Thread

Banks and Credit Unions to Team Up Against Apple Pay Fees

127 points · 133 comments · Brajeshwar

havaloc · 1790442549 · focus · HN ↗
I get why the banks are not happy, but I can tell them that I am not going to use Chase Wallet, Bank of America Wallet, Citi Wallet...just pay the fee and be thankful for the reduced payment friction, which they invariably make money from. PS: Nobody is going to use Paze (yet another half baked wallet), other than to collect the free $10 to sign up for it.
Somewhat related, even Walmart relented and now supports Apple Pay/Contactless. Every big merchant has now relented (Kroger, Home Depot, Walmart).
1. radialstub · 1790448131 · focus · HN ↗
  This is the government's problem. I tend to be on the side of less government, but it is so obvious that payment facilitation should be a service provided by the government. The government is just allowing corporations to collect rents, because they are lazy and incompetent.
  1. guywithahat · 1790448728 · focus · HN ↗
    It's not a government problem, it's a competition problem. Fundamentally 1-3% is actually a very competitive rate for organizing the easy transfer of money and handling fraud. Merchants would rather the cost be free, and banks may want a larger slice of the pie, but until someone comes up with a better way of paying money for both sides this is the best we have. If government got involved all that could happen is fees would increase and then we'd miss out on future efficiency improvements and savings.
    MBCook · 1790452003 · focus · HN ↗
    0% because it’s a service that’s so obviously should be provided by the government is better.
    coredog64 · 1790458080 · focus · HN ↗
    Having been a customer of a government run postal bank, I'm going to hard disagree.
    stevesimmons · 1790452306 · focus · HN ↗
    > Fundamentally 1-3% is actually a very competitive rate for organizing the easy transfer of money and handling fraud
    This is a very US-centric take. In the UK, EU and Australia, interchange rates are capped at more like 0.2/0.3%.
    gruez · 1790452667 · focus · HN ↗
    That actually proves the point, because a market left to itself arrives at 2-3%, and it only goes lower if the government is dictating a rate.
    Flimm · 1790455692 · focus · HN ↗
    What you are missing is that a market left to itself is not necessarily competitive when monopolies/duopolies form.
    Dylan16807 · 1790457513 · focus · HN ↗
    Proves what point? GP was saying the government would only increase fees.
    overfeed · 1790466006 · focus · HN ↗
    A duopoly is not "a market"
    wenc · 1790469920 · focus · HN ↗
    There are distortions in that "market" because credit cards aren't just for payment acceptance and fraud handling (which are narrow functions).
    In the U.S., many credit cards bundle short term credit, rewards, travel benefits, insurance etc. This bundling is why merchants can pay up to 2-3% in fees.
    The payment clearance and settlement parts are much cheaper. That's why many countries are able to build domestic payment rails (e.g. Pix in Brazil) that process transactions at low cost.
    PaulCarrack · 1790510450 · focus · HN ↗
    A 2% cash back card cancels this out, resulting in comparable interchange rates. In some cases, you can effectively make money by spending money.
    93po · 1790467342 · focus · HN ↗
    The USPS is overwhelmingly the most efficient and inexpensive way to ship things. Try sending a letter cross country with UPS - it costs $15. USPS costs $0.50.
    Government doesn't always mean worse.
    stasomatic · 1790511472 · focus · HN ↗
    The USPS lost $9B last year. If our government considered The USPS a real public good, they would pick up the bill and give them more budget. Instead, The USPS had to get in bed with Amazon to keep the lights on and start delivering on Sundays.
    93po · 1790623290 · focus · HN ↗
    It was $2.7 if you remove the forced retirement obligations that private companies don't have to do, which is only about 3% shortfall. And a large part of that was also due to private competition taking more of the market - in part because the USPS isn't as competitive as it could be, again because of costs incurred outside its control.
    Certain individuals, such as Susan Collins and Tom Davis, who were the largest names behind the 2006 law to force this on the USPS, were clearly doing it in an attempt to make the USPS fail/become less competitive. PACs affiliated with FedEx, UPS, etc gave more than $192,000 to Collins’s campaign / PAC from 2000 to 2004. FedEx’s PAC has given Collins more donations than any other congressional candidate in that PAC's history.
    There is a huge chain of evidence suggesting members of congress don't want the USPS to succeed due to self interest.
    votepaunchy · 1790678380 · focus · HN ↗
    Do private companies not have these “forced retirement obligations “ because they don’t offer fixed benefit pensions?
    stasomatic · 1790703008 · focus · HN ↗
    I am out of my depth here. $2.7 is not nothing, but $9B is still on the books, no? No ifs and buts about it, unless our government does the right thing. Just eat the cost and prop them up, treat your federal employees right. It's really bizarre that the government expects them to turn a profit.
    Tangent, having lived in 5 states, the USPS workers have always been nice and courteous, even when there are lines out the door during the tax season. And in general, like DMV or other licensing agencies.
    nateb2022 · 1790612371 · focus · HN ↗
    > then we'd miss out on future efficiency improvements and savings.
    Which I'm hoping will find its way back to our wallets but which I doubt will happen
  2. bnjms · 1790451828 · focus · HN ↗
    They’re more like taxes than rents. It’s a constant cost applied to all goods because of the ubiquity of use means we pay with or without playing the credit card/payments game.
  3. AnthonyMouse · 1790455278 · focus · HN ↗
    This is fundamentally looking at it the wrong way.
    Why do we need my bank to send money to your bank via Visa or the Federal Reserve or any such thing, instead of having my bank send money directly to your bank? All they need to do is both support the same openly specified protocol for transferring money.
    rietta · 1790457284 · focus · HN ↗
    We used to call those checks!
    havaloc · 1790457930 · focus · HN ↗
    Listen to the Visa episode of The Acquired Podcast, and you'll change your mind.
    AnthonyMouse · 1790494886 · focus · HN ↗
    If you have an open standard decentralized protocol that banks are required to support, that's the network effect solved. Merchants and anyone making the software that merchants use would want to support it because you're getting rid of Visa's fees.
    owebmaster · 1790464516 · focus · HN ↗
    That's what Brazilian pix does and the reason visa/Mastercard and the US government want to kill it
    hdgvhicv · 1790472573 · focus · HN ↗
    Most counties have such a system, many are more advanced than visa etc (seemless customer-customer payments too for example.
    From NETs in singapore to girocard in Germany, Alipay to UPI.
    ValentineC · 1790520150 · focus · HN ↗
    > From NETs in singapore to girocard in Germany, Alipay to UPI.
    Singaporean here. NETS is a shitshow of a dinosaur trying to stay relevant. They started as more of a debit card system like EFTPOS [1], but now lean more into merchant acceptance for both credit cards and QR codes. (Singapore is huge about credit card rewards, so few people want to use a debit card with PIN entry and no rewards these days.)
    I think the problem with them, and many companies that focus solely on a tiny market like Singapore, is that their organisations tend to be full of comfortable dinosaurs that don't stay up to date with financial software engineering practices (I've lost money from government site transactions that were a hassle to get back), and there's a captive market because of their duopoly.
    The biggest reasons they still exist are because they're a joint venture between the big 3 local banks, and our government likes their initiatives to have some competition to emulate a free market.
    Pix, from its Wikipedia page, sounds like a bank account aliasing system, just like PayNow in Singapore.
    [1] <a href="https://en.wikipedia.org/wiki/EFTPOS" rel="nofollow">https://en.wikipedia.org/wiki/EFTPOS
    SkiFire13 · 1790494336 · focus · HN ↗
    See "What do Visa and Mastercard do?" <a href="https://news.ycombinator.com/item?id=49614280">https://news.ycombinator.com/item?id=49614280
    It's not something irreplaceable but it's not trivial either.
    AnthonyMouse · 1790530019 · focus · HN ↗
    The "network" part of what they do could straightforwardly be done in a decentralized way using ordinary DNS (for the parties to discover the servers of the others) and TLS. When your card issuer is Example Bank then your "card number" would be 123@example.com and the merchant or their bank knows to contact the servers at example.com to initiate a transaction for that card.
    It seems like the primary thing they actually do is currency conversion, which a) isn't strictly required (e.g. plenty of small US merchants might hardly notice if they only accepted payment in US dollars), and b) could just as easily be transparently provided as an optional service by either of the card issuing bank or the merchant bank for cardholders or merchants who expect a non-trivial number of foreign currency transactions.

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