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Comment by satvikpendem | Hacker News Reader

This would be great if it can cut down payment processor fees which are mainly driven by the rates that Visa and MasterCard charge, essentially as a duopoly power in the market. They also control what you can and can't buy, such as for example heavily frowning upon adult content, even if you are legally an adult.

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I've seen small towns adopt cash only payments to curtail this. Why should the tax pay effectively a 2%+ tax on the economic activity of the town. Imagine a bunch of people living there, transacting with each other, 2% tax for every movement?

On some levels yes, if getting and keeping cash is your aim, it can work.

But there are costs associated with cash too. It has to be stored safely, counted and reconciled, banked (not always free) etc etc.

I’m not saying credit card fees are ‘cheap’, especially not in the US where they seem to be quite high to support the cashback economy, but cash isn’t free for a business either.

The EU didn't this effectively by just regulating them.

It's a failure of US regulation only that VISA and MasterCard etc charge what they do

This is for bank to bank transfers, like ACH but different. It won't be used for retail payments directly, though it could make them cheaper in the long run.

Depending on the implementation, I could use them for retail transfers though, if I trust the other party enough. It might not be wise in most cases, due to lacking the protections of credit cards, but it could be in some.

If you read carefully they clearly are not disrupting anyone’s gig. This is America man, the a public instruction isn’t going to step in and eat their business alive especially not something as big as payment processing. This is Zelle 2.0, ACH 2.0, etc. It won’t ever be for payments.

Given the numbers they quote re: cashless payment, it doesn’t matter if retailers don’t like the credit card processors. Consumers do - and with all the points and rewards and convenience of cashless payment, they will demand they at least support such payments and most people will use them even with passing on the fees. It’s hard for me to see a world where that changes any time soon.

Adult content has a stupidly high chargeback rate. Chargebacks are expensive and card processors don't like adult content for that reason.

Well if it's a direct bank to bank transfer, there's no chargeback, problem solved. Of course, you assume a lot more risk for getting back that 3% transaction fee, but if you know what you're buying, at least you can make the purchase you want to.

We already have debit card and the related networks (like Star) that are cheaper. People are just used to Visa, and like the rewards.

That seems surprising to me as Canada's equivalent system (Interac) is very popular.

Generally, retailers like credit cards because people usually spend more money when they pay with credit cards.

That is why you do not see major US retailers offer discounts for paying with cash/debit card/ACH. The only one I can think of is Target, that offers 5% off if you use Target Redcard, which can be linked to your bank account.

Until Dodd-Frank, the rules for discounts on cash transactions imposed by Visa and Mastercard by merchants were much more stringent.

Many retailers had their hands tied, whether or not they wanted to provide a cash discount or credit card surcharge.

Sure, but that was 13 years ago. Retailers also always had the option of simply not accepting credit cards, and only accepting debit cards.

I presume smaller retailers are hit the hardest with fees, as they face the most payment processing middlemen and have zero leverage in terms of volume from which to negotiate that stuff. So maybe Starbucks doesn't care how you pay, but Joe's Joe down the street has a hardwritten sign up by the till asking you to consider paying with debit or cash because it saves them a few percent on each transaction when you do.

I don’t use debit cards because it’s less secure than using a credit card. If I dispute a charge on a credit card I’m more likely to have a positive outcome than if I use a debit card. With a debit card the money is taken out of your bank account at the point of purchase. It’s hard to get it back in if I was charged inappropriately.

In the US, your debit card and credit card are protected by the same dispute rules under Regulation E.

My guiding principle is that it’s best to not let someone take money out of your bank account since putting it back in is a hassle. What happens in this scenario: You use a debit card to purchase something from eBay and what you got isn’t what was promised. eBay sides with the seller. What recourse do you have? With a credit card, in the worst case scenario, I just don’t pay the credit card company. I don’t care about credit ratings and credit card companies won’t sue me for the money. They’ll just ding my credit rating.

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