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When you pay a merchant $100 with your card they get about $97. When this $100 has exchanged hands 50 times only $15 remains. The bank owns the other $85. Cash

When you pay a merchant $100 with your card they get about $97. When this $100 has exchanged hands 50 times only $15 remains. The bank owns the other $85. Cash is a hassle but it cuts out the middlemen. We need a unified payment system in western countries, but it's almost impossible given how much of a chokehold big banks have over our economy. Capitalism at its finest.

louwrentius 3y ago
I agree. From what I understood, the Dutch iDeal system (which I love) might become a European standard. It doesn’t cover large parts of the world but I think the fees are not as “insane” as PayPal or systems like this.
- aleph_minus_one 3y ago
  > From what I understood, the Dutch iDeal system (which I love) might become a European standard. What can you tell me about iDeal's privacy aspects? Does it allow anonymous transactions (here it mght make sense to distinguish between - non-anonymous entity sends money to anonymous entity - anonymous entity sends money to non-anonymous entity - anonymous entity sends money to anonymous entity; "anonymous" is here to be understood as "anonymous to iDeal", i.e. iDeal has no practical chance of de-anonymizing this identity)?
  - louwrentius 3y ago
    As far as I know only the Merchant and your account is known to iDeal, not what you buy.
solatic 3y ago
You make it sound like the other $85 that the bank got sits in a vault somewhere, extracted from the economy and hoarded in a stockpile. Actually the banks have their own costs (e.g. salaries) and much of the money is further invested. In fact, the natural state is to keep so little cash on hand that Dodd-Frank forced the banks to hoard more than they otherwise were inclined to. Yes I've oversimplifying a lot of differences (payments infrastructure vs. investment banking, for one) but the point remains. I do think that day-to-day realtime debit-style payments should be a publicly-operated, minimal-or-zero-fee commodity rather than a massive source of rent, but having access to electronic payments for consumer retail is literally responsible for trillions of dollars more economic activity than you would see if we went back to cash-only.
- nish1500 3y ago
  Salaries for what? Marketing? Obscene bonuses? Downtown office buildings? It is a manufactured need. I am simplifying things but if we had a public owned payments system that wasn't a profit centre the costs would be far less. Even within the developed world the costs are very different between Europe and the US. Your fees are paying for someone's hefty bonus and lobbying expenses. Again, it has been proven. UPI works.
- wildrhythms 3y ago
  Why do you believe the investments made by the middlemen processors and banks are more worthy than the investments made by businesses who the consumer is directly patronizing?
thatfrenchguy 3y ago
Only in America are fees that high :)
- deleted 3y ago
  [deleted]
somerandomqaguy 3y ago
Plusses and minuses to each system. You don't need to pay the cost of transporting the cash to and from a bank (worst case is armored car transport), and electronic transfers have lower accounting overheads (no need to manually count). And modern credit cards have pretty sophisticated fraud/card theft detection nowadays.
Kenji 3y ago
[dead]
signal11 3y ago
UPI has no dispute resolution (as of now). So if you pay with UPI to someone and have a dispute, good luck. You have to approach the Indian courts to get your money back, which, given the Indian justice system, is… difficult. By contrast, dispute resolution with cards is much easier. Also, I don’t recognise this 3% figure — not in all geographies. Eg Europe under PSD2 has 0.3% for credit cards, and 0.2% for debit cards. In Canada, Visa and MC recently agreed to a 1% cap. That said, I’d be very interested in seeing where the conversations around dispute resolution in UPI leads. Context: Indian banks have already begun to complain about UPI being free, and the Indian authorities had to quickly walk back a consultation around potential merchant-side charges to UPI. I guess this tension between business, customers, and digital intermediaries is what makes payments an interesting space.
- vivegi 3y ago
  > UPI has no dispute resolution (as of now) Not true. [1] [1]: https://www.npci.org.in/what-we-do/upi/dispute-redressal-mechanism https://www.npci.org.in/what-we-do/upi/dispute-redressal-mec...
  - colesantiago 3y ago
    Glad to see it. It makes me sad that there are so many misconceptions about UPI that people are willing to resort to falsehoods (such as CBDCs and privacy) and it shows that most criticisms are from people that haven't used it in the real world.
    - 1024core 3y ago
      [flagged]
      - signal11 3y ago
        The UK’s Faster Payments system predates UPI. Free, near-instant payments round the clock. IMPS, the tech that powers UPI, came around 2 years later. But UPI as a layer on top of IMPS is great, especially the idea of providing an easy you@bank identifier. By contrast Faster Payments is like 102030-12345678. And being designed post iPhone was actually a blessing because it allowed UPI to have a mobile-first deployment strategy. But UPI also makes a virtue out of necessity: the reality that cards and a protected e-payment mechanism are difficult to organise, especially for India’s less-well off. This then turns into nationalistic chest thumping about “jealous foreigners”, while completely ignoring real issues around customer protection and scenarios that UPI doesn’t enable. To be clear: I wish UPI well. I also want to see less opportunities for scammers in UPI and for people to be able to use UPI with confidence knowing they will be easily refunded if things go wrong. It’s honestly tiresome to have reasoned conversations with nationalistic chest thumpers.
1024core 3y ago
> When this $100 has exchanged hands 50 times only $15 remains. Just to nitpick: 0.97^50 is 0.21806. So only $21.81 would remain and the banks would have $78.19
- nish1500 3y ago
  I used 2.9% + 30cent for each transaction
cubefox 3y ago
> We need a unified payment system in western countries, but it's almost impossible given how much of a chokehold big banks have over our economy. Credit card companies charge even more than banks.
- umeshunni 3y ago
  Most of the interchange goes to banks.
sunshinerag 3y ago
wow Capitalism? Where?

louwrentius 3y ago

I agree. From what I understood, the Dutch iDeal system (which I love) might become a European standard. It doesn’t cover large parts of the world but I think the fees are not as “insane” as PayPal or systems like this.

aleph_minus_one 3y ago
> From what I understood, the Dutch iDeal system (which I love) might become a European standard. What can you tell me about iDeal's privacy aspects? Does it allow anonymous transactions (here it mght make sense to distinguish between - non-anonymous entity sends money to anonymous entity - anonymous entity sends money to non-anonymous entity - anonymous entity sends money to anonymous entity; "anonymous" is here to be understood as "anonymous to iDeal", i.e. iDeal has no practical chance of de-anonymizing this identity)?
- louwrentius 3y ago
  As far as I know only the Merchant and your account is known to iDeal, not what you buy.

solatic 3y ago

You make it sound like the other $85 that the bank got sits in a vault somewhere, extracted from the economy and hoarded in a stockpile. Actually the banks have their own costs (e.g. salaries) and much of the money is further invested. In fact, the natural state is to keep so little cash on hand that Dodd-Frank forced the banks to hoard more than they otherwise were inclined to. Yes I've oversimplifying a lot of differences (payments infrastructure vs. investment banking, for one) but the point remains. I do think that day-to-day realtime debit-style payments should be a publicly-operated, minimal-or-zero-fee commodity rather than a massive source of rent, but having access to electronic payments for consumer retail is literally responsible for trillions of dollars more economic activity than you would see if we went back to cash-only.

nish1500 3y ago
Salaries for what? Marketing? Obscene bonuses? Downtown office buildings? It is a manufactured need. I am simplifying things but if we had a public owned payments system that wasn't a profit centre the costs would be far less. Even within the developed world the costs are very different between Europe and the US. Your fees are paying for someone's hefty bonus and lobbying expenses. Again, it has been proven. UPI works.
wildrhythms 3y ago
Why do you believe the investments made by the middlemen processors and banks are more worthy than the investments made by businesses who the consumer is directly patronizing?

thatfrenchguy 3y ago

Only in America are fees that high :)

deleted 3y ago
[deleted]

somerandomqaguy 3y ago

Plusses and minuses to each system. You don't need to pay the cost of transporting the cash to and from a bank (worst case is armored car transport), and electronic transfers have lower accounting overheads (no need to manually count). And modern credit cards have pretty sophisticated fraud/card theft detection nowadays.

Kenji 3y ago

[dead]

signal11 3y ago

UPI has no dispute resolution (as of now). So if you pay with UPI to someone and have a dispute, good luck. You have to approach the Indian courts to get your money back, which, given the Indian justice system, is… difficult. By contrast, dispute resolution with cards is much easier. Also, I don’t recognise this 3% figure — not in all geographies. Eg Europe under PSD2 has 0.3% for credit cards, and 0.2% for debit cards. In Canada, Visa and MC recently agreed to a 1% cap. That said, I’d be very interested in seeing where the conversations around dispute resolution in UPI leads. Context: Indian banks have already begun to complain about UPI being free, and the Indian authorities had to quickly walk back a consultation around potential merchant-side charges to UPI. I guess this tension between business, customers, and digital intermediaries is what makes payments an interesting space.

vivegi 3y ago
> UPI has no dispute resolution (as of now) Not true. [1] [1]: https://www.npci.org.in/what-we-do/upi/dispute-redressal-mechanism https://www.npci.org.in/what-we-do/upi/dispute-redressal-mec...
- colesantiago 3y ago
  Glad to see it. It makes me sad that there are so many misconceptions about UPI that people are willing to resort to falsehoods (such as CBDCs and privacy) and it shows that most criticisms are from people that haven't used it in the real world.
  - 1024core 3y ago
    [flagged]
    - signal11 3y ago
      The UK’s Faster Payments system predates UPI. Free, near-instant payments round the clock. IMPS, the tech that powers UPI, came around 2 years later. But UPI as a layer on top of IMPS is great, especially the idea of providing an easy you@bank identifier. By contrast Faster Payments is like 102030-12345678. And being designed post iPhone was actually a blessing because it allowed UPI to have a mobile-first deployment strategy. But UPI also makes a virtue out of necessity: the reality that cards and a protected e-payment mechanism are difficult to organise, especially for India’s less-well off. This then turns into nationalistic chest thumping about “jealous foreigners”, while completely ignoring real issues around customer protection and scenarios that UPI doesn’t enable. To be clear: I wish UPI well. I also want to see less opportunities for scammers in UPI and for people to be able to use UPI with confidence knowing they will be easily refunded if things go wrong. It’s honestly tiresome to have reasoned conversations with nationalistic chest thumpers.

1024core 3y ago

> When this $100 has exchanged hands 50 times only $15 remains. Just to nitpick: 0.97^50 is 0.21806. So only $21.81 would remain and the banks would have $78.19

nish1500 3y ago
I used 2.9% + 30cent for each transaction

cubefox 3y ago

> We need a unified payment system in western countries, but it's almost impossible given how much of a chokehold big banks have over our economy. Credit card companies charge even more than banks.

umeshunni 3y ago
Most of the interchange goes to banks.

sunshinerag 3y ago

wow Capitalism? Where?