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Comment by 01acheru | Hacker News Reader

Something needs to change in the digital payments sector. 1.5% is ok-ish but 3.25% to accept foreign cards in the EU is a lot of money!

I understand that costs are higher when using credit cards because of the credit part that introduces risk, but in my case for example I have a debit card that runs also over Mastercard, so either I have the money or I don't. Why should a merchant be charged the same fee of using a real credit card if the risk is highly reduced?

I still don't understand why it is so hard to break the Visa/Mastercard duopoly on card payments. Why isn't there a standard for payments that banks can implement? Why are Visa/Mastercard/Amex required? SEPA in EU is already something but it is taking ages for it to become an actual payment platform in everyday's life.

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India built rupay, an alternative to visa and mastercard which has 0 charge to merchants. It is expanding internationally and works in neighboring countries.

Aside from this, most local payments happen over UPI so they cost 0 as well.

Visa and mastercard usage is declining in India since a few years despite rapid increase in digital adoption. Government banned master card, diners, express, etc issuance for not complying with local data storage rules for over a year and it did not impact much.

I think the solution is to run payment infrastructure at public level like many countries have done in Asia.

This is exactly what I mean and what I would like to see in the EU. I think the digital Euro is meant to be something similar but it is still vaporware ATM.

Thanks for sharing!

Don't you guys have SCT Inst? Finding a tech provider / bank who can wrap that into a nice UX and API is the challenge.

The problem with SEPA payment, is that it's great for the merchant and a net loss for the user, especially individual consumers.

From a UX perspective today, it will always be more cumbersome to initiate a SEPA transfer to the merchant. Some integrations offer a semblance of interactivity with your banking app in an attempt to streamline it, but nothing beats the simplicity entering your cards details or just showing your face to Apple pay. Then from a consumer protection perspective, if something wrong happen with your order or the merchant goes bust, you have no recourse if you initiated a SEPA CT. Card payments on the other hand give you a nice chain of large entities exposing themselves to the merchant's credit risk in front of you.

It can probably work in specific situations (e.g. if you have a niche website with a sophisticated audience ready to overcome the hurdles to acquire your widgets), but for these reasons alone I just can't see SEPA payments going anywhere near even a ridicule fraction of the market share held by legacy card networks yet.

This. I would never do a SEPA payment vs a credit card transaction unless there's a significant advantage to me as a user to go with SEPA. And the merchant can't give me a discount for using a specific payment which is not allowed under EU rules, so there's not much the merchant can do there.

> And the merchant can't give me a discount for using a specific payment which is not allowed under EU rules

Charging a fee is not allowed, but giving discounts for specific payment methods are AFAIK.

In Finland with my fairly large bank the barrier is pretty much same if the card isn't already saved. Actually SEPA is easier as I only need to log in and confirm instead of having to provide CC details and log in to confirm the transfer.

Yeah this. SEPA (e.g. what is known in the Netherlands as Ideal) is easier than entering cc numbers. Unlock phone, open app, scan qr code, enter pin on phone, click OK. Much nicer and faster than entering 16 + 3 numbers, and don't even get me started on 3DSecure or whatever it's called bullshit.

For me, click pay, click bank, enter username+password, enter 1-time code, verify the details, get sms with second 1-time code and enter that. Done.

I hate trying to remember my cc number, expiration date, and CVS... And then doing that exact same thing above.

Brilliant. I hope we can get closer to this state side with FedNow instant payments coming soon.

Nevertheless I choose to use a credit card almost all the time because of the purchase protections and rebates.

SEPA Direct Debit has pretty good UX, I find. Just enter the bank account number, accept terms, done. In theory it's a bit more complicated as for B2C you're supposed to collect a real signature (which no one does) and for B2B there are additional rules (which most merchants also ignore), but in practice it works reasonably well. B2B SEPA direct debit is also much better for the merchant as money that has been successfully transferred cannot be refunded, unlike credit card payments where you can get chargebacks for 120 days...

If it's offered, I pay with the Danish Mobilepay app. The flow is:

1. Click "Pay with Mobilepay"

2. Enter phone number, or confirm it if if the merchant already knows this

3. Press notification on phone, fingerprint, and swipe right to approve.

I'm not sure how this appears to the business, but to me it looks like any other payment or transfer on my bank statement.

There are multiple types of SEPA payments, I think you're talking about SEPA Credit Transfer (essentially making the bank transfer yourself).

On the other hand, for SEPA Direct Debit, not only is the interface quite reasonable (you enter your IBAN and confirm a mandate), but consumer protection is very high. You can chargeback no questions asked for 8 weeks, it will be immediately accepted and the merchant can't do anything about it. And as a customer, besides the 8 weeks no questions asked policy, you have 13 months to ask for a refund of an unauthorised transaction, with supporting evidence. In practice, the bank will always accept such a request too.

SEPA DD is suited for recurring payments as it relies on a mandate. It doesn’t make sense to set up a mandate for every one off txn, and at which point you’ve authorized the merchant to pull money from your account at anytime. The ball goes back to your court to contest afterwards, as well as keep track of all the mandates you’ve signed.

It's the chicken and egg problem... If you started a new card provider today, you'd need to get consumers onboard, banks onboard, merchants onboard, and every card machine in the world replaced to accept your new card type.

The closest we get to that is loyalty cards and gift cards that only work in one shop. Some of those have managed to be compatible with a few shops, but nowhere near what would be needed for a consumer to consider it a replacement for visa.

I totally understand you and you are perfectly right IMHO. This is why I don't understand why isn't there a payment standard, we are in 2023 already, the economic burden of keeping fattening those "old-school" card networks is absurd, it is billions and billions of dollars each year.

Lobbying is the only reason I see that keeps a payment standard from being implemented.

There is no standard because there are different currencies in different empires and different rulers of those empires. Asking why there isn't a unified standard is the same as asking why there isn't a one world government.

The economic burden of the "old-school" payment networks Visa and Mastercard is very low for both merchants and customers for what these networks provide. The economic burden and other burdens of a one world government would be immense in comparison.

Please remember that most people use other methods to transact larger amounts, so the fees are mostly for the convenience of small remote transactions.

Would you want to work on a payment standard and then try to convince the rest of the world to use it?

I dunno, that just sounds too soul destroying to me.

It would be nice to work on a payment standard IMHO, it is something really world changing, but it isn't something that you or I can simply create in mama's basement and then post on medium to cater some attention.

If the EU were interested in doing something about this they wouldn't have that problem at all - they could simply mandate interopability.

What you're describing is called "network effect": https://en.wikipedia.org/wiki/Network_effect#Credit_cards

One funny thing is that some card transactions (e.g. contactless payments without PIN entry over 100€ for at least one payment processor, needs to be enabled by the merchant) actually don't go trough Visa/Mastercard but are already done via SEPA.

> SEPA in EU is already something but it is taking ages for it to become an actual payment platform in everyday's life.

Is there anything stopping merchants from offering different prices to people based on different payment methods?

I assume the reason merchants do not list a discount for paying via SEPA or ACH or debit card or whatever local non credit card (and non Visa/Amex/MC) option, is because merchants benefit from the higher prices that people are willing to pay when using credit cards (compared to the cost of accepting credit cards).

In the US, Target is the only big retailer I know that discounts for using ACH (debiting directly from bank account). They give 5% off.

> Is there anything stopping merchants from offering different prices to people based on different payment methods?

I think there's an EU rule about that. I've seen a business (justeat) charge a card-processing fee for cash-on-delivery orders.

> Traders in the EU are not allowed to charge you extra for using your credit or debit card.

https://europa.eu/youreurope/citizens/consumers/shopping/pri...

Interesting. So foreign cards have to be accepted at the same price?

I know credit card fees are capped in EU, so this might be a reasonable policy, but if merchants and domestic customers have to eat costs due to foreign card costs via higher prices for everyone, that does not seem fair.

Some expensive cards (historically mainly Amex) are just not accepted widely.

> So foreign cards have to be accepted at the same price?

No, only regulated cards have to be accepted at that price.

So a surcharge can be charged for EU commercial cards which also cost > 2% and are not subject to the interchange regulation.

But I think that goes with the card fee limit of 0.2-0.3% if I remember correctly.

Which is basically the government helping an oligopoly instead of fighting it. Of course, considering how attractive the idea of all transactions being trackable must be to governments this is hardly surprising.

What they can do is offer a rebate if you don't pay by credit card.

Swiss (the airline), for example does that.

Here's a sticker at a large Danish supermarket showing it isn't necessarily that simple.

It says local and foreign debit cards are free, but Danish credit cards cost 0.9375% extra and foreign ones 1.75% extra. Maybe the rule only applies in the Eurozone?

https://imgur.com/a/UDnathK

In some countries it is illegal to charge different prices based on which payment method is used.

Here in Italy for example there is a lot of discussion around this topic now that most stores are legally bound to accept digital payments but cannot charge a different price if you pay with card instead of cash.

Which basically means that you pay credit card charge even for cash payments.

That is a bad rule. It hides the cost of the CC for the consumer. Ideally the card holder should pay the whole fee and it should be on the recipe.

It's called surcharging and it's not allowed in the EU.

I think this indirectly happens. I live in Haarlem, Netherlands, and some popular supermarkets in my area would not accept a VISA/Mastercard. They only accept Maestro(Which I think is cheaper for them because it is a debit card that Dutch banks give out). I found it surprising because that should mean they lose out on some business from so many expats that visit/live in Netherlands, but apparently not.

This happens in the US, too. A local (western US) example is WinCo Foods, a chain of grocery stores. The only cards they take are debit (and EBT, but that is a different issue). No credit cards.

Interestingly, Aldi in the US used to only take debit cards, and changed to accepting credit cards a few years ago.

Maestro and Mastercard Debit cost more or less the same for NL-issued cards, interchange is a fixed 2ct [1]. As Mastercard is getting rid of Maestro, Dutch banks will start issuing Debit Mastercards soon.

Probably the supermarkets will switch to only accept Mastercard Debit/Visa Debit.

[1]: https://www.mastercard.com/content/dam/public/mastercardcom/...

> Is there anything stopping merchants from offering different prices to people based on different payment methods?

Yes, it is usually not allowed in your contract with the card payment providers. If you start doing it anyway - as some do - you risk them terminating the contract.

https://www.epicompany.eu/

https://nordicpayments.eu/

> Something needs to change in the digital payments sector

Ethereum solves this, just use stablecoins

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