Credit-card firms are becoming reluctant regulators of the web
economist.com
economist.com
But it goes beyond credit card companies too. It applies to the whole banking system.
It will soon be the case where the majority of Americans live in states where recreational cannabis is legal (it was ~1 in 3 last year but NY, NJ and others will push it over). Yet you can't use a credit card to buy cannabis pretty much anywhere AFAIK.
Worse, dispensaries have to operate on an all-cash basis because they simply can't get bank accounts.
Granted, the legality of cannabis is a grey area since states allow it but the Federal government still maintains it as illegal.
I personally don't like the financial system being gatekept for legal activity this way.
Whether or not they could is a legal question. It seems though they're happy to appease politicians and "values" voters by virtue signaling on these issues, however.
As for sex work, in particular, this one is tricky. While I fully support body autonomy and in an ideal world, sex-for-money and the like should be legal, it's not that simple in reality. Why? Because the sex industry is deeply tied to human trafficking. I have no idea how to solve that problem.
At first I thought you were going to give an argument for removing financial gatekeeping, which I think is an inappropriate point to apply leverage towards moral ends. But -- and this is the heart of the problem everywhere -- you end up picking and choosing between vices. This maintains the processor's position as the morality enforcer, which is the entire issue: it's just one more thing that power-driven agents can strive to influence.
From my understanding, based on that 2018 rule, the executives at CC processors are personally liable if they process money for sex work. Like "you are an accomplice to human trafficking" guilty.
Well done on missing my point entirely, possibly intentionally. I'm fine with whatever happening between consenting adults. Unfortunately, there's a link between sex work and human trafficking that cannot be ignored [1]:
> Countries with legalized prostitution are associated with higher human trafficking inflows than countries where prostitution is prohibited.
and
> Criminalization of prostitution in Sweden resulted in the shrinking of the prostitution market and the decline of human trafficking inflows.
Sex trafficking impacts people who aren't consenting (including minors).
So what are the negative externalities of cannabis consumption? Long term cannabis abuse can be a problem but pales in comparison to, say, alcohol abuse. Basically, there's no world that makes sense for alcohol to be legal and cannabis not to be.
Also, cannabis legalization has arguably hurt the illegal drug trade [2].
[1]: https://orgs.law.harvard.edu/lids/2014/06/12/does-legalized-...
[2]: https://time.com/3801889/us-legalization-marijuana-trade/
Nothing you said here illustrates that. You made yourself clear, and clearly you are for cannabis, but only theoretically for sex work between consenting adults, because you see negative effects from sex work that you think make it worth suppressing sex work between consenting adults.
Other people see externalities from cannabis use (although you argue as if you've never heard anyone mention any.) Other people see the fact that companies and banks can't support sex workers as something that causes sex work to be unmonitored and underground.
Neither of those last things are the point I'm making. The point I'm making and that the person you replied to was making is that you're having the debate. You don't have a problem in using the ability to receive payments or bank to prevent or encourage behavior, your problem is that you personally are not the regulator.
Is that how we should be deciding who gets to charge a credit card?
This is like the ring from LOTR: throw it out altogether, because there is no way to use its power responsibly.
But credit cards are on scope of an entirely different order of magnitude compared to a local bank checking account. Visa and Mastercard are global authorities on cashflow. And this is exactly why they're accidentally becoming regulators, they transcend the US weirdly fragmented banking system.
In a very real sense, government required compliance effectively forces banks into a gatekeeper position. And while some BSA enforcers do act in their interest the same any group does ( cops, politicians, IC, doctors ) by extending their reach and influence, others are wary of expanding it beyond current regime ( which is already pretty onerous ).
It does help that banks tend to get very sensitive about some things as they do rely on deposits to survive. In one of the banks I used to work for, teller BSA training included a mention to be sensitive about customers and questions along with a story of a teller, who prodded a little beyond what the customer deemed acceptable and who then proceeded to close the account with 'none of your god damn business'.
What I am saying is that things are only the way they are, because we allow it that way. Cash is still a viable, albeit annoying choice.
And banks have been complacent until now, but the cost of complacency seems to be going up.
All that said, ABA better gets it shit together. Between high compliance burden on banks combined with low to non-existent compliance on fintech startups can quickly amount to real trouble for the banking system in US.
Every dispensary I've visited here in the northeast accepts cash and debit cards, I assume they don't accept credit due to higher processing fees and higher risk of chargebacks rather than processors being problematic (otherwise they would not accept debit since they get ran through the same system anyway).
This turns it into an ATM withdrawal apparently.
If I just need $80 or so (I think the limit is $100), it's faster to go to the local Walmart and buy a candy bar or something and get back $80 cash than to go the closest ATM owned by my bank to avoid the double dipping fees.
The ATM has to be actually refilled with cash, so they charge you for it.
The only charges I encounter are from using my bank's card at another bank's ATM.
This was a great boon for banks a few decades ago, as it functionally gave them a huge ATM network for free.
The debit card system understands this sort of transaction, and doesn't charge the normal x% processing fee on the cash withdrawal portion of the transaction.
In other words, retailers can create transactions that are effectively ATM withdrawals - without an ATM.
Some dispensaries can take debit card transactions, and they have to do so through "high risk" processors... companies like Square will not work with them because of federal law.
This. And while it's obviously not the same thing at all, since cannabis is a schedule 1[0] substance, the US government could treat processing credit card transactions for cannabis companies the same as they treated HSBC[1] or worse.
As such, until cannabis is moved off of schedule 1, Congress acts to make cannabis legal at the federal level, and/or the US Department of Justice makes it clear that providing banking services to cannabis companies will not be prosecuted under money laundering laws, US banks won't jump into the pool.
[0] https://www.dea.gov/drug-information/drug-scheduling
[1] https://www.investopedia.com/stock-analysis/2013/investing-n...
Banks and CC companies by usual standards are staying out of things more than average. If it’s not a risk to their liberty or wallets the financial sector is happy to stand back and watch all sorts of awful things.
In my opinion it's not the role of the card issuers to make this determination or to implement unilaterally the restrictions. This is a matter of law and should be handled in court.
There is not a single state where cannabis is legal, there are only states that have decided they won't enforce federal law.
The feds don't really enforce it either. Is there a state the feds have sanctioned over legalization? They even collect federal tax dollars on the businesses selling these "illegal" products. Unless a law is actually enforced, it's just words on paper.
This isn't some incidental detail - it's the entire reason why the banking and credit card industry doesn't want to interact with cannabis right now.
Guess who regulates the banking industry and has authority over interstate commerce? The federal government. This particular example has nothing to do with credit card companies making a statement against cannabis, and everything to do with them not wanting to break the law.
The market for legal marijuana projected to be $100B by 2030. If the banks want a piece of that pie, then they will change the rules and "fix" the problem.
As far as I can tell, the stuff the banks won’t touch is either legally risky (weed) or financially risky.
(PayPal also cannot be used for cigarettes or porn, so they have a policy of avoiding what they see as high risk items, including items regularly handled by other card professors)
On the flip side Amazon will sell all kinds of firearm related accessories, just not the firearm itself or ammunition, presumably because they're not actually a FFL and can't handle the legal requirements.
https://www.forbes.com/sites/afontevecchia/2012/07/16/hsbc-h...
My last employer was just as happy to bid on jobs building grow ops as they were solar farms, all while maintaining the insurance mandated drug testing policy.
FYI - Banks do work with cannabis in states where it's legal. Those banks just can't be national banks - they have to be state ones that are regulated by the state. In other words, Chase/BoA/etc. can't touch it because they operate at the federal level and are highly regulated.
https://www.riskscout.com/post/the-state-of-cannabis-banking
The dispensaries I've been to in LA will generally take credit cards now. They round it up to multiples of 5 and give you change in cash, and I think under-the-hood they're doing a cash advance or something?
This doesn't detract from your point; if anything, it reinforces it. Just an interesting factual point.
Those are debit cards; the transaction is a cashback (that's why they give change in cash).
When your parent or partner finds out you paid for an OnlyFans membership, you lie and tell them you lost your card. This happens incredibly often, and payments companies don't want to touch this.
You can in the UK. Dispensaries here do accept credit cards.
(Yes, I also hate it, but I do concede that America is physically big.)
You can't solve that problem, but I believe you could mitigate it by making prostitution legal. Funny thing is that prostitution is legal at the federal level, it's just that all the states except Nevada have laws against it. So it's kind of the opposite of cannabis, and if the credit card companies wanted to be consistent in following federal law they would allow it.
This is vague. What are you saying? Please cite sources for whatever position you’re presenting (I’m not trying to be argumentative; truly can’t tell).
For those that has yet to learn about the Googles, then they should know that sex work is legal in the Nethelands: https://www.government.nl/topics/prostitution, yet human trafficking for prostitution is still a very real problem there: https://www.dutchnews.nl/news/2017/10/some-6000-people-a-yea...
I mean, drug trafficking is deeply tied to human trafficking, as well, and your post concerns cannabis legalization, which is one way to combat that problem.
Sex trade is different because of stigma and culture and prohibition. Stigma and culture have to change through education, activism, and time, but prohibition can be dealt with immediately. Create a robust framework of protections for sex work, protecting the rights of workers, and incorporate the industry into the existing legal system.
Getting rid of trafficking, pimps, and lack of recourse for workers and consumers negates far greater harms than any moral social corruption predicted by pearl clutchers.
The same applies to almost everything which society tries to cope with through prohibition. Black markets spawn second class dealers in vice, money and trade off book to the detriment of everyone except kingpins and corrupt agents of government and law enforcement. The vulnerable and desperate get locked into feedback loops of abuse and exploitation.
Legalizing all drugs and sex work almost completely eliminates the niches that perpetuate black markets. Forcing banks and legal jurisdictions to treat trade in vice equally to any other economic activity gives society the opportunity to treat drug abuse as a health issue. It enables sex workers to receive justice for abuse. It virtually eliminates the primary sources of income for cartels and kingpins. It forces culture to adapt, eventually allowing activists the opportunity to destigmatize responsible activities of adults in private.
We have laws that protect consumers and service providers, that give resource for violence and theft and fraud. It shouldn't matter what substance or sex act or hot dog brand was involved if a citizen is injured.
Adults have no business telling other adults what they can consume, or do in private. The business of government is behavior in public and in maintaining the rights of citizens in private.
We have ample and overwhelming evidence that prohibition always creates more harm than good, across thousands of years of history. It never works and always creates opportunities for abuse and horror. We also know that legalized vice results in more responsible use and less frequent consumption and fewer harms across the board.
It should be a no brainer. We should have responsible drug use education. We should have public sex work education.
Financial institutions crafting pseudo-moral gatekeeping policy from the whims of executives, pr departments, and Twitter outrage is a disgusting offense against society.
Let us not be naive. The decades long preference for oligopolistic rather than competitive markets is what created behemoths (both new and old) and now the only question is who of them is going to be granted the keys to the digital kingdom by fiat.
Advertisers are also regulators. I've seen sites start heavily censoring themselves because someone complained to Google and they pulled the ads. Stuff like this ruins the web.
Advertising is a different beast altogether. Being able to to exchanges (money for goods, etc) is something quite a basic right(If I can call it that). That doesn't apply to making money though. I don't think it's normal in any way to force anyone to conduct business with someone they don't want to unless is a basic necessity in that particular day and age.
I'm not sure if you are missing contacts or providing irony. But the fact is payment processors and banking in general is extremely heavily regulated.
A few years ago when you saw almost all banks and payment companies starting to crack down on spending money to buy and sell cryptocurrency, that was to no small extent because federal regulators gave them a little side-eye about the subject. No specific regulations, to be clear, but a few pointed questions.
When every means of sending money overseas demands clear documentation of your identity, That's not so much because banks feel the need to know every detail of your business; it is strictly mandated by federal law. And while my examples all involve US banking, most governments around the world are similarly strict.
For example, if you do business with wikileaks, you will get a nudge from the regulator to 'reduce the number of high risk clients' you work with... They're not saying it's illegal, but they're also saying they're going to find some regulation to prosecute you with unless you do as they say.
It's a sad state of affairs when these kind of regulations aren't written in stone, but instead are flexible and applied on a case-by-case basis.
But the type of regulation that is needed is regulation of the banks and payment processors themselves. Not of their clients or things related to their clients.
We don't need crazy things like crypto - we need decentralised and accountable banks and payment processors (not that the distinction between the two makes any sense either). Speaking of credit card companies: why do they exist?? Why can't my card just sign a digital request for transfer and tell the POS terminal to send it to my bank to be executed. A room of computer science students could write an open standard for that in like a month and have a working implementation within the year.
There are multiple types of decentralization and the one we need for finance isn't the "everyone is (theoretically) equal and there are no rules" of crypto but the "distributed network of trusted providers" that we use for things like public key infrastructure and email. People WILL get hacked, lose their wallets, etc. so recovery MUST be possible and like it or not, law enforcement SHOULD have the power to freeze accounts and take back money that doesn't belong to someone.
Take security: with natively programmatic money, security providers can be debundled from currency issuers and payment providers. For example with smart contract wallets it's possible to assign your own guardians which act as security backups and who need to approve all transactions, based on whatever conditions you set, e.g. m of n need to sign to approve >x amount withdrawn within y time frame.
This massively opens the space for competition which inevitably increases quality and efficiency.
It's the same with the security of data: the centralized finance approach has all customer data stored by one party. If that party is compromised, you have a massive leak affecting millions of different people. With programmatic money, digital commerce can work like cash, with no private information disclosed at all, to any one, and no private data being collected in large centralized repositories.
There are also basic institutional advantages with programmatic money on autonomous networks: the rules cannot be changed without consensus, so a rent-seeking party cannot use the network's monopoly status to extract economic rent. A centralized authority, like a regulator or a private company, can always abuse monopolistic control over an industry, meaning that risk will always hang over traditional industries, making them unreliable in the long run.
Sounds like you're saying we need crypto. Decentralized banks? That's exactly the sort of crazy idea that's just not gonna happen outside of crypto.
> Speaking of credit card companies: why do they exist??
They provide a useful service. They pay for stuff for you, then you pay them back later. This is great because if fraud occurs it's their problem to deal with.
Banks already are a decentralized system, just not a very good one. I can send a SEPA transfer from any EU account to any other EU account no matter which banks they are with and there isn't a "SCT processing company" that handles that for me, the banks communicate with each other - the system is decentralized. But that transaction takes up to a day for pretty much no reason, so we use payment cards for most things. Those are centralized. If Visa/Mastercard doesn't want to handle my transaction, I'm screwed. If instead cards simply signed an SCT message and my bank refused to process it, I could simply switch banks.
> credit card companies
Yeah, my bad, I should've said payment card companies / card payment processors. For debit card transactions they don't provide any benefit, they are only middlemen between me, the merchant and our respective banks.
> For debit card transactions they don't provide any benefit
Agree.
But no! The state! oh the horror! Cant have state-run things!!!!
We need decentralized currencies with strong privacy guarantees. There must be so many nodes in operation no single government on earth has any hope of stopping the processing of transactions. Currencies must exist independently of governments, especially their monetary policies. It must be mathematically impossible for them to trace anything. Only then will people be free.
Believe me, you can't outrun it with your fancy digital currency with "so many nodes in operation no single government on earth has any hope..." is terribly naive. They can seize the networks man, they can arrest you, they can shoot you. They eat your bitcoin for lunch.
There is a third choice. Technology.
Every time some new technology appears, it subverts government controls. They must become even more tyrannical than they already are in order to regain the same level of control they enjoyed before. We'll either end up with an uncontrollable population wielding ubiquitous subversive technology or a totalitarian government which polices every aspect of our digital lives.
Most likely, balance will be found along the way. We're gonna find out just how tyrannical they're willing to become and just how much people really care about their privacy and freedom.
Revolt has worked out decently for the Iraqi Kurds and the Taliban. Jury is still out on the Burmese and the Houthis. Libya is a violent mess but technically they successfully overthrew the central government with significant external help, so at the very least that's a non-fail. Just for a few timely and relevant 21st-century examples that disprove your statement of "guaranteed suicide".
It is named PIX.
All banks implemented it, so, no matter what is your bank you're able to do payments from your smartphone using your banks app.
It is so popular and easy to use that even street merchants accept it.
In most banks you must first authenticate your smartphone app by going to an ATM where you use your card and some sort of biometrics to authenticate along with your pin. The app can only be used after this first "machine" authentication.
There are also customer-customizable limits, the usual anti-fraud controls. Of course, there is a lot of scams involving people with less instruction, but it is not substantially different from the levels in other types of transfer/payment.
Don't give fuel to the FUD.
Because the POS terminal (or more likely, the payment processor) would have to work with thousands of individual banks. The credit card companies handle that complexity so that payment processors only have to integrate with a handful of credit card companies instead of thousands of banks.
> A room of computer science students could write an open standard for that in like a month and have a working implementation within the year.
(While I don't share the optimism regarding the timeframe, I agree with the general sentiment)
But now I'm curious, what are the challenges with having a large number of entities implement a standard? Is it "just" the shrink-wrap effect of having a few-initial or large players, is it getting the parties involved to even agree to the standard, or what?
Credit card companies handle all of that and much more in exchange for transaction fees.
As for rollout: the NFC payment rollout took like a year to get to the point where I haven't encountered any non-NFC terminals since and that required all new hardware. Now that the hardware is out there, adding support for a new system is just a matter of software. At worst, a technician will have to visit every terminal and update the firmware manually (not sure if those things have OTA). "All the major credit card companies" == two, and it wouldn't really matter for their systems anyways since they're not banks, they are now-obsolete middlemen. People could still choose to use cards and vendors would likely still want to support them, there would simply be one more payment option available.
And yes, I agree that this would probably take forever in the US, but they're still using magstripe and the government is too big of a mess to be able to mandate a technical standard or even pass any legislation regarding banking anyways, so I think they have other things to deal with first.
You are correct. Web advertising is long overdue for some trust-busting. But for some reason, antitrust law is rarely enforced.
I remember a LOT of software being sold online (licenses and such) was sold via money orders or sometimes wire transfers.
You could often pay upon delivery even when shopping online, but there's no need of delivery for tickets.
While it was much less widespread than today, credit cards for ordering from a catalog or e-commerce was becoming quite common by the late 1990s but, as you say, for an individual, it was hard to accept credit cards pre-Paypal. (I had a small software business through about the mid-90s and I eventually was able to accept a credit card through a local reseller but it wasn't at all a routine process.)
When it comes to the recent events around Pornhub and Onlyfans, the payment processors erred on the side of caution, because those two customers of theirs couldn't for definite guarantee that nothing shady was going on on their websites.
There is more childporn on Facebook than Pornhub, you know why? Because pornhub requires an ID. But Facebook is untouchable because it's too big.
If they were concerned about 'shady', they would shut down Wells Fargo for fraud
How can the provider of vital infrastructure be complicit in anything? Is the engineer who designed and built a bridge complicit when a criminal crosses it?
They should be considered neutral. Just like information carriers are considered neutral. Not liable for what goes on inside their networks. Searching for and punishing anyone violating any law is up to the authorities and they must do that without violating everyone else's privacy no matter how frustrating it must be for them.
You mean my web is ruined because I don't see more those ads selling the newest crypto ponzi scheme which promises 10000% yearly returns?
Let's deal with it, if advertising was totally uncensored that would be a nightmare for average user.
Somewhat obviously, you don't actually get a lot of people willing to pay for your content if you hold truly unpopular opinions.
Would you think it's okay if their water company tried to cut them off?
Suppose that your use of the water service was creating public lashback against the water utility for "supporting" your business. A loud minority is pestering the water board members and complaining that what you're doing ought to be illegal even if it isn't strictly yet. Some are pressuring other big water users to reexamine their contracts with the utility, and someone even managed to talk a pump supplier into severing their relationship with the utility. A different minority is yelling stuff about "rights" and making trouble at board meetings.
The easiest possible thing to do in this situation is to find some vaguely plausible reason to cut your access to the public utility, and tell you that you have to truck your water in yourself from now on. Note that this kind of stuff actually happens to farmers, refineries, and other businesses.
As far as what's "right"... Damn if I know. None of this is happening in a vacuum, and these decisions end up being made by people who are accountable to and influenced by their family, friends, and community for the choices that they make. Clear laws can dilute that responsibility, but only to a point.
It depends on what level the ads are being cut. But sure, that can be different.
> As far as what's "right"... Damn if I know.
I stand pretty firmly on "everyone deserves access to utilities".
Maybe with a throttle at a certain level if they're abusing the utility itself.
So charging more to big water users is usually fine, refusing to deal at all is rarely fine.
The point at which someone is acting so badly they need to be removed from utilities, where fines aren't even enough, is the point where they should be going to prison. And then they should have access restored upon release.
And sending money in a simple electronic way should be a utility in the US.
Generally financial institutions are happy to take anyone’s money, and lend to them too unless they don’t think they’ll get their money back.
Their regulators can change those criteria though, forcing upon them an unfunded mandate. This is no different than policing entities washing their searches through private entities (e.g. the telecoms).
I consider this a pernicious trend.
I guess they started blocking things The Economist care about.
"But calibrating that response raises questions of principle, practice and priority. Businesses will go their own way. Some, such as PayPal, Visa and MasterCard, which handled donations to WikiLeaks, and Amazon, which provided web-hosting services, have dumped it as a customer in response to American outrage. More may follow. They risk attacks from its fans, just as those that refuse face hostility from their customers in America. Too bad: business is full of hard choices."
https://www.economist.com/leaders/2010/12/09/the-right-react...
For the avoidence of doubt, I am talking about the freedom to not have someone in your house / your company platform.
But the precise content of speech is exactly the part that matters! If a death sentence is read out aloud in verse, or just sent in via a short text message (that is via two very different types of speech) is clearly not very important if the end result in either case is an aid worker being blown up with a Hellfire. Speech very often triggers actions, to ignore this fact is to state nothing may be prevented because judgment is only possible by examining actions committed to reality.
That is not a balance, that is an absolute position in favour of one side of the coin ... regardless
If it's legal then banks should have no choice but to handle it.
If you don't want that, and you want the banks not to refuse any legal transactions, that's easy. They then don't refuse to process any transactions at all.
If you do want them to refuse illegal transactions, and they're allowed to refuse legal transactions, that makes it easy for the bank because then they just refuse anything marginal even if it's totally legitimate. This is what we have now. It's not a problem for the bank but it's a big problem for the people getting unjustly locked out.
Expecting the bank to process no illegal transactions and all legal transactions is an impossible burden, because nobody actually knows what that means. The meaning of a lot of laws isn't even settled until they get litigated in court and set a precedent. It would require the bank to be infallible, and know everything about everybody's business, because a mistake in either direction would incur penalties.
So which one do you want? (The first one actually looks pretty good when you consider the alternatives. Let the police be the police and the bank be the bank.)
You're describing your state banking regulator. Also, like a bajillion federal banking regulators.
The article talks about credit card networks. I'm referring to banks. Banks are highly regulated, including with respect to account closures. Credit card networks are much less regulated.
If you want a non-court public venue to dispute your bank on something, anything, you have several such venues. Depending on your state, they can be quite toothsome.
I’m not defending porn as a grand corner of free speech but I don’t like banks deciding who can and cannot be paid.
The alternative that might work is charging businesses fees that vary according to the risk of their transactions being illegal. Which sounds good on paper, but also runs the risk of leaving the bank in the position of making a large amount of fees from illegal activity, which rarely goes over well in court. Better, perhaps, to have a unified fee schedule and just refuse any business that could be unprofitable from liability.
I think the banker would have a strong point here. They're not in a place where these are always easy calls to make - transactions don't come with an evil bit. The constraints placed on them don't leave them a lot of viable choices.
Well, they're doing that but there's also a huge set of things whose legal status is "shmaybe?", and AnthonyMouse's point is that this is where the defaults matter. Currently, banks tend to merge that third category into "illegal" set. They could merge it into "legal" set instead, which would arguably be better for society.
You can imagine a similar model for payments. The bank can’t just indefinitely say “umm not sure”, it has to go one way or the other.
So bank should be held liable if they:
- do not collect evidence
- do not act on evidence
- if they act without evidence
The bank should face appropriate penalties for making misjudgments in both directions. For example, you should have a right to sue bank for refusing to provide a service. The court could judge whether bank had sufficient grounds to refuse to conduct the business with you.
The bank should also provide the evidence to law enforcement to trigger investigation into alleged illegal misconduct. If the judicial systems clears you, then again, you should be able to compel bank to provide the basic financial services.
There is regulation like that for individuals in EU. Banks are obliged by the law to provide basic financial services (bank account and identification services if I recall correctly) to EU residents as part of the European Single Market.
While offering a "Basic bank account" is a legal requirement, they have no requirement to offer that service to any specific person. In reality, it typically means that they're offered to people in debt, but not to people the bank doesn't like, american citizens, prisoners, etc.
From DIRECTIVE 2014/92/EU CHAPTER IV, Article 16:
2. Member States shall ensure that consumers legally resident in the Union, including consumers with no fixed address and asylum seekers, and consumers who are not granted a residence permit but whose expulsion is impossible for legal or factual reasons, have the right to open and use a payment account with basic features with credit institutions located in their territory. Such a right shall apply irrespective of the consumer’s place of residence.
Member States may, in full respect of the fundamental freedoms guaranteed by the Treaties, require consumers who wish to open a payment account with basic features in their territory to show a genuine interest in doing so.
Member States shall ensure that the exercise of the right is not made too difficult or burdensome for the consumer.
From: https://europa.eu/youreurope/citizens/consumers/financial-pr...
If you are legally resident in an EU country you are entitled to open a "basic payment account".
When banks can refuse you a basic payment account
You can be refused an account if you do not comply with EU rules on money laundering and terrorist financing.
In some EU countries, you may be refused a basic bank account if you already have a similar account with another bank in the same country.
If you're applying for a basic payment account outside the country where you live, banks in some EU countries may also want you to prove a genuine interest for doing so – for example if you live in one country but work in another.
It seems reasonable to just make the fines small, and the bank can try to minimize them by having their policies match what a court will find for those which are taken to court.
For example, can you buy alcohol in Delaware? Well, not if it's Sunday. How about a weekday? Not if it's between 1am and 9am.
Can you buy alcohol in New Jersey on Sunday? Sure, well not if you're in Bergen County.
That's one product. How do you propose these companies codify the entire world's regulations? It would require thousands of people to maintain the rule engine.
Next, TESLA eula will forbid you from going to questionable establishments, and the car will shut off if you arwle going to a strip club.
USSR couldn't dream of this level of surveillance, turns out the trick was to privatise it.
Only it won't be delivered by AI, but by a compliance script tied to geo-blocked locations. It will get extra tricky for cars to navigate when their owners are child molesters and have to stay 10 miles away from houses with children in it.
Onwards to our glorious future!
Basically a pubic service PSP with loss financed by govs. I'm not holding my breath, and I can't imagine what could realistically be done at our level to be even an inch closer to that ideal. It's depressing.
Basically a pubic service PSP with loss financed by govs. I'm not holding my breath, and I can't see a single action I could take that would bring us even a millimeter closer to this goal. It's depressing.
I want the same thing from web service providers - if the content is legal then Amazon, etc. should not be permitted to refuse service.
Twitter should not be permitted to have its own terms and conditions, rather they should follow the law - it's either illegal, and ban the person, or it's legal and they must leave it up.
Maybe put a limit like: If your number of registered users is at least 5% of the US adult population, then a new set of rules kicks in.
There are some details I don't have answers for: What if someone posts things that are legal, but offtopic for the location? I don't want to prevent moderators from removing that kind of thing, but I also don't want them using it as a false reason.
I'm sure there are other edge cases I have not thought of.
And if what you say is right, how can the parent propose requiring banks to process any legal transaction?
All transactions have some likelihood of fraud, so it's a fuzzy line.
Right. But banks are regulated by the US Federal government. And according to US federal law[0], possessing and selling cannabis is just as illegal as possessing and selling methamphetamine or heroin.
As such, unless and until that changes, the banks aren't going to involve themselves in what the US Federal government deems a felony, regardless of what the several states do.
Law enforcement should deal with the endpoints, so dealers, brothels, and your moms shitty meatloaf.
I'm not saying that the regulatory framework should allow payments to known terrorists or terrorist groups, more pointing out that electronic transfers are never going to be structured like a utility without significant restructuring of banking laws.
This could happen, but it would also mean overhauling some of the finance laws that hold credit card companies accountable.
In addition to the government currently blocking transactions from semi-legal industries that should be legal (cannabis), the government has a history of censoring mail mentioning contraceptives (Comstock Laws) and pressuring banks to cut businesses with legal, undesirable industries (Operation Chokepoint). A few weeks ago, an IRS agent at a service center refused to help me because they didn’t like my clothes. (I was wearing a tank top.) This is inevitable when you create government-backed monopolies.
What does this refer to?
Sure. But OP mentioned the U.S. government "currently blocking transactions" from cannabis businesses.
Sure, some things should be legal but aren't. It hardly seems surprising that while they are illegal the federal government tries to prevent them.
The Comstock Laws applied to all carriers (private or public) and therefore would apply to FedEx or UPS as well. They also were ruled unconstitutional over a hundred years ago.
Meanwhile, Operation Chokepoint was something that lasted less than a year before the same administration said it was an overreach and reversed it. It was an error, and between that and congressional oversight got fixed. It sucks, but it should be pointed out that, again, it was government pressure on private entities. Nothing that wouldn't be at least as good under government control.
Meanwhile, if an IRS agent refuses to help you because you're wearing a tank top, that seems like something you should escalate. But I will point out many private enterprises (airlines, etc.) have refused to serve people wearing tank tops. To the point of refusing to honor their ticket and screwing up their whole vacation with no recourse. But the only official IRS dress code deals with profane/offensive writings. Tank tops are allowed, even for IRS agents.
I would love to hear more from people who already use it. How well does it work?
As far as I know, El Salvador is currently trying to shift their whole economy to Bitcoin. Handling day to day payments via Lightning. Is anybody from HN there? How practical is it for non tech people to use it for their daily payments?
This is just what I remember from reading into lightning a few months ago.
As far as I understand it: When a channel you have open is closed by the other side of the channel your wallet needs to know this within a certain time (24 hours? Can't remember).
So to avoid having to read the blockchain updates once a day, you would subscribe to some service that tells you when one of your channels is closed.
I also think you only have to do that if you distrust the other side of the channel. If you select a channel partner (a friend, a well known institution, a bank?) and only keep a small amount in that channel, I think you can just trust them and not sign up for any "watchtower" to watch if they try to cheat on you.
PS: Looking up the growth of the Bitcoin blockhain it seems that even if you do the watching yourself, that would only mean to read less than 1MB per day? Here is the data:
A maximum of 4MB per block, 6 per hour, 24 hours per day.
The day before yesterday it shows: 368.471K
Yesterday it shows: 368.664K
So "0.193K" up in that day.
What does that mean? 193 Megabytes?
Also in the thread's context we are talking about Visa and Mastercard banning merchants right? In a scenario where the LN is widely adopted that merchant can setup and run BTCPayServer (https://btcpayserver.org) to maintain his own independent LN or on chain payment process system.
As for users, there has been work to facilitate nodeless operation on software wallets. Probably based on https://github.com/lightninglabs/neutrino. I know Blue Wallet is building something based on a lightweight LN node so people can establish channels from their personal wallets (https://github.com/BlueWallet/rn-ldk). There is an Android exclusive wallet that (https://lightning-wallet.com) can do that and Muun (https://muun.com) is doing some smart tricks to provide nodeless and custodial LN experience.
And the network itself centralizes around large hubs (otherwise route finding doesn't scale).
Uh, this kind of route finding is still an open problem, and there's not even an idea of how to address it.
Approximations don't scale, as routes will start failing more and more as the network grows(due to liquidity issues). Therefore routes will go through well-connected and well-funded nodes, which is the centralizing force you're looking for.
There are 195 countries in the world. And a user could pay via any of those 195 nodes.
When you accept a certain credit card type (Visa, Mastercard etc) only users who are customers of that company can pay you.
Basically a litmus test will be when a gigantic brothel in Europe or a European country’s Caribbean district does a very public but permissionless capital raise, gets filled by retail, and pays dividends while shares being actively traded permissionlessly.
Thats when you’ll know the floodgates are open. Just given how much unwanted attention and publicity that will generate.
To me, its surprising it hasnt happened yet but I think now it is just a matter of time. Many services will take a second look when ownership by address is still concealed. Most crypto platforms do not offer that yet for shares/assets issued on their platform (ie. Monero has no ability to have fungible assets traded on it). Lightning Network has a theoretical but limited ability to do this. Bitcoin will have a greater ability to do this after its current inprogress upgrade goes live (taproot, schnorr) but not a complete solution out of the box even then.
To me, the important litmus test is when bitcoin gets definitively linked to a specific terrorist incident. Now, terrorism in the West is mostly out of fashion, except US rightwing extremists, because it's hard to have a death toll that anyone would notice over COVID, but that's not to say it won't happen in the future.
There is definitely room for price discovery in that industry from an environment with free floating shares. It only takes an enterpriser getting a little greedy or an existing shareholder bundling up their stake in a fund.
Capital formation in the crypto markets rivals VC’s fiat activity, but it is mostly crypto native purchasers for crypto native infrastructure. The systems do work for trusted centralized physical establishments, and the regulatory environments typically just require notice in the state's register. Those societies are comfortable with private sector exchanges being the gatekeepers in how people raise capital and plan exits, and have not factored in the reality where they are completely circumvented and marginalized industries grow, compliantly, and very quickly.
Any custodial ones I have tested have worked well, though.
Any benefits over paying with credit cards / cash / direct deposits?
For the day-to-day stuff it's obviously not as widespread as credit cards and I can't use it for much. For those situations I top up a debit card (Lastbit) using lightning.
In addition to that I spend a fair bit of money on Bitrefill. Obviously also a stop-gap until wider adoption gets here.
For someone living in a country where it's easy to send money locally and where cash isn't very common I don't think the benefits are apparent yet, for me personally. In my business I do receive a number of payments from abroad that always take at least a day to arrive and some funds are lost due to bad exchange rates. Lightning would help a lot here.
There is nothing "unsafe" about handling money for journalist outfits, yet they still police the space - and very arbitrarily too.
I don't think they want to be dealing with any of this as it is costly (compliance staff and lost revenue) and fraught with political peril. But when the alternative is press releases arguing that Visa is helping aid sexual exploitation, they are going to choose to wash their hands of the market segment.
Regulating is expensive and they are not being paid for it. It Same reason why online social media would do as little content moderation as they can get away with .
Jon Oliver did a great piece yesterday on the state of non English content moderation on popular social media like YouTube and Facebook : the numbers he gave were 90% users can be non English but only 13% of the moderators deployed for other languages .
The real sad part is most of the content moderators for these companies all come from developing countries like India and already know a lot of other languages better than they do English.
They only care so far as to make users and regulators think they doing enough.
Obviously, a day will come when the biggest processors (ie Coinbase) will be forced to not accept certain clients / transactions, effectively destroying in practice the possibility of exchanging cryptocurrencies with dollars.
This would only prevent that possibility for the affected clients and only on Coinbase.
By the way Coinbase already has the possibility to blacklist any USDC address it is required to do so by law enforcement. (USDC being a stable coins basically worth 1:1 with USD at this point). And that is because the smart contract governing USDC can have its list of blacklisted addresses updated at any moment.
So in a way the day you're talking about is already there.
> So in a way the day you're talking about is already there
In a way, yes. But there's a difference between "being required to do so by law enforcement" and "doing it preemptively". And obviously, there are many exchanges other than Coinbase.
The point is, I'm not even a crypto fan, but everytime someone comes up with the "how are crypto useful?" question, I can't help thinking "at the moment, they're the only alternative to VISA / MC for payments".
The relevant point, to me, has always been that CCs never needed to work perfectly for the payment use case, they just had to work well enough to be a viable alternative (warts and all).
The fact that some of them do fill this role and have since their creation, namely bitcoin, is what makes me pay attention to the space.
> Tom Mutton, a director at the Bank of England, said during a conference on Monday that programming could become a key feature of any future central bank digital currency ... what happens if one of the participants in a transaction puts a restriction on [future use of the money]? ... Sir Jon Cunliffe, a deputy Governor at the Bank, said digital currencies could be programmed for commercial or social purposes ... “You could think of giving your children pocket money, but programming the money so that it couldn’t be used for sweets. There is a whole range of things that money could do, programmable money, which we cannot do with the current technology.”
At an IMF meeting last October, Swiss BIS director Carstens commented on CBDCs, https://www.youtube.com/watch?v=mVmKN4DSu3g&t=1451s
> With cash, we don't know who is using the 100 dollar bill today ... a key difference with CBDC is that the central bank will have absolute control on the rules and regulations that determine the expression of that central bank liability .. also we will have the technology to enforce that ... if an advanced economy issues a CBDC, and someone in a 3rd country wants to use it, it will require the consent of the central bank of the residence of that person, therefore the degree of control will be far bigger.
Well-intentioned initiatives like Linux Foundation GHP (https://www.goodhealthpass.org/), EU digital health certificate and Apple+Android digital driver's license can all be drafted into the service of CBDC initiatives which require digital identity for digital currency wallets, unifying online and offline policy for programmable "permissions" like carbon/food quotas or other social credits. If western citizens acclimate to "showing papers" for routine daily movement, then real-time policy can be applied to those movements.
This could replace fungible currency with "colored credits", with policy attached to both the origin of money and a whitelist of possible destinations, goods or services. PayPal has amended their ToS to include merchant content regulation as a condition of payment processing.
This problem was very apparent when Wikileaks faced a payment blockade a decade back (https://www.commondreams.org/news/2012/07/18/wikileaks-break...). We are overdue to reign in Visa and MasterCard, just as we are with giant social media common carriers.
What about services that are maybe-legal? As I understand, a lot of the sex-related industry (porn, etc) have some issues related to revenge porn, consent, exploitation, etc. Its hard for the payment processor to trust that every transaction is legal. Especially when occasional illegal content slips in.
If someone is doing something illegal, it should be the authorities job to deal with it.
But now with stablecoins, I wonder how long before all places deemed too unsavory to will just start accepting Tether or another stablecoin. You can already see the govt scrambling to patch their own weakness in this area with their own coin (forgot what it's called). The govt knows they are in the weaker position here because they have virtually zero regulatory authority over stablecoins.
Having gatekeepers is not inherently bad, having just one who can effectively block anything is problematic.
With them blocking all that kind of stuff, people will start looking another way (you know).
Is it free speech if it's only for those who can afford it?
See also: https://en.wikipedia.org/wiki/Operation_Choke_Point
Journalism today "What you don't know about the sky could kill you! Journalist uncovered the truth the sky is actually blue!"
What Pornhub and by extension its mother company MindGeek has done is obviously beyond despicable. After myself knowing the context of some of the services that these payment processors have refused to work with (particularly in the “adult” industry), I would never call what they are doing censorship. I’m instead happy that someone with authority is stepping up. Could this authority be abused? Sure. Is the aforementioned an example of abuse of authority? Absolutely not. It’s an example of when people in authority are doing their job. I don’t want to see anyone’s mother, sister or daughter getting raped and have their rape being filmed for the sexual gratification of millions of viewers online. Seeing Visa and others do the right thing in this case is a breath of fresh air.
[1] https://traffickinghubpetition.com/
[2] https://youtube.com/watch?v=b4auDHtorGM
[3] https://arstechnica.com/tech-policy/2020/12/pornhub-purges-a...
[4] https://edition.cnn.com/2020/12/14/business/mastercard-visa-...
That is the legal system working. Taking payments away for someone who has lost in the legal system, on the censorship scale is probably more acceptable even to someone who's very pro free speech.
It's another thing when visa and mastercard ban forums or subscriptions for people who are voicing their personal political opinions. That becomes a slippery slope very quickly. What court or jurisdiction or due process to visa and mastercard have to decide what is acceptable or not? Is being anti immigration acceptable, or is that racist? What about anti illegal immigration? What about feminists worried about trans rights? What about covid vaccinations? Youtube has blanket banned pro and anti vaccination content. Should mastercard follow? What about anti climate change discussion? What about anti green tax discussion, does that count as anti climate change?
We are on this slippery slope already IMO. And it's not looking very good good for free speech.
Right-wing talk about free speech usually just sounds like people want to make being a right-wing bigot a protected class. I've heard a reasonable argument that it's really just a largely unrecognized ethnic group of Scots-Irish evangelicals. From that point of view, it makes a little sense.
It was heavily promoted by Exodus Cry, an organisation that seeks to completely ban porn, strip clubs and any type of sex work: https://en.wikipedia.org/wiki/Exodus_Cry
This whole thing has lead to a lot unintended consequences that has significantly hurt, or impacted sex workers negatively, such as the MasterCard changes that made Onlyfans try and get rid of sexual content.
Their authority is just rule by fiat. They are not answerable to the people like an institution in a democracy.
What Mastercard/Visa are doing is not a proper way to run a country, let alone the world.
The other unfortunate reality of sex work is that women "busted" by law enforcement are of course going to claim their trafficked when it gets them out of a legal bind.
The root cause of all this a puritanical western society using the power of the state to impose their morals on others. What consenting adults do among themselves, even if for compensation, is nobodies business besides those involved ... and CERTAINLY shouldn't be illegal. So many of us are still conflating sex work with "human trafficking" ... and are party to the PERCEIVED problem by not understanding it can be legitimate work.
Women who consent is out of topic. Although how much some of this consent is meaningful is another can of worms.
> If you sign a contract, you've signed a contract and need to abide by it. I'm of course against non-consensual stuff, but don't cry "I was a victim" later on because you've had a change of heart.
So what kind of evidence do you need that a woman has been raped? Can there be such evidence that can’t be disputed by you or someone else? Can we ever say that a woman has been raped?
I’m seriously curious how you’re reasoning here.
> The root cause of all this a puritanical western society using the power of the state to impose their morals on others.
The West is hardly puritanical, porn and prostitution in general are large industries. The laws are not puritanical, Pornhub got a slap on the wrist relative to what they’ve done. Maybe it’s too puritanical for you, I don’t know.
> So many of us are still conflating sex work with "human trafficking"
That’s a straw-man. It can be argued that an increase in prostitution is positively correlated with an increase in sex trafficking. But that’s not like saying that they are one and the same, no one here is arguing that they are.
Bitcoin was launched 12 years ago, reached $1'000'000'000'000 monetization this year (>1.5x larger than IMF), exploded interest and funding for cryptography and p2p networking over the past 6-8 years, and is marching towards reaching monetization of gold ($11T).
Lightning network runs over 3 years already and growing its capacity exponentially, offering truly "digital cash" capability: no trusted third parties and instant transactions.
Yes, Bitcoin is volatile and it will remain so until it saturates the market like gold did, and every person has as much bitcoin as they want to carry, relative to other assets.
People never have enough, they can never be satisfied if there is someone else who might have more than them.
If you want to maximize your $$$ _compared to others_, that's up for your enterprising skills, and nothing to do with bitcoin monetization progress.
Notice that Bitcoin is somehow specially demonized, but vacation travels or Li-Ion battery production is not. (Although, travels are largerly banned, so there's some progress there.)
I'm pretty sure even if everyone transitioned to "renewable energy" (also largely ideological concept), it would still be useful to demonize Bitcoin for using too much energy, like it's not good to "hoard" money. The reason for that is that Bitcoin is the hardest money there has ever been, so people are fighting to accumulate as much of it as possible before everyone else.
This is unlike any other activity where resource usage is roughly proportional to the value delivered, rather than maximized on purpose. Even if we had a Dyson Sphere, we'd have to waste more than a half of it on mining.
12 years to get to 8% is not really "marching towards".
And then your flippant "everyone uses energy to do things" dismissal doesn't help. Yes, they do. But people don't buy power plants just to run payment processors. But they do buy them to mine Bitcoin.