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Comment by adrr | Hacker News Reader

Cash is more expensive to take as a payment method than interchange unless you’re cheating on taxes.

Nationalize a universal payment interface like india did. India, a very corrupt, bureaucratic place with billions of people did it. There’s no excuse but lobbying.

Credit card rewards are evil. They incentivize crafty behavior to secure miles or whatever and shaft normal people who just want to live life and get what’s equitable without playing shenanigans. I’d rather live in a world where when you pay for a coffee, you pay for the fucking coffee. Not a million equations of cashback and miles with perverse incentives.

FedNow is launching soon. It won't support chargebacks or reversals, which merchants would love, so they may offer it as a payment method (if this is possible). Consumers will then be able to save a few % at the expense losing their ability to contest the transaction. Unless credit card agreements mandate the price be the same regardless of payment method, or something.

The entire US banking system is built around debits, delayed settlement, and reversible transactions (as contrasted with bearer tokens, like cash). If a digital payment method doesn't support chargebacks/reversals, then it's not going to be exposed to consumers in its raw form. Rather it will have conventions layered on top of it that do support these things - like your bank contacting the receiving bank and saying "this transaction was unauthorized, please send the money back".

I haven't read too much on FedNow, but I would expect this will take the form where accounts that can receive payments assent to their bank reversing transactions for various reasons (and then using another non-reversible FedNow transaction to send the money back). So at the consumer level, chargebacks will still exist (for better and for worse).

I suspect fednow is why visa and MC are moving now to reduce fees.

I can’t wait.

It almost certainly isn't. Nobody's taking FedNow at point of sale.

Nobody is doing anything with FedNow yet because it's not out. But if it works it will grow, just like in the EU where they have similar things and they're used.

When I said "nobody is taking FedNow" I meant nobody is going to be taking FedNow at the point of sale after launch in July. It'll work just fine, but it enables things like Cash App, Zelle and Venmo to avoid using debit rails. It's quite unlikely it'll actually exist at cash registers. Out of curiosity which product are you referring to in the EU? To my knowledge they just use Visa/MC Debit or local debit schemes at point of sale.

Lots of larger purchases use the equivalent of what would be in the USA a routing number and a bank account number.

At which retail point of sale?

I suspect it’s fast cryptocurrency networks. There’s L1s where you can pay on your phone and the transaction goes through in a second and a whole bunch of payment startups.

With 3d secure and SMS verification I would argue that any standard crypto payment is faster than credit card as has been for a while. At least online.

In China most payments cannot be reversed. By contrast, the security of payment methods are much more stringent in China.

I was surprised when I first learnt that you could spend money online with a VISA card by only card number, expiration date and a 3(!) digit CVV. Those are hardly secure and printed out on the card that anyone can see. Then the US merchants have so many rules about fraud detection but all of them are just heuristics with many false positives and false negatives.

When Internet companies constantly invents new methods to both increase security and usability (two step authentication, pass keys, FIDO-U2F), the payment industry in the US is just stuck in the past.

Many of the large American companies involved in payments (Visa, MasterCard, Stripe, Square, PayPal) also operate in Europe, and implement the modern security practices required here. 2FA for credit/debit payments made online, for example, and chip payments since... 2004 or something.

Stripe and Paypal are annoying. They refuse payments with virtual debit cards, debit cards issued in other jurisdiction than your shipping (or IP?) address, etc. I'm usually put off when I see a Stripe or Paypal checkout screen.

American payment systems are shockingly outdated and have been so for decades.

Just because things are different doesn’t mean they’re “outdated”.

The optimal amount of fraud is not zero. Merchants, and consumers, both benefit from the equilibrium where there is much more commerce, backstopped by bank fraud detection.

Credit card fraud is just not a large problem in the US, and the extra commerce encouraged by continuing to use a relatively insecure system generally outweighs the benefits of tightening security.

Tokenized NFC payments are even more convenient than swiping credit cards, and they’re gradually replacing the old system, but there is no urgency here.

Most debit cards cost the merchant 0.05% for interchange and provide consumers with fraud protection.

That sounds great. We all know how secure credit cards are and that nobody ever gets fraudulent charges.

Miles just allow airlines to transfer portion of business expense for personal use.

Yes, I always wonder how this is both legal and allowed by corporations.

Sounds like a kick-back from suppliers directly to employees.

And tax free too

> Nationalize a universal payment interface like India did. India, a very corrupt, bureaucratic place with billions of people did it.

Didn't you just contradict your own argument?

Instead of air mileage, just give us the coffee. We can't afford the time off, but we can drink that damn coffee.

> Nationalize a universal payment interface like india did

> a very corrupt, bureaucratic place with billions of people did it.

You're not making a great sell here... you're just saying that this is a thing that a corrupt country does and therefor others should.

Are you American? Have you lived abroad? Here in Thailand (a "poor" "third-world" country) all individuals and businesses can send instant money transfers with no fees at all 24/7. It's an incredible system. I think the truth is that it has less to do with corruption and more to do with the fact that people who implement technology first end up later with, on average, worse technology. (If you build the first rail system in the world you'll have the worst rail system in 50 years.)

The US banking system is lightyears behind the rest of the world in banking, where they still use paper checks and transfers take multiple days. I show my family (who still lives in the US) my banking app and they gawk as if it were some magical thing they'd never even imagined. With a tap of a button in my bank account, I can split a restaurant bill in however many slices I want. Restaurants don't even split bills here (like they do in the US), someone just pays the full amount and splits it in the bank account.

Read my comment again but remove any reference to countries or even credit systems. My comment would apply to any thing that the parent was arguing for. The logic is "corrupt and evil country did x. Therefor anyone can, and should, also do x." The sentence correlates "x" with corruption. If "x" isn't corrupted, then the argument should be different. But I'm just saying that the argument, presented in that way, is unconvincing.

I said it’s something even a corrupt country was able to do that is universally loved and accepted. The fact that the US isn’t able to do it suggests it’s in someways far more corrupt than even India.

> I said it’s something even a corrupt country was able to do that is universally loved and accepted.

I still don't understand why this is a convincing argument. As an example, many countries with dictatorships have people that love and support the dictator (no matter how cruel they are). Dictators will also try to make this look universal.

This isn't a comment on the banking system (or even India), this is a comment on your argument. You're trying to convince others that a thing is good by connecting it with corruption. For me, this just doesn't follow.

The U.S. has legalized corruption in the form of lobbying. This wasn’t so bad as long as donations to politicians were capped, but since Cotizens United there is no limit, so the corruption has gone through the roof as well.

I'm not objecting to credit cards and promoting cash instead -- I'll happily support a total cash ban (quite an unpopular opinion around these circles, I believe, but that's a story for another time). I'm objecting to the cost of 2-300bps on credit cards, when it is trivially shown that they can be 30-50bps (Alipay, EU caps, etc) and everything will work just fine, just without 2% cashback.

Significant number of people below the povery level are unbanked and live off cash which is why some jursidictoons ban retailers from not accepting cash.

What's your opinion on Buy now Pay Later for online retailers? fee is close to 5% but allows customers to pay for items with interest free installments over 90 days.

In some countries, citizens have the right of opening a bank account though

> I'll happily support a total cash ban

So if you say something negative about the govt and the govt bans your access to e payments, would you still support that?

It will never happen anyway.

We are never going to ban cash in the US because government officials need the anonymity of cash just as much if not more than your local drug dealer.

This is a perpetuated lie based on half-information. It is technically correct. If you are comparing a place that only takes cash, and a place that only takes plastic. This place does not exist. This thing exists, is called a vending machine, and it is indeed cheaper for my bag of chips to be cashless.

If a business takes both cash and cards, allowing cards In Addition to already taking cash, does not cost more. It costs a lot less.

But don't take my word for it. Just look at how many places kept trying to offer discounts for cash, how hard and for how many decades the card companies lobbied against that, and how many places do that now since it became illegal for credit cards to force that into their vendor agreements.

Let me give you an example of the logic used for the statement. A 5 ton truck is faster than a porshe 911.

When the truck is cruising on the highway and the porshe is starting off a red light.

What is your argument here?

I believe the oft-cited reason cash is more expensive is primarily due to shrinkage, which is on the same order as the credit card fees (unless you’re a family-run business or have only amazingly trustworthy employees). Cash-only discounts can be just as easily explained by the “flexibility” cash provides — you can’t assume the conclusion as a fact. The fact that most cash discounts are greater than 1% generally supports this idea, since a business offering a 3% cash discount definitely earns less than taking plastic. (But the accounting “flexibility” is worth more than that 3%.)

Are you saying this is not true, and cash shrinkage is less than the fees?

What I am saying, is what I said. Which has little to do with that to which you are replying. Please read it, and reply to that if you so choose.

You just asserted it was a lie, but didn’t say why. I want to know how you are refuting the “cashless is cheaper” argument? All of the business owners I know value cash only for the ability to declare a bit less, the fees are a wash with the complexity of dealing with cash. If you are arguing that there is another reason it’s cheaper but not saying how — please tell us! Or are you talking about the every-day, minor tax fraud that makes it cheaper?

Multiple restaurants around me only take card. Also airlines. I work for a dtc company and we would go cashless at our stores unless we are forced to by mall management. Cash is expensive to handle.

https://www.usatoday.com/story/money/2018/04/15/cashless-res...

Got it - I was wrong about that second part. The restaurants around you don't serve people who are poor, or people under 18. Smart choice.

Several restaurants around you (I've never seen one, ever) being bigoted and rejecting business, does not mean your general statement is true. 99.(99999?)% of physical businesses also take cash. A blanket generalization, like the statement to which I replied, is based on - umm - the general case. a .0001% case of it being true doesn't make it true.

Trees you see, don't grow on land. Because I saw one growing through the water in a shallow lake once.

Here in the real world, the polar opposite of what was stated is actually true. In fact, I'll bet you a lot more businesses Only take cash than only take credit. Adding credit to a business that does cash (most businesses), is expensive. Adding cash to a business that does credit (count them on one hand) is also expensive.

You seem to not understand that, so I do have more tree and fern examples - just ask. You'll have to wait a couple of days if you want other kinds of flora however, as my brain turns slowly.

This is mostly a myth. If your business has high revenue, that is a lot of money in fees to CC processors. Of course if you prefer CCs then you can invent a bunch of imaginary costs for handling cash.

This idea of businesses that are handling cash are cheating on taxes is about as right as saying men with moustaches are burglars.

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