New York is proposing the creation of a 'public Venmo' | Hacker News Reader

New York is proposing the creation of a 'public Venmo'

vice.com

61 pointsmindgam377 comments

The piecemeal attempts to create a rational payments system are getting to the point where the Fed just needs to acknowledge the need for a free/secure/unified infrastructure run and regulated by the government. They are starting to do this (Fed real time payment + settlement system) but not fast enough.

Other countries laugh at us when we talk about the checks we have to write, the scams we endure with mistaken payments / withdrawals without our knowledge, or the fees we accept banks charging us.

We would never choose to have the system we currently do. We need to get over the interests / lazy inertia holding us back.

If you take away profits from banks for processing your transactions it is called socialism?

Half trolling.

Single Euro Payment Area wire transfers are always free, by the law.

Naturally banks need to make profit, but it is prices little bit more transparently as monthly fees.

No need to be flippant, it IS socialism. As in, the payment network ought to be socialized. The opposite being privatized.

>always free, by the law

Actually, the law is that SEPA transfers cannot cost more than a national transfer.

National transfers happen to typically be free.

It’s ok, we laughed at other countries that didn’t have robust credit systems and required people to pay for things with debit cards instead of credit cards, where they could be personally liable for any sort of fraud that takes place with their card.

Nope in other countries you're insured on your debit card as well

Then who cares if it leaves your sight? Why bring a card processor all the way to my table? I doubt they are that well insured.

They bring it so you can enter your PIN, most places don't use signatures.

Reminded me the first time in the USA, when the waiter ask how I will pay my meal, I said VISA, and he just waited here. I said I need the card processor, and he explained to me that, no, he will take my credit card in the back and to trust him to not steal from me... It's an insane process.

> Nope in other countries you're insured on your debit card as well

At the time EMV ("chip-and-pin") was first rolled out across most of Europe, cardholders were actually liable for card-present fraud on their cards, whereas they had not been for magnetic stripe card-present fraud. It took a few years for the EU to pass a law changing this. In the meantime, chip-and-pin was actually a downgrade from the customers' perspective.

Those countries also have robust and much more secure systems in place that make card fraud not nearly as common as it is in the US.

The post office used to offer free checking accounts and basic banking services. They should reintroduce that with updated digital services as well.

I can only speak about my local post office, but I can't imagine wanting to deal with their customer service if anything were to happen to my money.

Many countries have postal services offering banking to help pay for the post/because it works well with postal branches everywhere. They are separate divisions and the banking division is run like a bank. But I am always skeptical in the US, because government employees and caring, efficient/competent service don't seem to mix all that often.

It's more about providing a basic level of service to the marginalized groups in our society who are unbanked. It also provides a bulwark against extortionary and predatory pricing. Take check cashing as an example. Every time you get paid from your (I'm assuming highly paid) tech job does your bank take 1%? That's the story for people who don't have bank accounts. You and I would never use these services.

> Other countries laugh at us when we talk about the checks we have to write,

Checks are increasingly rare in the US as well. Ask someone under the age of 25 how often they write a physical check to someone who isn't their landlord. (And even many landlords are starting to accept other forms of payment these days).

Personally, I don't think I've written a physical check in at least five years, except to my superintendent (holiday gift - I don't want to send cash by mail, and it's the one time that a physical check is actually the most convenient way to pay someone).

> the scams we endure with mistaken payments / withdrawals without our knowledge

SEPA, which is what is used in Europe, is actually vulnerable to mistaken payments and similar scams as well. It's faster than ACH, but it's just as easy to send money to the wrong recipient (and just as difficult to rectify if that happens).

How is SEPA vulnerable to "mistaken payments"?

Well, at least it's your mistake that you make. (I agree that some better checksum or verification before you press "send" might be good).

In the US, people can withdraw from your bank account if they have the numbers. And it's on you to detect and report the fraud to get it reversed.

It's not real-time, but Same Day ACH is here. The Fed charges about 5 cents for it, and it processes within roughly 4 business hours. The biggest problem with ACH as I see it is that there's not a widely implemented memo field that goes along with the transaction for invoice/customer numbers etc. This makes matching up incoming transactions a hassle, and so billers don't want to just give you their bank account number, they want you to sign up on their web site.

In the EU with SEPA, there's roughly the same functionality but with the memo, and that is the standard way to pay for things, without any third party billing platform being in the middle.

> “Why should we have to pay to use a payment system? It’s like paying to use a street,” Hockett asked at a press conference announcing the proposal.

I'm probably ambivalent about a "public" banking system, but this comment seems to ignore that we quite literally do pay for using streets in the form of taxes (indirect) and tolls (direct).

Don't we pay for streets though, indirectly through municipal taxes or what not ?

That is exactly what my comment stated.

India UPI was proposed and implemented by the Central Bank and provides a fantastic example of a low-to-zero cost option of intra-bank money transfer which is bank and vendor neutral. Google recently recommended the model to the Fed[1].

However, what NYS is proposing is distinct from an open payment system. This is a closed parallel system of exchange which serves as both a bank account and a payment system. I don't get how this will be better than providing low-cost bank accounts to the unbanked and then providing an easy payment system on top.

Or perhaps requiring banks in NYS to provide free accounts to those whose income is below a certain threshold. Certainly another way to bell the cat rather than creating an alt-currency and a ledger.

[1] https://www.bloombergquint.com/business/can-indias-upi-becom...

(edits: grammar)

Correction: It is run by NPCI (National Payment Corporation of India) which is a multi-bank private non-profit body that is authorised by the central bank (RBI) to run a payments system.

Additionally, the central bank already runs a vendor neutral bank account transfer infrastructure called NEFT which recently became 24x7. UPI just happened to be mobile first and we had enough underlying infra to support such a thing.

If this turns into an open-source and independent application/enterprise then it could be quite interesting and maybe even good. Unfortunately, I'm fully expecting the end result (if this proposal even goes anywhere) to be a heap of state-run opacity. There's no way I trust the State of New York with my money.

I think the more likely scenario is that NY would contract the transactional system out to some company, and force banks to setup special account types that interact with the system, and pay licensing fees for using it. And setup a clearing house to enable end users to get accounts from the participating banks.

And "force" is more hyperbole. It goes without saying that the banks will not pass up the an opportunity to add a significant amount of cash to their reserves, and will lobby heavily for it.

Canada's interbank network Interac has allowed for "Interac eTransfers". It's run as a for-profit, but since it's a consortium backed by banks in Canada, most banks don't charge for eTransfers.

Among my friends, it's the way to pay for e.g. your share of the take-out, or pooled office gifts.

Similar things exist for banks in the US. For example, Zelle is a product created by a company owned by a number of US banks that is integrated into those banks' apps as well as most other banking apps (my smallish credit union uses Zelle). I tend to use Venmo still because more of my friends have it and I think most people in the US will stick with Venmo unless the barrier of entry for a new system is negligible.

This is aimed at solving one of several problems people without bank accounts have. So let's just figure out why people don't have bank accounts and account for that:

> People who are unbanked often cite distrust of the banking system, lack of access to government-issued ID, or inability to maintain a minimum balance as reasons they don’t have bank accounts.

Seems easy enough to me. Make government-issued IDs free, make account minimums illegal for FDIC insured banks, and if you don't trust banks, you have nobody to blame but yourself (plus, if you don't trust banks, why would you trust gvmt-venmo?). These fixes would also address a lot of other problems (voter ID issues, other negatives of not having a bank account)

> if you don't trust banks, you have nobody to blame but yourself

Well, the banks made a pretty good case for why they can't be trusted in 2008.

That doesn't mean I don't use a bank. It's just not practical to go without one, and I trust the government-backed insurance of my funds for when the bank fails, but I don't trust the banks themselves one single bit.

Even with deposit insurance, if there's a run on your bank you want the money out ASAP, because the money is only useful to you if you can reasonably access it, and waiting a few days or weeks for a check in the mail can make or break people living paycheck to paycheck.

Yes, you're absolutely right, that's why I have split my money over two banks. Hopefully they won't fail at the same time.

> I trust the government-backed insurance of my funds for when the bank fails, but I don't trust the banks themselves one single bit.

If the bank fails because they just mismanaged handling the money, that I'm sure the insurance will save the day for the customers. The Feds will come in, check the books and figure out how much each depositor should have and cover them.

But what happens if the bank fails for more malevolent reasons? Say state-sponsored hackers from somewhere that is pissed off at the US hacked in to a bank's back end systems and installed malware that corrupted the backups for a few months and then finally deleted the online records.

Does the insurance apply there? How do the Feds figure out how much everyone gets?

Many banks have free checking - with no catch (no direct deposit required, no minimum balance required, no max number of checks/withdraws)

I'm also pretty sure I didn't need to show an ID when signing up for a capital one 360 account online.. so even the ID thing is a stretch. but sure, I might accept not having an ID as a valid reason since you may need it to use your debit card and probably will for checks.

There is already an open source payment system which needs a bit fine-tuning so it can scale to payments. No government, serves all unbanked. Solves the same problem. You know the name.

No payment system will ever succeed unless someone can use it to purchase something from an unknown person, receive their good or service, be dissatisfied with the good or service, return the good or service, and then be assured of a refund from an unknown and untrusted actor.

Even with cash, in the vast majority of cases you physically hand over the cash to someone you can see at a location you can return to. In the event of a transaction for physical goods at least you have the good in hand, and in the event of services thanks to government regulations most expensive services require licenses so you can later find the person who failed to perform the service you paid for in cash to your satisfaction. Also, one can create an actual, literal, "paper trail" by requesting a physical receipt-- one that serves as evidence of the exchange and would ideally contain contact information.

With your un-named payment system, can I do a "charge back" if I order some totally legit good or service from an unknown actor in an unknown location in the event of the non-delivery or fraud?

Also, no payment system that requires an internet-connected device (and a powerful one at that if no third parties with the ability to store and process large amounts of transaction data are involved) will ever, ever, despite the protestations of its acolytes, between now and the heat death of the universe, ever be able to serve the unbanked.

That why with the IVL part of the proposal is a physical card that can be used, if a patron is poor and unbanked and does not have an internet-connected device, to transact with the ledger via a trusted intermediary.

> return the good or service, and then be assured of a refund from an unknown and untrusted actor

Escrow systems are inherently a second layer atop a currency. The "issuing authority" of a currency does not engage in such dealings with the users of the currency; these arrangements are made by the seller (or a palatable third party on the seller's behalf) or by the buyer (or a third party contracted by the seller, e.g. a credit card company).

With the "un-named payment system", escrow is entirely possible and has been successfully set up in many instances, most notably on popular darknet markets. A type of protocol-layer escrow is also possible, by the way, through the use of multi-signature transactions.

> payment system that requires an internet-connected device

This is exactly what the OP article is proposing to build, and what these comments are discussing.

> no third parties with the ability to store and process

SPV and other "light" wallets that remain cryptographically verifiable and decentralized without needing a constant, high-bandwidth connection exist and are, in fact, the default option for most people.

>This is exactly what the OP article is proposing to build, and what these comments are discussing.

If you read the white paper, which apparently nobody else did, they say (paraphrased) "Look, this thing is online but we recognize that not everyone has a computer or cellphone so part of the system is a physical card like a debit card that poor people can use".

> With your un-named payment system, can I do a "charge back" if I order some totally legit good or service from an unknown actor in an unknown location in the event of the non-delivery or fraud?

This is a form of insurance and someone could sell this service on the un-named payment system. This business would be profitable as long as most transactions are legit, and part of the profit would be used to reimburse bad transactions.

I don't see your point. I go in, transfer some BTC get the product. I return it, you transfer me back the money. What's different with fiat?

Are government run digital payment systems a cyber-security nightmare?

>"public Venmo"

Europe figured this out years ago; it's called a SEPA transfer.

Generally seems like a good idea, minus the part about it being state owned and operated. If it's operated by the state, it will probably be a disaster. Many governments can barely keep their Windows machines up to date, leading to ransomware attacks. It would be a shame if people's money were held hostage for ransom.

On the contrary, payments is critical infrastructure, like roads or social security, that needs to be publicly owned and operated, immune to the rise of cancel culture, and other whims of the techno-elites. No one should be denied their right to basic economics because someone in power at a private company disagrees with their politics

The government should define what's okay and what's not (aka regulation), and let private entities duke it out for a reasonable share of the economic value.

Why not let consumers decide on what's better for them?

What does centralized (and politicized) regulation do better than then free market?

Having multiple private entities competing for customers allows consumers the opportunity to decide what they want.

You can argue for improvements to the political process, but public entities do many things better than the market. For example: the fire department, parks, utilities, roads, healthcare, education.

How do you know these services do better than the market given that they are monopolistic (as in: the government doesn't allow for competition)?

Because the US has for-profit healthcare and it’s worse on all societal-scale metrics than nationalized healthcare in other countries. And we had for-profit fire departments and the result was poor people’s houses burned down. For-profit utilities cut maintenance of essential infrastructure to hit quarterly goals. For-profit education reinforces class hierarchy, enables grift, and results in superficial curriculum tailored for mercurial “employer demand.”

Do you mean "for-profit" with competition, or without it? Were people voluntarily paying for those services?

If it's "for-profit", monopolistic, and run by the government, it means:

1. your money is taken away from you through taxes

2. a service you may or may not want is implemented

3. a 'target' for 'profitability' is set, which makes no sense given there's no price system directly attached to the services

4. 'targets' are delivered by cutting edges so that public workers demonstrate enough competency to justify pay raises

For profit with competition.

> payments is critical infrastructure, like roads or social security, that needs to be publicly owned and operated

So if one day Bitcoin becomes the norm, do you believe it has be handled by the government? If you think so, how do you think the government will be able to enforce that?

The largest private companies in the world (e.g., Yahoo, Facebook, Equifax, Target) can barely keep user data private, leading to massive data breaches. It would be a shame if people's private information were to be compromised with essentially zero recourse.

Ideally there would be regulation that drastically limits the blast radius of such incidents. In a perfect world, these companies would not be allowed to hold on to private information and would simply operate as zero-knowledge networks in the same way that Internet carriers do (in theory at least).

Ok, but you still haven’t made an argument for why it would be better to spend a lot of effort designing a complex system of incentives and punishments for private companies rather than focusing on building a quality public service.

Imagine the next government shutdown over budget.

I love how we say this with a straight face and ignore the fact that the best hackers _anywhere_ are mostly currently or formerly employed/trained by the government: NSA, FBI, same with Israeli hackers trained by the IDF, Russian and Chinese hackers, pretty much everyone is a current or former state actor.

So yeah I'd trust NSA lending its talent to securing our payments infrastructure over some of the people that were in that Google thread that got paid 300k to do hardly any work in years. But this is a false dichotomy.

I respectfully doubt many talented folks are giving up $500k+/year jobs to work for Uncle Sam at below market rates.

No it's the opposite. A lot of people getting $500k were trained by Uncle Sam and left.

My point was that you can't say the government would mess it up when the government (really, many governments as I outlined above) has done a phenomenal job of training many of our best private sector hackers.

> My point was that you can't say the government would mess it up when the government (really, many governments as I outlined above) has done a phenomenal job of training many of our best private sector hackers.

That's very different from saying that the government's core competencies include developing and operating secure consumer-facing web services that are also convenient to use.

There's a very big difference between having the raw resources and actually executing.

I forgot to mention another point that someone else mentioned (and I added to).

I live in the DC area. If you think that your average government contractor would do a much better job, you'd be shocked.

The NSA has a history of being so offence-focused that it wouldn't be very wise to trust them.

Alternatively, it has a public reputation of being extremely offense-focused.

well, we know without a doubt that they withhold info related to vulnerabilities in order to prioritize continued offensive success. that doesn't bode well for any non-offensive work, and there's no reason to believe that has changed.

I somehow doubt the NSA would be the ones building it. It would probably be farmed out by the govt like the ACA website.

I agree it would be terrible if the govt ran it, but would make sense is for the govt to actually plan it and put regulations around it. Provide a framework for private companies to work off of.

That's why I said lending their talents. The NSA and FBI would definitely consult on something that big.

Actually they'd do it regardless of whether it was built by the public or private sector.

I'm in the DC area – so I know exactly how bloated and utterly incompetent most defense contractors are (I worked for a couple). So I have nearly zero faith in them doing a better job.

i would wager a fair amount of US dollars that, given past behavior/track record, the offensive mission of NSA would almost certainly result in some sort of backdoor that would eventually be used by opposing actors to pull down the data directly.

the defensive NSA guys would probably be blamed post-facto in some sort of delicious intra-organizational bull-bleep.

That's a different argument. I'm addressing this notion that the government is oh so incompetent and the only people that can do this is the private sector, when many countries have upgraded to excellent government-run (but private sector built) payment systems that work just fine.

> If it's operated by the state, it will probably be a disaster.

The more I see this meme, the more ridiculous it seems.

The US federal government, the overall governing body of the most powerful nation in the world, employs 2 million people in around 1,760 agencies and manages nearly 1 Trillion dollars. If anything it touched "became a disaster", it would not be able to support the most powerful nation in the world, supporting the world's largest economy by GDP.

States are not the federal government, but they generally follow it as a model, and they generally do a good enough job at managing themselves that everything they touch also does not become a disaster.

> If it's operated by the state, it will probably be a disaster.

This is a common trope propagated by big-business interests, but it's not borne out by evidence. Giant corporations have proven remarkably apt at being hacked and leaking private data.

Yes but have you seen the costs of infrastructure in the US?

Big business is bad but big government is bad too.

Government is necessary. Government is not free. Grow up.

IIRC, I once signed up for a NY transit account to auto-bill my train pass. Noped right out of there when they emailed me back my password in the clear.

What about Venmo for beggars. Cities in the UK have foreign beggars camped outside every grocery store near the city centres. Locals do not know what to make of this. Are they desperately poor, or part of a scam to exploit people’s generosity? Do they make £10 per day or £200? What can the authorities do if there’s no law against it?

If there was a sort of begging venmo app where you could donate money, but it only worked up to a certain limit each day, then at least you’d know the public was not being exploited by professional beggars, and genuine beggars would see a bigger share of the public’s generosity.

It could even go further and show what the money gets spent on (in aggregate), so we could definitively answer debates like whether beggars spend all their money on drugs/alcohol.

Or we could implement a basic standard of living where we don't have to have beggars.

How?

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