I'm paying for an expensive object from halfway around the world, it's unnecessary overhead when I'm buying a bagel in a cafe.
> It would be an absurd amount for a payment system, yes, because we already have a secure worldwide communications network that we pay to maintain and there's nothing special about Visa's encrypted bits.
Sure there is. Someone had to build the all the software that deals with those encrypted bits. Someone had to scale it up to handling tens (hundreds?) of billions of transactions per year, each one approved or declined within a few seconds.
If you think it costs zero dollars and we can just say "the internet is our payments system" and call it a day... well, I don't know what to tell you. Your expectations are so far from reality that I'm not sure we're going to have a productive discussion.
> If you think it costs zero dollars and we can just say "the internet is our payments system" and call it a day... well, I don't know what to tell you.
If you can somehow manage draw this conclusion after reading my comment, then I'm not sure we're going to have a productive discussion.
The maintenance costs are probably closer to zero than to the current profit margins of the credit card companies. FedNow transfers are almost free after all. $0.043 per transaction according to Wikipedia.
Visa's operating costs in 2023 were $10-$11 billion, compared to their profit of $17-$18 billion. This is on a revenue of $32 billion.
FedNow's operating cost must be multiple orders of magnitude lower.
Would they be if FedNow had a planetary instant payment system with the same amount and value of transactions as Visa, including fraud protection?
So if we lived in a perfect hacker paradise where there are no company profits or private property, what would be reasonable operating costs for maintaining an instant planetary payment system – including fraud insurance? Assuming the same amount of transactions as today?
I don't know, but in Europe the visa/mastercard charges are capped at 0.2% for debit cards and 0.3% for credit cards. This seems to be enough for them to continue operating.
Are there any European-based credit cards that have entered and competed in the American market, with it supposedly being so lucrative compared to Europe? I'd assume someone would've made that jump?
> any European-based credit cards
Are/were there any in Europe to begin with?
Eurocard made a deal with Mastercard in the 60s which made it impossible for them to enter the US market.
Barclaycard, was as the name implies limited to a single bank.
The were a few other systems that were mostly national and didn’t even expand into other European countries.
I can't imagine Visa would continue to operate in Europe if it wasn't profitable, and I'm not surprised that there are no European competitors considering Visa has the highly profitable U.S. market to buoy their position in Europe.
I cannot speak for other country but VISA bought the Carte Bleue system in France un exchange of following all regulation and not upping the fees.
For two decade before that and since then, all carte bleue are visa and vice versa.
Mastercard exists here as a premium level card giving you tons of bonus, and usually fee with your account. Eg my bank account online is free and almost no fee for anything (I pay 9e for extra phone and wallet insurance and next day replacement), and as long as I keep more than 24k in the various accounts and give me a Gold+ visa card and a mastercard with 1% cashback.
Building a new network from scratch would be extremely expensive with limited chance of success.
Visa can certainly remain profitable even with the fee caps but I find it hard to imagine that they would try to enter the EU market if they had no presence in it and there were already several established competitors there these days.
So carry cash then.
I do, in fact. Unfortunately, the push for cashlessness has made this impractical in many places, and as mentioned elsewhere in this thread the cost of handling cash isn't zero, which means that direct transfers via a FedNow-like mechanism have the opportunity to reduce costs for everyone involved.
A lot of their fees are redistributed from the poor who struggle with credit card debt to the well off who play the credit card points/rewards game.
The actual lender for a CC is not Visa, it's the associated bank that's backing the CC. So the redistribution of wealth is occurring on the banks books not Visa's.
You may be right, but where does all their revenue go then? They can offer their service profitably for 0.1% fees, their fees are often 2-3%.
Over $200 billion revenue though, almost 2%. Does seem like a lot.
There is no reason why a bank couldn't allow customers to use FedNow to access a revolving credit line.
Sure but AFAIK FedNow is not going to hold funds or authority to payback or revert "fraudulent" transactions?
If I lend out $X dollars but my client says the loan was accessed fraudulently then who pays for this loss? The bank, the payment processor (FedNow/Visa), the customer, or the vendor?
These are called ACH return codes and are similar to disputes on credit card.
Liability is on the receiving or the originator institution. But in practice, it depends on the contract with the “processor”. Many Pay By Bank “processors” offer a guarantee model to cover these returns. Otherwise, liability is typically on the merchant.
However, Nacha is beginning to iterate on their return codes to better fit the e-commerce use case and clearly define liability.
The bank usually handles initiating reversals, not the payment processor. Though FedNow may not have the API to facilitate them easily, not sure on that.
The funding method (credit or debit) is in theory completely orthogonal to the dispute settlement mechanism and legal liability provisions of a given payment method.
One exception is that for debit, you're possibly out the money until the dispute is settled; one mechanism to avoid that would be a regular overdraft facility (in the European sense, i.e. with a listed interchange fee and not a fine-like flat fee like in the US) for credit-worthy account holders, and a refund of all interest incurred due to eventually successfully charged back payments.
I'm not charged interest on chargebsck balances that are ruled against me right now on my credit cards. You seem to be proposing that I would now need to pay interest on chargeback balances, and if I win, then it's waived?
That seems like a lot of risk for me, if I happen to lose a chargeback for some reason.
>With debit card (...), you don't have dispute protections.
In Europe you do. There's no reason this can't be the case in the US too.
We do in the US, too. GP is misinformed.
What is correct, though, is that while you wait for a credit card dispute process to be resolved, you have not spent any money, and still have that money in your bank account. But if you want to dispute a debit card charge, that money is gone until the dispute is (hopefully) resolved in your favor.
The only way to regulate that problem away is to require debit-card-issuing banks to preemptively return the money to an account immediately after the account holder disputes a charge, which... I dunno, maybe that's not a terrible idea. Or maybe it is.
> In Europe you do
Sort of.. generally in Europe chargebacks are still pretty rare in general and convincing your bank to make one is non-trivial and takes a lot of time
... What? In France I can vouch that both personally and professionally, a charge back at caisse d'épargne, banque populaire, société générale or crédit agricole will take you less than 5 minutes on the phone.
I would be interested to know which country and bank gave you a hard time to do charge back
I've had to file 2 chargebacks so far with N26. First one took two weeks, and was possibly resolved by the merchant refunding me after getting pressured. And the second one I filed a month ago and hasn't even been confirmed to be investigated into.
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.
I always use my card properly charged, the only reason to still use a credit card in Europe is for car rentals.
The lawsuit is not about credit cards or instant electronic fund transfers.
Visa (and MasterCard as well) have colluded with banks in multiple countries (not just in the US) to eradicate national debit card payment networks that cost consumers either $0 or a very small flat fee per a transaction (e.g. $0.10) and replace them with their own branded debit cards that attract fees for the consumer, for the merchant and generate revenue for the payment network. The revenue is tiered (e.g. premium debit cards attract higher interchange fees that go directly to Visa/MC), hence the proliferation of Platinum debit cards. And consumers are now left with debit card transaction surcharges that have been passed on to them whereas Visa is profiteering from every single party involved in the end to end payment processing.
National debit card payment networks are now dead, courtesy of Visa/MC.
Pix [1] is super successful in Brazil though.
[1] https://en.wikipedia.org/wiki/Pix_(payment_system)?wprov=sft...
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.
I think you mean "also", not "though". (UPI in India was just one example.)
Yeah, one of the few things that Brazil has over North America is Pix.
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.
FedNow is for institutions not individuals
Not true
Will take years for banks to adopt FedNow. Regional banks and credit unions probably a decade out. Then another cycle of adoption by merchants and buyers (4-5 yrs).
what’s even the point of using a regional bank for personal use?
FedNow will not become an alternative to consumer payment cards anytime soon, if ever. Visa & Mastercard work very well for payments between strangers.
It's not a complete payment scheme by itself, as it's missing dispute resolution (a prerequirement for payments between strangers).
But who says that the same party has to offer payment rails and dispute protection? There are successful models of the two being decoupled in some markets (e.g. various providers offering fraud/chargeback insurance on top of SEPA Direct Debit in Europe).
Dispute resolution isn't required in most cases anyway. It's already a lot safer than cash, because a permanent record proves the payment did occur. Also, chargeback insurance, in expectation, does cost the user more than he saves.
What’s the dispute protection with cash?
None, which makes it a pretty suboptimal payment method for some transactions.
I'd never buy an airline ticket in cash, for example: If the airline were to go bankrupt (which has affected me more than once in my lifetime), I'd have no recourse.
Can ordinary people use FedNow right now? How?
You would need to go through a participating bank or fintech
>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...
> 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).
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.
> 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.
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?
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.
I don't think that is getting at the main confusion. It is pretty clear how, if someone can't pay their debt back, they're worse off. The confusion is that a credit card is a short-term smoothing tool. The point is to let merchants assume customers are good for it instead of going through the whole process of checking with a specific bank or expecting people to carry physical proof that they have the money. Using a card can't get someone ahead, the bank is expecting to charge the customers more than they give them.
So why is it necessary for these people to be using a credit card if they can't pay it back? Especially if they have an average income that is sufficient to cover their lifestyle. If they're going to be strictly worse off after engaging with a system, why are they engaging with it?
>The point is to let merchants assume customers are good for it instead of going through the whole process of checking with a specific bank or expecting people to carry physical proof that they have the money
I lost you there a bit. Why can't debit card serve the same purpose?
It can and does in my experience. I suppose my question is me basically asking for a reminder of why rational poor people are using credit cards. I've always assumed they were a tax on people with no impulse control and/or poor mathematical understanding.
It is easy to see how someone with no money would take out a loan via a credit card and be unable to pay it back at all. But if they can pay it back, then outside of very rare instances why can't they arrange their affairs so they have the equivalent amount of savings up front? Their income is at least equal to their expenses on average in the short term, they can't be using credits cards to cover long-term imbalances because the interest is too punishing. If their expenses are experiencing variances then there must be opportunities to put aside an emergency fund.
I don't see how the math checks out that they need and can afford a credit card if they can afford to pay some sort of "poor tax". If you can afford the extra cost of credit card interest, you can afford not to have one. Otherwise where are the bank's profits going to come from?
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.
Did I? I sure don't remember it and there's no edit marker.
I'm not going to explain how credit cards work in this thread, more than I already did and was ignored.
https://www.nytimes.com/2023/03/04/opinion/credit-card-rewar...
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.
Sure if you ignore what I wrote, and push your own understanding, it doesn't make sense.
Interchange fees are absolutely rent seeking. Them being variable just makes them even more insidious.
Here: https://www.nytimes.com/2023/03/04/opinion/credit-card-rewar...
> 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.
>For people like me who treat a credit card as a debit card
What do you mean here? Do you mean you overpay your credit card so there is always a negative balance?
Or, do you mean you treat your credit card like a charge card, and pay it off every month?
The latter.
As in, I don't actually need credit that lasts longer than a month.
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.
That's changing in my corner of the US (suburbs of a large city). Most of the local businesses I've gone to in the past couple of months are adding a 3% surcharge if you pay with a credit card. Haven't seen a larger company do this, but restaurants, coffee shops, and some other local stores are doing this now.
Retailers compete with each other. In the long run, credit card fees will lead to higher prices, and (basically non-existent) FedNow fees to lower prices.
I don’t disagree, but I also don’t trust that retailers will pass on the savings. Many higher priced items sell based on MSRP anyway.
Retailers don't "pass on the savings". One retailer will lower the price if they don't have to pay as high a Visa fee - to attract more customers. Other retailers will then follow suit.
Free shipping wasn't much of a thing until one retailer decided to make it one :-)
Or they will increase prices later than they would have. Which I think is most realistic scenario that will happen if cap is set. Prices don't go down, but they will go up slightly less over next few years.
Isn't that the point of the lawsuit - that because they have a monopoly there's a floor on the price that consumers see?
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"
Processing cash might cost retailers even more than cards (miscalculations, keeping change, counterfeit bills, cash collection every day) unless it allows them to evade taxes.
Unless there were some sort of government-provided zero fee digital system for money transfer. Oh well, surely such a thing will never exist.
Not sure if people who prefer to use cash will consider that an adequate substitute.
Well for corporate stores yes. Still a good number of rural area small businesses that give a discount for cash, or only accept cash.
> [...] 2.5% of every purchase back, either in cash or kind. Yes, the merchant pays 4% [...]
Who doesn't love a good negative-sum game!
You should look up railroad vouchers and why they became illegal. This is basically the same shit, different century.
I searched for a FedNow app and couldn’t find it. So, it doesn’t appear to actually exist for use by someone who just wants to send money to another person now.
Most banks just receive, not send via fednow so not possible to use right now.
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...
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.
> 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.
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.)
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.
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.
Comments from this discussion...
>Visa charges 3%. Everything you buy could be 3% cheaper, that's better than cash back.
>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"
>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 mean in Europe they also have credit card payments, the rates are just pushed down. Yeah it means Europe doesn't get the cool rewards.
There doesn't need to be a magical new business here. Some numbers changing can resolve a lot of pressure.
> ... shows that cash handling costs many retailers between 4.7 and 15.3 percent.
This feels like a weaselly way of putting it. I want to know the average (or median) cost of cash handling, not what it costs for "many" (whatever that means) retailers. It could be that the 15.3% figure represents costs that 0.01% of retailers have to bear, and that 4.7% is for 10% of retailers. And it could be that 90% of retailers spend less than credit card fees managing cash.
Or they could mean what you want them to mean, and it really is more expensive than credit card fees for the median business to manage cash. But from their wording, it's hard to know the truth behind it.
Sniff-test-wise, I find it hard to believe that gas stations (and other retailers) would offer a cash discount if cash was actually more expensive for them to handle than credit cards. It seems unlikely that they wouldn't have come up with that without at least some research to quantify their cash-handling costs.
> Sniff-test-wise, I find it hard to believe that gas stations (and other retailers) would offer a cash discount if cash was actually more expensive for them to handle than credit cards. It seems unlikely that they wouldn't have come up with that without at least some research to quantify their cash-handling costs.
Well said. I totally agree, and I can't imagine any basis in reality for cash handling costing retailers 4.7% (much less 15.3%). Sure, cashiers need to handle change, but that's not a big cost compared to turnover for most businesses.
There are lot of other steps as well. Like counting the till, depositing the big bills and possibly getting more change. As in general lot of cash users use larger bills compared to the change. Moving this cash around, guarding it. Recounting it at times. Work spend outside the transaction with the customer. And it is not like bank will always offer free deposits or give out the right amount of coins for no fee.
For small businesses cash also allows for easier tax evasion
> Sniff-test-wise…
Penny-wise, pound-foolish isn’t a saying because it’s a total rarity. Plenty of people follow “common” practices that seem positive but are actually negative.
Cash is much easier to steal from your employer, let alone miscount, misplace, or even accidentally destroy. You’ll see most if not all of these outcomes occur if you work a service/retail job.
> 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.
>>> 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-...
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).
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).
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).
They do almost no ready-to-buy business; if you didn’t order it, it’s probably not going to be there. And few people are going to buy multiple cakes at once. And they don’t have a tip jar. Order cake three days ahead, walk in, pay for cake, leave.
So it very much fits the mold of “95% of sales are single items”.
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.
At that point, yell fuck it and advertise a $60 cake with a decent sized font to say "Including all applicable taxes and fees"
Hell, people might actually tell others how it ended up being the exact price on the sign
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.
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.
Oh, absolutely that happens here too. But why would you want a bunch of heavy coins when you could make them no longer relevant? Paper money is much more compact.
> 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.
> 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...
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.
That only makes sense if cash is the only form of payment a business accepts
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.
Well, the comparison is not cash but a counterfactual market that's more competitive and where fees are lower.
>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.
How cute. The value proposition of accepting cash isn't to save on transaction fees, it's to save on Uncle Sam's fees. Cash doesn't have to go into a register and get Z'd at the end of the day (or have a Quicken invoice to go with it, depending upon the type of business). Although I neither condone, participate in, or tolerate tax fraud, it's absolutely a thing, and their failure to mention it doesn't inspire confidence in their conclusions.
That's a thing only if you don't emit receipts or use a modern POS system. In particular it would happen in flee markets or in old shops that only keep a very forgiving paper trail.
But otherwise your POS won't let you get away with that, and your customers will usually be grossed if you're handing them goods for cash without any receipts. Food business could be the last bastion where it would somewhat work on a regular basis IMHO.
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.
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.
One big reason that it’s still favored is because it allows some tax evasion
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.
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.
The US payments market is a symphony of abusive practices that gouge everyone. Besides Visa and Mastercard, you have the chargeback cards that basically make things cheaper for the rich. Merchants have even figured out how to get in on the action by creating non-fungible money called "gift-cards". And all that on top of random people telling stories of how their merchant account was shut down suddenly and without appeal.
But, God forbid that the government build any infrastructure for the economy's main highway, and crypto is the only alternative possible.
Ever heard of FedNow? Payments is going to change here soon enough. If you've ever paid a merchant with Zelle, imagine a better system than that which everyone can use. Instant push payments.
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.
I mean that is what I would assume (specific steps allegedly taken) given the title has the word "monopoly" in it.
> 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.
> Being a monopoly isn’t illegal. You have to also behave anti-competitively.
Which is why it's reasonable to some that someone getting in trouble for "being a monopoly" is actually getting in trouble for some specific actions they took.
right, hence the "specific steps taken", and actually when in the history of the world has a monopoly existed that has not taken anti-competitive actions?
People having monopolies have a strong urge to maintain them, the means to do so, and not doing so might actually require lots of thinking and trying to walk a very thin, straight line.
on edit: ok it seems this post mentions a monopoly that takes no anti-competitive steps, which is a company I've never heard of https://news.ycombinator.com/item?id=41642040 but if they have 100% of the market I guess there's no reason for them to be anti-competitive, that kind of thing comes when you have 80% of the market but it's threatened (guesstimate)
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
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.
Sure you do. ASML has a famous 100% monopoly on advanced photolithography machines, but I've never heard anyone accuse them of anticompetitive behavior - there's just nobody else who knows how to make them so well. I guess it's not how Visa works though.
In an increasingly cashless society, and as a European, I find it deeply troubling that it's very difficult to conduct the most basic financial transactions without a foreign (US) intermediary.
Exactly this! Not only Visa, now we have Google Pay or Apple Pay for NFC on our phones. Banks e ded up using these instead of implementing their own NFC apps. All my data is at Visa, Mastercard and Google..
In a cashless world money transfers must be fee free.
That’s also one of the main criticisms. If you pass around a 50$ bill it stays 50$. If you pass around 50$ online fees eat it up and it’s gone.
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.
It should be treated as a natural monopoly (i.e. digital utility) along with all that it entails.
Like what? Price setting? Visa pricing is tiny.
In Europe, sure. In the US, not so much. Unless you want to make the argument that the fees charged in the US are effectively subsidizing European cardholders and merchants who enjoy a legally-mandated lower fee, Visa seems feel the European market is worth it even with their lower profit margins.
And even if you did want to make that argument, I'm not sure I care to subsidize Visa's profit margins in other places; capping fees in the US to a similar level as in Europe would be fine with me.
(Except maybe not really: I do very well with rewards from credit cards. Mandated lower fees would make those disappear overnight. Of course I can't prove that I wouldn't still be saving more money with mandated lower fees, though. But I think the average person would probably save with capped fees, and that's what's most important from a policy perspective.)
(Of course this presupposes that merchants set prices in order to pass along CC fees to the customer, rather than just charging whatever highest price the market will bear. If CC fees get reduced, prices might stay the same.)
> European market is worth it even with their lower profit margins.
Overall fee (bank + network) seems to be around 1% in Europe and 2-3% in the US. So if we subtract the cashbacks/rewards which are almost nonexistent in the EU these days I’m not sure that the difference is that huge.
Also credit cards usually have monthly fees in Europe which be more than $€10 per month or so. Of course benefits like travel insurance etc. might balance that out.
Credit cards cost like 30$ a month and come with max 2500$ per month limit in the Netherlands. For payments above that amount you need to transferonry from your bank account to the credit card. It's not accepted at 95% of the shops because the extra cost. It's only useful while booking a hotel, renting a car or traveling abroad.
You are conflating visa network fees with interchange (which goes to the card issuing bank).
Visa's actual take is like 0.15% or something. It's tiny.
Every terminal should be required to run any legitimate card on its own network.
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.
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.
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.
> 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.
I can imagine a universe where payment systems selectively interoperate. It is pretty common now. tells can have multiple pieces of hardware.
> androids can't call iPhones
Nextel had exactly this with the walkie talkie feature and the market sorted it out.
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).
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.
> We’re getting FedNow (eventually)
It’s technically live [1].
[1] https://www.frbservices.org/financial-services/fednow/organi...
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.
There is probably some backroom dealing regarding the future of TCH's RTP rails [1].
I’m gonna be honest I’m a little worried that FedNow is too little too late. If it’s never widely deployed, people won’t know it exists and ask for it.
And that means the banks can continue to push their Venmo competitor Zelle. And I’m guessing they somehow make more money that way. Or maybe push people to their 1st Local Town Visa credit card offer, now with 0.05% cash back!
> that means the banks can continue to push their Venmo competitor Zelle. And I’m guessing they somehow make more money that way
The cost to send a request for payment is 10x on RTP what it is on FedNow [1].
Both of those are real-time settled, i.e. when you send a money from your bank, your bank no longer has the money the moment you send it. Zelle, on the other hand, isn't a payment rail--it settles over ACH [2]. The receiving bank may credit their customer as a courtesy. But the originating bank gets to hold onto the money and earn interest off it. (Technically, the receiving bank is paying interest on the credited funds. But that's why the credits are capped well below ACH's limits.)
At the end of the day, for FedNow to succeed it has to be a win for consumers. As in, would you change banks to get access to FedNow? (My bank doesn't support Zelle, for example.)
[1] https://www.crossriver.com/insights/comparing-rtp-and-fednow
[2] https://www.paymentsjournal.com/the-clearing-house-and-early...
I think you missed the Excel spreadsheet in the parent's link. Chase (under JPMORGAN CHASE BANK) and Wells Fargo are on that list.
Interestingly, the other 2 big banks—Citigroup and Bank of America—are missing. They both do support RTP though (which apparently is a different network operated by the same entity that backs ACH). Unsure if RTP is meant to compete with FedNow.
I did. That list is much more impressive.
Thank you.
And every transaction should have a fixed cost, no matter what the amount is.
Risk & value scale with transaction size
And with account type.
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.
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.
This article seems to specifically be talking about debit transactions, rather than credit cards (unless I misunderstand it).
I tend to use the two interchangeably, since most websites don't really differentiate between them on the user-facing side.
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.
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%)?
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."
Yup. Here in Norway all debit/credit cards are combo BankAxept and Visa/Mastercard. BankAxept is used for 8/10 in-country transactions.
BankAxept charges maximum 0.135% fees, even less for high-transaction businesses:
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...
You are confusing the DOJ (here) and the FTC (lina).
Lina in fact, has repeatedly lost in court and is widely viewed, by both antitrust hawks and doves alike, as being remarkably ineffective.
You'd be very hard pressed to compare her record to any effective FTC chair (IE in reigning things in) and say "yeah she's doing great"
Instead, she's showboated and lost repeatedly, which has only emboldened most companies who feel that she is so inept that they having nothing to fear.
In fact, she's lost so much she has been getting asked if she's doing it on purpose to try to get more power (lol):
https://thehill.com/opinion/finance/4490640-internal-ftc-ema...
Career FTC employess, who (despite what HN may think) are very very good lawyers and very good at antitrust law, have no faith in her "honesty and integrity":
"The annual OPM poll of federal employees shows morale and respect for the “honesty and integrity” of FTC leadership plunging from the highest level among federal agencies to the lowest levels under Khan."
That's not really a great sign. The biggest win they've had is basically "A settlement that blocked anticompetitive harms of pharma giant Amgen’s $28bn acquisition drug maker Horizon"
In the same time period, they lost 6 much more major cases in a row (microsoft/activision, etc). That's unheard of.
If you want someone who cares about the press, and will file lawsuits at the drop of a hat, take Lina. If you want someone who is actually going to achieve meaningful change, she ain't your person. I'd rather have an FTC that anyone is actually afraid of.
It's hilarious what a clown show it's been with Lina Khan at the top of the FTC. .
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.
> 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.
> 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.
> 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.
If it was up to the majority of companies out there, they'd "self-regulate" into forcing their workers to work 18 hour days for pennies while they dump toxic waste into the water supply to save an extra 7 cents YoY. It's a complete fantasy.
> 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
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...
It sure is nice to have one's political opponents define words for oneself, hmm?
Private property sure, but intellectual property is not universal to all capitalist markets. And the protections vary and change. Even in American, often-times accused of strong IP protections, the protection is limited, as we're seeing here.
Lina hasn't revolutionized anything except the crazy number of stupid cases brought, which have been thrown out of court over and over again. Everyone wants her fired because she's a nuisance and out of her depth.
The government is ineffective, and companies can be policed but often the government chooses not to because it is corrupt, when it's not simply because they are incompetent. Often the smaller companies or ones who haven't bought enough politicians and bureaucrats are over-"policed" in order to benefit other companies.
On a slight tangent, the type of transactions you can make through your banking app in a developing country like Turkey is insane compared to US.
Without exaggeration, you can make instant money transfers across banks; buy stocks, gold, insurance, bonds, foreign currency; pay taxes and other government fees; make international SWIFT transfers; open retirement accounts; buy private healthcare; instantly open as many checking, savings, CD accounts as you want; and many more.
And in the US, they try to sell Zelle as the biggest innovation in banking. It's just pathetic.
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.
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.
Aren’t the regulatory agencies all under the executive function? Isn’t the President the head of the executive?
That seems entirely reasonable.
I find it interesting that HN posts so many article about how the intelligence agencies are “loose canons”. A big part of that are the tens of thousands of employees that never change when the President does.
Seems like a great idea that a new President could clean house.
Being able to fire a scientist at the NWS because you disagree with their scientific findings shouldn't be allowed. Organizations like NASA, NOAA, et. al. were chartered to render findings of scientific fact and replacing people because you disagree with the scientific truth or their expertise is going to completely destroy those institutions.
High ranking officials of the executive government should be in office until the next election and only if the next president also wants them should they get their job back. These people have a lot of power and voters should have power over them in turn.
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.
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.
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.
So it’s funny you mention that. I actually think Marx made a fantastic critique of capitalism. He kind of nailed the inherent flaws within the system. I compare his solutions to someone predicting that every desk would eventually have a telegraph through. Identifying a problem doesn’t therefor imply a solution.
Regarding the modern Progressive movement though, I find them a bit too authoritarian for my tastes. There are countless examples but classic Western liberalism is at odds with their ideology. They’ve fallen into the classic revolutionary entrapment of their own power being tied with continued upheaval. If you are not with them completely then you are the enemy. From the Google Manifesto to JK Rowling’s cancelling, they remind me of the mob during the French Revolution. They just eat their own and refuse to accept any kind of meaningful critique.
Liberalism requires debate, disagreement and questioning the status quo. I don’t see that amongst the modern Progressives. They would rather burn it down than build something better.
Ironically, I fear them gaining power as much as I do the religious right. Neither contains the capacity for building the coalitions needed for stable governance. I like moderates. Stability. Peace. Compromise. Mutual Respect. Empathy. I just don’t see those values in those circles.
Now that I’ve politely disagreed, I suppose it’s just a matter of time before someone comes along to insult me and prove my point.
I disagree with you on the human rights thing, that is definitely on the table for discussion.
I connect the erosion of bodily autonomy in America to the Democratic mandates for health insurance purchase with Obamacare and then certainly the federal mandate for employees of large corporations to receive the experimental EUA Covid vaccine.
In the arena of basic human rights, any political party that demands I show my private medical information as proof of vaccination in order that I may continue to work in a 100% remote job has lost the thread and there's no way back to good graces.
The "my body my choice" and workers rights Democratic party locked me down on home detention as a non-essential worker for over a year and finally got me RIF'd from my fancy job because I refused to show my papers well after the crisis had ended. Would you call that fascism or authoritarianism?
And that erosion of bodily autonomy at the federal level led to the _easy_ overturning of Roe v Wade! At the time the federal vaccine mandates were announced, I called it that they were weakening Roe. Play stupid games, win stupid prizes.
The Democratic party needs to end and something new needs to grow to replace all the corruption. There's not one good policy for humanity coming from them and certainly far too much optional war and needless killing.
> In the arena of basic human rights, any political party that demands I show my private medical information as proof of vaccination in order that I may continue to work in a 100% remote job has lost the thread and there's no way back to good graces.
There is no political party that demands this. I've worked 100% since the start of the pandemic and have only been asked for proof of vaccination for a company onsite. Never once been at threat of losing my remote job because of vaccination status. Sounds like your company was just looking for an excuse to lay people off.
> And that erosion of bodily autonomy at the federal level led to the _easy_ overturning of Roe v Wade! At the time the federal vaccine mandates were announced, I called it that they were weakening Roe. Play stupid games, win stupid prizes.
Really? You should've told the Supreme Court because they didn't mention vaccines at all in their decisions to overturn Roe v Wade.
> There's not one good policy for humanity coming from them and certainly far too much optional war and needless killing.
This is not even remotely true and is so emotionally charged that it is impossible to actually have a discussion. I much prefer their policies on public infrastructure, environment, and climate just to name a few.
> Sounds like your company was just looking for an excuse to lay people off.
Of course. I called it a RIF for a reason. At the time, I was caught unawares and was very hurt by what I saw as a betrayal. It was my sense that the RIF was a politically-driven move and it was a compliance test that I had failed. It sounds like you were fortunate to have not been so caught up in it.
In my depths-of-despair blue state, the lockdowns were brutal and the outcomes on kids here have been tragic. Adults I know are just now processing the pain, many marriages wrecked. I lay those terrible Covid politics and ruination at the Democrats' feet.
> Really? You should've told the Supreme Court because they didn't mention vaccines at all in their decisions to overturn Roe v Wade.
Yes, really, it wasn't a sacred cow. The zeitgeist was: my body, my choice, but only when the mob allows it, all courtesy of Covid. RvW is just one more easy come, easy go judicial decision.
Health science will continue to advance and the abortion racket will eventually end.
> is so emotionally charged that it is impossible to actually have a discussion.
Yeah, you're right. I was coming on too strong there. :/
> public infrastructure
Infrastructure is not a Democratic issue, but the corruption is worse under the D's. Rural broadband is the latest government spending fiasco.
> environment and climate
Democratic climate politics is a racket. It's bumpersticker politics, and junk science. What climate model ever survives, where is the science in meta-analyses? Regulations around pollution is something everyone can get behind. I remember smog in Los Angeles in the 70's and it is so much better now. But pollution isn't fear porn that brings in the big bucks, boiling seas are. The catastrophism is OLD and TIRED, and none of the fear porn hath come to pass. It's such a racket.
Name some more favored policies! In the seventies we had the misery index under Carter. Under Biden, we got the huge spike in deaths of despair. Democratic public health policies are schizophrenic. What a huge mess, I can't understand Democratic voters!
> In my depths-of-despair blue state, the lockdowns were brutal and the outcomes on kids here have been tragic. Adults I know are just now processing the pain, many marriages wrecked. I lay those terrible Covid politics and ruination at the Democrats' feet.
This sounds hard and I'm sorry to hear you were going through that. I don't think it is a fair assessment of the situation. The lockdowns and quarantine started under Trump for instance. To spare his side of any blame and lay everything at the feet of the Dems is having a selective memory.
> Health science will continue to advance and the abortion racket will eventually end.
You are going to have to explain this statement because I don't see how abortion is a racket. Unless you mean saber rattling over abortion.
> Regulations around pollution is something everyone can get behind. I remember smog in Los Angeles in the 70's and it is so much better now.
Smog in better now because of the EPA and restrictions around fossil fuels. The GOP explicitly states in their platform that they want more fossil fuels and to gut the EPA. As far as your comment on corruption, this is not a "Dem" issue, politics at the local level is incredibly corrupt. I live in a red state and the same thing happens here. Tons of grant money disappearing into pockets of contractors that are friends of the local republicans. There needs to be more oversight at the local level.
> none of the fear porn hath come to pass.
For you it hasn't. Parts of the country reaching wet bulb temperatures and other countries seeing record high temperatures every year. More fires in the western US that burn longer and cause more damage.
> Under Biden, we got the huge spike in deaths of despair. And Deaths of despair have been rising since the 90s and took a sharp rise in the mid 2010s. https://www.jec.senate.gov/public/index.cfm/republicans/2019...
> I can't understand Democratic voters!
Don't take this the wrong way but you just lack empathy. A lot of what you are saying is that "Dems say it will get bad and it hasn't gotten bad FOR ME" and this isn't 100% your fault. Media works hard to "other" people so you won't feel empathic. I think Trump is a moron but I understand why people feel angry and fall for the rhetoric he pushes. However, I've read all of Agenda 47 and the GOP 2024 platform and I'll pass on it thanks.
> The lockdowns and quarantine started under Trump for instance
There were states like SD that were done with lockdowns in July of 2020, if I recall correctly. And, their outcomes were better. I never mentioned Trump, he was always a states' rights guy, but you're right he was the guy in charge, so he needs to be held to account on covid.
My state's voters are hopeless. I will never understand the shallow emotional appeals here that unfailingly win the day.
> More fires in the western US that burn longer and cause more damage.
We do have a lot of fires! You attribute that to climate? In my opinion, a lot of those fires are intentionally set and for a lot of reasons.
> You are going to have to explain this statement because I don't see how abortion is a racket. Unless you mean saber rattling over abortion.
You think there's no money in abortion? Check it out, use your imagination. I'm saying the earlier fetuses can come to term outside the womb and the better tech like ultrasound gets, the more the fetus becomes humanized and will be accorded human rights. If the population crashes, the whole life discussion will flip. The clock is ticking on this topic, and it's ultimately going to be seen as barbaric.
> However, I've read all of Agenda 47 and the GOP 2024 platform and I'll pass on it thanks.
It's reactionary. If the D's and RINO's could show a little restraint, maybe the pendulum wouldn't have to swing so hard.
How about not just giving your vote away for cheap/free purely over Blumph hatred this time and demand some actual reforms and accountability from your side? How much faff is in your platform?
Whether it is reactionary or not doesn't matter. They are still policies I don't support and even with this statement you lay the blame at other people's feet. With many other points, you are beginning to delve into conspiracy so I think this conversation has run its course. And I don't have a side, that is cult thinking. I request accountability from everyone.
Well it's good you're a free thinker, we need more of those. Sorry for assuming where you had placed yourself.
The 'conspiracy' label has no sting if you meant it to. I'm sick of clown world and voicing my opposition to it and shaking my fist at clouds. You can't blame me for not accepting predominant narratives, we are so propagandized. And when I am wrong, I own up to it.
I don't believe Trump will be allowed to be president again, so you shouldn't have to worry about Agenda 47 bugaboos.
I think this could happen even if Harris wins. There are a lot of big donors to her campaign that want Lina Khan out.
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.
> 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.
> 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.
> Vance will be meeting with Trump regularly
This varies from administration to administration. On the economic portfolio, there is zero indication Vance has remit. (From what I can tell, zero involvement in cabinet decisions, for example.)
> From what I can tell, zero involvement in cabinet decisions, for example.
The VP is ex officio a member of the Cabinet of the United States, as as such is involved in "cabinet decisions". (Strictly speaking the US Cabinet, unlike the Cabinet in Commonwealth countries, doesn't actually make decisions, it just recommends decisions to the President, who can either accept the Cabinet's recommendation or choose to overrule it.)
While originally the US Cabinet did not include the VP – George Washington was under the belief the VP was a member of the legislative rather than executive branch, due to the VP's role as President of the Senate, and as such did not belong in the Cabinet, hence he excluded John Adams – by the 20th century it became standard practice for VPs to be included in the Cabinet. Every Cabinet in recent decades has included the VP. Pence as VP was part of Trump's Cabinet, just as Harris as VP is a member of Biden's.
Now, the Cabinet is just a tradition, it is not established or required by law or the Constitution – so any President could at any time abolish it, or alter its membership. If Trump wins, there would be nothing legally stopping him from breaking with tradition and excluding Vance from his Cabinet. But I'm not aware of any concrete evidence suggesting Trump will actually do that.
The VP has a high level of access to the President, independently from being the most senior member of Cabinet (the President is not technically a member). Of course, the VP doesn't have the legal right to meet with the President, so if a President comes to dislike a VP, they have the right to freeze the VP out and refuse to meet with them. But again, no reason at present to suspect Trump would do that to Vance if Trump wins. On the contrary, Trump (not without reason) views Vance as a "mini-me", and as such may be more likely to listen to him than to other potential advisors. Many critics accuse Vance of sycophancy, but for Trump that's less a criticism and more of a positive.
> VP is ex officio a member of the Cabinet of the United States, as as such is involved in "cabinet decisions"
Sorry, I meant agency appointments. Not cabinet decisions. That game is in its last inning right now with both campaigns. From what I know, Vance has not been consulted on economic considerations outside crypto.
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.
if 'crypto' wasn't used for scams / crime. it would have been the perfect candidate to break the Visa / Mastercard duopoly.
but alas....
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?
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.
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?
FTC is staffed with people that think monopolies are bad.
That's both unfair and untrue.
The FTC has been staffed with very good antitrust lawyers for a long time. The career employees give a crap or they wouldn't be there - every single one of them could make a lot more in private practice. They are at the FTC because they give a crap and are good.
As such, there's no need to denigrate them without any evidence.
Because the Biden administration has effective antitrust regulation as a policy goal and has staffed the FTC with competent people empowered to pursue that.
They don't control most FTC employees actually - i'm not sure why HN always gets this wrong.
The set of political employees at the FTC is very small.
As for the rest, much like other critics, i don't believe Lina is competent, and i dont' think she's been effective at all.
I think she's showboated a lot and made plenty of press, but in the end, that just hides that they have achieved, in practice, far far less than almost any FTC that gave a crap.
When she's gone, she will leave behind a legacy of crappy precedent it will take someone years to clean up to get things to a state where the FTC can win antitrust cases again (their win rate under Lina is remarkably low).
The DOJ, on the other hand, has done a great job.
Two questions:
1. What’s the best place to research FTC win rates?
2. Given that Khan is taking an “aggressive” approach to what sorts of cases the FTC should pursue, wouldn’t it make sense for the win rate to be lower under her leadership?
1. You can find the stats (and many other things, like employee counts by type/division, etc) in their annual report
2. No, actually. At least, not this much lower. The win rate is certainly limited by aggression in the extreme, but not as limited in practice as you might think.
Assume for a second the FTC historically only brought 50% of cases it had a 100% chance of winning (IE was not that aggressive).
If it now brought 100% of cases it had a 100% of winning, it would be much more aggressive (file twice as many cases), but the win rate would still be 100% :)
Now, obviously, if they were bringing 100% of cases they had a >50% chance of winning before (0% of cases with <50%), and now are bringing 100% of cases they had a >25% chance of winning before (0% of cases <25%), the win rate would go down a lot.
But the general view of experts (on both "sides", which includes some of their long time very-good very-experienced now-retired career attorneys ) is, basically
1. they were much closer to bringing 50% of the 100% win cases before.
2. they haven't moved to bringing 100% of the 100% win cases, they've moved to some totally strange and random distribution that is based more on press and politics. Microsoft/activision is a good example of this - their argument is very weak (basically that microsoft is monopolizing the cloud gaming business!?)
3. it would be a lot more effective to start by bring 100% of the 100% win cases, or 100% of the >95% win case or whatever, than what they are doing now. You can/should be a lot more aggressive, but still "feared" for winning.
I've put aside any of the other complicated factors to simplify the comment enough to answer your question effectively.
If anyone felt we were at the point they had been bringing 100% of >50% win rate case, and were now trying to bring 100% of >40% win rate cases, I think you'd see a very different perception occurring among experts.
The other complex disagreement (but is a bit of a sideshow given that) is not just on the approach overall, but the fallout from losing so much.
That argument, roughly, looks something like this on the legal side.:
A. The FTC has a tendency to file in a small number of courts (DC, California, Delaware).
B. It gets appealed to roughly the same courts as well
C. You end up in front of the same judges a lot
D. Being humans, they are not immune to bias (though again, these are much better judges than people give them credit for)
E. As a result, bringing crappy (IE 25% win rate) cases in front of them just doesn't just affect your current case, but also affects whether the 100% win rate case stays a 100% win rate case.
This is almost certainly true, and you can argue over the degree to which it's true.
We'll call this the "reputation effect on enforcement ability".
Similar argument about companies doing the calculus about their mergers and business practices, IE the "reputation effect on deterrence ability".
So even among the hawks (which i am, for example, but i'm an american school hawk, not a european school hawk :P) you end up with a view that you can be a lot more aggressive without either of these reputation effects, and you should start there, not with a randomized distribution that is in some sense more aggressive, but is unnecessarily causing serious reputation effects. This will, in turn, likely also enable you to turn 95% wins into 100% wins, etc.
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.
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?
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
Lina Khan has been at this for the past four years. Would you mind demonstrating why you think this is for election brownie points?
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?
Reminder that Visa isn't really the problem: [0]
[0] https://www.reddit.com/r/stocks/comments/1dyb7t0/whats_going...
Seems largely mutually exclusive. Both undesirable
The only thing worse than a VISA monopoly is a government monopoly.
Is there such a thing as a country with multi federal governments?
> 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.
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!
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.
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.
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.
Costco in the US used to only accept Amex.
I assume they changed to Visa because Visa offered a better deal.
Seems like the opposite of a monopoly.
This change happened in 2015, for anyone who remembers Costco and amex being inseparable: https://www.costco.ca/_ax-faq.html
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).
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...
Interesting. In EU, I never saw a business accepting only Visa but not MC or vice versa.
The only two semi-exceptions:
- during a MC-sponsored event, you had extra fast lanes when paying with MC (Roland Garros in Paris)
- Ryanair (low-cost airline) would accept free payments only with some niche cards (Visa Electron, Mastercard prepaid) and charge like 10€ extra per flight segment for any other card, until I think EU forbid it.
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.
They used to only accept Amex and had a branded card. It worked fine for them that way too.
In the US, bank debit cards are commonly Visa, although they can often be run on multiple networks, debit is confusing.
There are tons of cash-only businesses.
There are also a lot of businesses that take cash because their owners have been banned from taking credit cards.
> 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.
Apple Pay and Google Pay are not payment networks. Those are just Visa and Mastercard.
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.
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.
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.
Which of those is realistic though. They exist but you turn away customers with money who cannot pay.
> 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.
> 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.
> 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.
Don't both Square and Venmo still have to interface with the Visa / MC / Discover / Amex networks? And therefore pay some fees?
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.
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...
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.
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.
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%.
> 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.
Square is part of that $7 billion VISA makes.
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.
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.
And what is secure model?
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.
Cash is not necessarily an option. Did you know there is no federal requirement for a business to accept cash?
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.
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.
> 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?
Yes, when taken in this context, the Monopoly argument makes sense:
> The DOJ said Visa imposed “exclusionary” agreements on partners and smothered upstart firms.
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.
As with many things, it’s a duopoly with Mastercard that has another 30% of the market.
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
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.
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.
> 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/1403161/000140316123...
>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.
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.
> 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.
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.
> How much did visa pay in taxes? Less than a single 140k family?
No...the proportional equivalent impact of ~150,300 $140k families.
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.
Why do families pay less taxes than corporations? I'm not a money guy or a lawyer but that seems extremely *off*.
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.
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.
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=3089423
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.
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.
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.
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".
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.
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.
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.
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...
>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.
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.
Isn't that because of high chargeback rates?
> 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.
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.
>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?
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.
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.
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.
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.
> 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
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.
I'm old enough to remember https://en.m.wikipedia.org/wiki/The_DAO
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.
This is such a popular fallacy: "people sneered at ${thing that became a big deal} and therefore ${thing that I'm a big believer in} isn't doomed to obscurity."
For every success story that people were skeptical of there have been a thousand failures that people were just as skeptical of. "People also made fun of ${success}" is meaningless as a defense of any technology.
As I noted in my reply: middlemen are inevitable and already dominate the crypto space. If your plan for a crypto future doesn't plan around the inevitable middlemen you're already doomed to failure.