Hacker News Reader

Comment by White_Wolf | Hacker News Reader

In a world where cash is starting to dissapear, payment processors and banking in general should be regulated and treated just like some sort of utility company (Ex: Water, electricity).

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.

View on HN

How credit card processing hasn't been classified and regulated as a utility is truly baffling to me. Especially with governments explicitly recommending contactless card payments instead of cash during the pandemic and many doing things like taking large bank notes out of circulation for years now.

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.

Crypto is the only competition that can force financial innovation in TBTF era.

Innovation isn't what's needed, it's regulation. Making an alternative that does a couple things better but a thousand things worse isn't going to turn a broken market into a free one.

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.

I'm no apologist for corporate power, but most payment network censorship seems to be driven by government regulations - Wikileaks, sex work, weed, and gambling are all things the government has passed laws to explicitly harm. As such, additional regulation is more likely to cement the current restrictions rather than repudiate them.

Yeah I should know this. I tried to donate to WikiLeaks before. My bank flagged my account and alerted my mother.

I believe cyptocurrency has the potential to do everything a 1000 times better.

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.

> We don't need crazy things like crypto - we need decentralised and accountable banks and payment processors

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.

> decentralization => crypto

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.

Banks are centralized enough to be targets for government intervention. There simply aren't enough nodes in this supposedly decentralized system for the failure of a single node to not matter.

> For debit card transactions they don't provide any benefit

Agree.

If it only we have some kind of country-wide entity that was run by the people through elections and that could create a centralized payment system with open access to everyone....

But no! The state! oh the horror! Cant have state-run things!!!!

Governments the world over are surveiling you without your consent right now. How could you possibly trust them? Centralized economic systems are nothing but yet another state surveillance apparatus. People think it is normal for the state to demand complete identification data on every person businesses transact with. It sacrifices our privacy yet fails to prevent crime. No amount of crime justifies this.

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.

Man. You can't outrun the government. You can vote, you can try armed insurrection. Reform or revolt, those are the choices, and revolt is guaranteed suicide.

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.

> Reform or revolt, those are the choices

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.

>>>Reform or revolt, those are the choices, and revolt is guaranteed suicide.

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".

The Brazilian government created an instant payment system that doesn't depend on payment processors. You can send money to anyone in seconds using their tax id number or their phone numbers, it clears in seconds.

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.

Awesome! We need more countries implementing systems like that. Once that happens, an international or at least EU standard is hopefully soon to follow.

I thought this was ubiquitous in Europe already: both countries I call home (Denmark and Portugal) have each had their own for a long time now.

Not in my experience, although I haven't done an insane amount or traveling. I've seen local payment systems in a handful of countries, but I don't remember any that were commonly used at POS. I know of a handful, for example, built by a few banks or a mobile network operator, but those have little market penetration due to only working with those providers or their partners (but of course not their largest competitor).

How do they deal with fraud/theft?

Well, the same you do with Credit Cards or other forms of electronic transfer of debts.

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.

Very badly. It is now extremely common for criminals to force people to log into the bank app and transfer out all liquid assets, no doubt to bank accounts created with stolen identities. What happens after? I'm not sure. I assume the victim has to prove that a crime occurred in order to reverse the transactions.

No different from what could be done and was done before with debit cards, credit cards and standard wire transfers.

Don't give fuel to the FUD.

>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.

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.

That's because there is no open standard for it, which is mentioned in the following sentence.

> 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)

There are standards, however making them "open" wouldn't change anything. You've obviously never tried to integrate with a large number of separate entities before.

I have not, I've just clarified the point of the parent in case you misread.

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?

You are talking about a many-to-many relationship here. Every payment processor has to ensure their system works with every bank, and vice versa. So the standard defines the data format, great. What happens when Payment Provider #223 has an issue communicating with Bank #16252? On an even bigger scale, who is going to maintain all of the necessary technical info for the parties to all interoperate? Who will handle fraud detection? Who will be liable for fraud that goes undetected?

Credit card companies handle all of that and much more in exchange for transaction fees.

Sure, the standard could be made relatively easily, but how do you go about getting every bank to agree on this standard and update their systems to accommodate it, as well as the 10s of millions of POS terminals in the US alone to be updated, as well as all of the major credit card companies, etc.

You get banks to agree by mandating it. Just like the formats of SEPA Credit Transfers are written into law and required by all EU banks to support.

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.

> In a world where cash is starting to dissapear, payment processors and banking in general should be regulated and treated just like some sort of utility company

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.

I think they're saying the regulations should include not excluding someones legal business because you 'dislike it' ala WikiLeaks.

Todays finance regulators require you to not do business with some people, often without good evidence.

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.

This sort of thing is exactly why we need private and anonymous cryptocurrency like Monero.

Is this still the case today, in 2021? I know that Wikileaks was blockaded for several years, but I thought those were all dealt with.

There are different types of regulation. The one that exists now and primarily is regulation such that individual human people cannot transfer or store in to large amounts of money without federal investigation of the source and identity. Banking and processors comply with these rules and generally go overboard making things hard for human people so they can keep their own corporate asses safe.

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.

I'm not a fan of digital currencies, but this is one of their shining points.

It is supposedly coming, albeit decades late:

https://www.frbservices.org/financial-services/fednow

> Advertising is a different beast altogether.

You are correct. Web advertising is long overdue for some trust-busting. But for some reason, antitrust law is rarely enforced.

Reply on news.ycombinator.com