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Comment by hjk05 | Hacker News Reader

> Visa and Mastercard are taking a 3-4% cut of every single consumer payment made in much of the world. That ends up being a very, very big number.

In Denmark we solved this the lowtech way. Visa cards have to be Dual visa/dancard, where the dancard has extremely low cut limited by law(0,055$/transaction flat rate)

It’s not hard, it just requires you have politicians capable of dodging the huge piles of cash MasterCard and Visa throw at them whenever talk of breaking the duopoly hits the table.

But maybe for the US, something like bitcoin will be the only way forwards, using technology to try to solve a market problem though “disruptive technology” when what is really needed is just disruptive politicians.

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Dancard works for local payments, but the discussion here is about the growing demand to transact with foreign companies online. For example, if you're in Denmark and you want to buy a SaaS subscription from a US company, you're stuck giving them a Visa/MC number. Some of the downsides of this are the 3% fee, risk of the number being stolen, not to mention Visa/MC applying US law and morals to kill businesses anywhere in the world.

> Dancard works for local payments, but the discussion here is about the growing demand to transact with foreign companies online. For example, if you're in Denmark and you want to buy a SaaS subscription from a US company, you're stuck giving them a Visa/MC number. Some of the downsides of this are the 3% fee, risk of the number being stolen, not to mention Visa/MC applying US law and morals to kill businesses anywhere in the world.

If there was political will, there is nothing stopping governments from capping the fees taken by Visa/MC.

The fees on Visa/MasterCard in the EU are capped at 0.2% for debit cards, 0.3% for credit cards.

American Express (and all the other schemes where the issuer is also the acquirer, i.e. Diners Club) aren’t capped.

The 0.3% cap however did kill Amex’s licensing model where they let other banks around Europe issue their cards, so they simply withdrew from those, as 0.3% is not enough to pay for the rewards.

Note that this is just interchange. Payment processors still charge merchants whatever they damn please.

Many people feel the solution to bad products is making better competing products rather than adding government regulation.

Many people feel that regulating abusive monopolies which kill competitors in underhanded ways is a better solution than expecting greed to solve it.

I may be in the minority here, but it's possible that there can be a scientific economics.

Sure you feel one way. Other people feel another.

But it's also possible the correct answer doesn't depend on your feelings but on falsifiable theories.

If you can come up with a scientifically falsifiable theory on the effectiveness of government regulation, there’s a Nobel Prize waiting for you. It’s hard for a lot of reasons, including that it’s almost impossible to create a true test and control treatment.

Macroeconomic theory relies on a lot of spherical cows. In theory I don’t disagree with you, but in practice we don’t have the tools (yet) to do this type of economics in a scientific/falsifiable way.

I don't think you can come up with a quality test for economic scenarios in a truly scientific way, many monopolies dominate for very different reasons, many industries have very different mechanics, and worse, regulations are often implemented in vastly different ways and often won't come out the way you'd like them to even if you have a perfect scientific answer to a given problem.

You can't guarantee or even approximate a given input and output for a scenario like this.

I'm not sure I quite understand, but it's certainly possible the equations that govern economics are sensitive to initial conditions. In that case we will never know enough to specify the initial consitions entirely.

But we also don't need to specify initial conditions exactly to do science.

I'm less convinced that the equations themselves are unknowable.

We also won't be able to specify the outcome precisely even if we somehow had a guaranteed outcome in mind.

Politicians will screw up the implementation, businesses will engineer around it and the alternative solution might ultimately come out to be a better one in practice than in theory.

Trying to define economics by simple equations which you expect to define policy is a lost cause.

Look up Hayek on the pretense of knowledge in economics.

Hayek isn't particularly well regarded as an economist, even among those that love his politics.

See e.g. Milton Friedman's comments about how flawed Hayek's economics are and how great Road to Serfdom is.

So my take on that speech is it's political rather than scientific.

In general I'm skeptical of arguments that something is unknowable unless they come with a rigorous proof or at least a well stated conjecture that has stood the test of time.

This. There shouldn’t be punishments to middlemen who provide a service just come up with a better way. Innovation should happen here not governments enacting laws that effectively kill all the profits a company can make.

I think we don't have to go to cryptocurrencies to see that these punishments are severly needed. Just look at the weekly scandals of "disruptive" new startup banks, people's financials deserve a few governmental protections and if the middlemen are shitty at their job (due to malice or mere incompetence) they deserve a little punishment here or there.

I get that this type of oversight is likely against some philosophical POV here but it's not like middlemen making money is an all-to-great and solitary goal a society should try to defend.

There are rent seeking “middle-men” companies out there just milking patents or their position without providing much if anything of value. I’ll admit that. But I would contend that the credit card processing companies charging 3 to 5 percent are providing a value in the complexity that is payments but whether that warrants 3 to 5 percent I’m not qualified to say just I wanted to make the distraction between the types of middlemen.

Agreed, it's not as though Visa/MC will decide to exit a country altogether foregoing any revenue.

Every additional payment method supported by XaaS is one more reason for using 3rd party payment processing, meaning that there will be a fee even on independent cryptocurrency. It’s not a solution.

> It’s not hard, it just requires you have politicians capable of dodging the huge piles of cash MasterCard and Visa throw at them whenever talk of breaking the duopoly hits the table.

Ignoring the difficulty of avoiding lobbying money, yes, it'd be difficult. This is a large scale financial change and there are always, always loopholes that will come, not just from politicians who make those because of lobbying money. With how giant the economies are, and how often these cards are used, it isn't a simple move at all.

Look at credit card chip readers in the US. The amount of backend equipment change it took to get something "that simple" in action was a lot. I'm not defending them for it not being quicker, but a move like a duel card is absolutely difficult.

"Look at credit card chip readers in the US."

Europe made this jump well over a decade ago.

It isn't a backend equipment problem.

Dual cards are easy btw. I used to have a joint Amex MasterCard. Separate cards, but same account.

Look at credit card chip readers in the US. The amount of backend equipment change it took to get something "that simple" in action was a lot.

I'd wager that the banks didn't give a damn as long as fraud was cheaper than investing into a new, much securer system. France was the first country to introduce chips into debit cards and tha was in 1990[1]

[1] http://www.theukcardsassociation.org.uk/history_of_cards/ind...

Cards are yesterday things. Many countries quickly moving on to phone based payments. Its much secure (requires touch or face ID) than doing fake signatures. I've no idea why visa/mastercard can't move to this. The often given reason for massive 5% cut is potential voided transactions, merchant setup, cashback expected by customers and ofcourse profit. Much of these can be eliminated by phone based transactions. This space is ripe for disruption.

>Many countries quickly moving on to phone based payments. Its much secure (requires touch or face ID) than doing fake signatures.

EMV is a thing, you know. And cards don't run out of battery or get smashed like phones.

> Many countries quickly moving on to phone based payments

Even as a tech guy, no thanks. Phones are mostly ok but still fuck up too frequently to trust them with anything serious.

Not sure if matters but at least to my understanding, DanKort is a debit card, so I would expect it to have a flat rate since the cost of transaction is less dependent on the total amount vs a credit card transaction where there is more clearance and risk involved?

At least in some jurisdictions I lived, debit card is as good as cash (well, not exactly the same but because handling cash has also its cost, most of retailers treat them equally)

But that's the point. Monzo is the best bank in the world and yet it's only available in the UK. As soon as you're trying to cross a border it becomes challenging. A cryptocurrency can be a very useful solution here: it skips decenies of progress to set up an interoperable network for banks and custodians to use (and users as well if they want to).

> A cryptocurrency can be a very useful solution here: it skips decenies of progress

The fact that it is a _cryto_ currency is merely anecdotal. Its an implementation detail. It makes people think this currency is actually distributed as most other crypto currencies, while in fact it's just a consortium of companies having total control over all aspects (issuance, destruction, etc.) of the currency.

> set up an interoperable network for banks and custodians to use

This is just plain wrong. It's not banks or custodians that use this currency, it's just end users and the consortium. Banks are heavily controlled and regulated. I _mainly_ trust governments and legal systems to take fair decisions or litigate properly monetary issues. There is nothing like that here. The consortium of companies owning the currency decide the amount they want to create, they decide who gets refund and why, etc. I have much more trust in a country and a judiciary system than a bunch of worldwide companies to handle my currency.

The consortium of companies owning the currency decide the amount they want to create, they decide who gets refund and why

Don't forget the amount of support they will provide. Looking at major tech companies and their histories in providing customer support I see a rather bleak picture here.

This goes also for all those new fangled disruptive app banks. Guess how much success an N26 (new German app bank) customer had to contact support after 80'000 Euro went missing from his account. Spoiler: Until it was a massive story in the press, not much.[1]

[1] https://en.wikipedia.org/wiki/N26_(bank)#Controversy

> The fact that it is a _cryto_ currency is merely anecdotal

Completely agree. It's a currency.

> It's not banks or custodians that use this currency, it's just end users and the consortium

I do not agree with this

> I have much more trust in a country and a judiciary system

compared to a protocol that can be monitored for the total amount of money it holds?

'Monzo is the best bank in the world...'

For small, everyday transactions this may be true but mainstream banks are much better for all the other stuff.

define "all the other stuff"

Business banking, loans/mortgages, investment, savings and, when things go wrong, accessible human assistance.

Being able to provide services when its customers are outside of its home country?

Serious banks have been doing that for literally hundreds of years.

Monzo does that too :| I use it all over the world because it has no fees.

>Monzo is the best bank in the world

That's very subjective.

I suggest you try it :)

I've had many many banks accross the world. Monzo is what everyone wished for.

I’m putting everything on credit cards. Amex for £ transactions, 0% FX MasterCard for foreign transactions. Another airline reward card when the merchant doesn’t take Amex.

I only ever use debit to pay off the balances of credit cards and to withdraw cash.

If you want to constantly live in debts and not be able to track your money I guess.

Actually helps me to track my money better.

What debts? I clear the balances when I get the statements.

> What debts? I clear the balances when I get the statements.

In the mean time you are in debt.

> Actually helps me to track my money better.

Have you used Monzo?

> In the mean time you are in debt

Why/how is that a bad thing?

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