Hacker News Reader

Comment by trendia | Hacker News Reader

Visa is working to prevent people from using cash in stores [0]. Currently, they are merely giving merchants an incentive to change, but in the future they may use their immense lobbying power to get preferential legislation enacted.

Once cash is gone:

1. your purchases will be available to any company willing to pay for it, and

2. Visa will get a de facto "tax" on all transactions (through 1-2% merchant fees)

[0] https://www.wsj.com/articles/visa-takes-war-on-cash-to-resta...

View on HN

NB that handling cash isn't free either. You have to pay someone to count it, secure it, and steal it (you are arguably not intentionally paying people to steal cash, but shrinkage is certainly a cost of doing business in cash).

I've seen estimates that the cost of handling cash is actually higher than the interchange fees that Visa charges. This generally counts things like armored truck services, time spent counting cash (probably multiple times), time spent delivering cash, dealing with registers, etc.

Cash recyclers are now common in most large stores.

I know one stopped receiving ten dollar bills.

Well, there is a third even better option, don't charge insane fees to finance ridiculous gimmick programs that for the vast majority of people never have >=1 RoI.

Interchange fees for CC are capped at 0.3% and 0.2% for debit in the EU. No 20 cards in every wallet, black pink yellow variations, no "yes VISA but not MasterCard" sillyness. Honestly even the cap of 0.3% is still far too high.

> no "yes VISA but not MasterCard" sillyness.

Is there anywhere that is actually a thing? Very rarely I see a place that won’t take Amex, but no visa or mc?

> I see a place that won’t take Amex, but no visa or mc?

Lots of places won't take AmEx or Discover (some of the highest fees in the business.)

CostCo currently only takes Visa (no MC.) Sam's used to only take Discover. It's rare, but it happens. In this case it's also only for "credit" purchases, "debit" is ok for any card, but the fees are way less for "debit" than "credit".

I've only run into one place in 2 years of having a Discover card that wouldn't take it, seeing Amex not accepted is rather common.

the bigger issue is that once cash is gone your purchasing history is available to government and nothing there is protected from prying eyes. plus a cashless society is far easier to control as purchases can be blocked at anytime as a goods or services can be declared illegal.

so while Visa is the threat in the forefront we need to be very wary about any attempt to push towards a cash less society until privacy is guaranteed from even government agencies

Any data hoarding and/or selling of this kind by anyone—credit card companies, loyalty cards, ISPs, Google, Amazon, creepy phone-wifi location spying in stores, anyone and anything like this—is de facto spying for the government. As has been discussed many times, keeping oneself clean of this spying (nearly impossible, but for the sake of argument) isn't enough because others' data leaks yours.

Anyone against government access to this stuff ought to be for strict limits/prohibitions on its collection by any entity. It's toxic and should be eliminated.

There is an entire industry of data aggregators and consumer profilers that has existed for decades, long before the internet landed on the scene. These players have been funneling data and providing search services to the three letter orgs in exchange for freedom from any legal encumbrance. There is no way to stop this from happening. They are the main reason why the US has such weak data protection laws in the first place.

Well, the way to stop it would be to outlaw it. More difficult and niche/low-visibility issues have been fought and won, over time. Not impossible, though not easy, and you'd be up against a maybe-unprecedented number of lobbying dollars.

> "from any legal encumbrance"

Do you have any anecdotes or links where data collectors exchanged favor with ABCs for legal violations?

> a cashless society is far easier to control as purchases can be blocked at anytime as a goods or services can be declared illegal

Certainly easier, but it wouldn't stop trading (IIRC, there are already cases of, e.g., swapping stolen goods for drugs).

Won't stop people trying to get rid of cash though :/

So how do we fix this?

In the days when we had interest rates it was possible to make money on transactions by taking the money one day and paying the invoice on the next day. Overnight the money would earn interest. This would be profit to cover the transaction. So a bank could make money moving cheques around for people, taking two weeks to clear back in the days when everything was manual.

So with electronic payment there is no human inspecting signatures and doing data entry. So why the merchant fees?

In a free market a competitor that just makes money on interest should be winning here.

AFAICT, interest rates are too low (near zero) for banks to make a profit on interest margins alone.

You could have a non-profit do the interchange, like the Interac network in Canada, but that would be difficult to coordinate without consolidating all the banks. (Canada has, like, only half a dozen.)

Actually this is solved in the eurozone with that payment method, name forgotten... It is a fundamental bit of what the Euro is about being able to transfer money without the fees.

>> name forgotten

SEPA?

> why the merchant fees?

Convenience. Handling cash is risky and expensive. You have to pay someone to count it, take it to the bank, where it has to be counted again, etc. That is time that has a cost. There is risk of loss or theft. That can be insured but there is a cost for that too. If you have to have an armored courier transport it, that has a cost.

Bottom line, the merchant fees are probably not much more than, and in some cases less than the costs of handling cash.

According to this article [0], WeChat and Alipay will surpass Visa and Mastercard in total global transactions per day in the coming year.

If a payment app really takes off in the Western world, wouldn't that be a very big risk for Visa and Mastercard?

[0] https://www.nytimes.com/2017/07/16/business/china-cash-smart...

Only if the payment app ties directly to a bank account, rather than a card. I don't see any movement in that direction in the US, so the card networks would still be getting their cut.

I foresee a Wallmart/Amazon race between banks and online wallets in the future (each trying to become the other first). Paypal nearly got there a while back. They were actually paying more interest on your Paypal balance than banks were paying on your savings, since they didn't need all the infrastructure involved in being a bank. Not sure what happened to kill that.

Maybe this is how bitcoin (or one of the digital currencies) becomes mainstream, because it has to be used for embarrassing purchases, not just illegal ones.

So instead of being sold to select third parties, your transaction history will be broadcast to everyone on Earth and permanently archived. Brilliant!

Maybe cash should be replaced by zcash.

Which is digital and a pain in the ass to manage compared to physical cash.

I wish they'd lobby this harder overseas. I moved to Europe 10 months ago and one of my biggest qualms with seemingly almost every single vendor here is that they only take cash and in the rare cases they also take card, they only take some cards (sometimes Visa, sometimes Maestro, sometimes MasterCard, etc).

I would give up my purchasing history to everyone in the world if it meant I could use a single card to actually pay for 80% of things on a day-to-day basis. Cash sucks.

Europe? You need to be more specific than that. I find it hard to believe what you say and I live in eastern europe (Romania). I don't have any problem paying with cards here. It's an actual european law that asks the merchants to accept credit cards.

Had an incredible opportunity to do a road trip through Romania (including way off beaten path) with some elders that escaped during communism. Both my visa and sometimes American express worked in many areas albeit I prefer to use cash when I can and find myself trying to use cash more often every day.

Sorry for being vague; just left it "europe" since I've moved around a bit since getting here.

I'm currently in Croatia, where it seems only restaurants and some grocery stores frequently take cards; I paid for an invoice at a local bank (Raiffeisenbank) yesterday that only took cash, which I thought was hilariously ironic.

For what it's worth, my stay in Iceland (3 months) was absolutely fantastic when it came to taking card payments.

On the other hand, the Netherlands (Amsterdam, 3 months) often only took Maestro-only (or sometimes Visa-only) in the cases where vendors even took cards.

Likewise in England (Sheffield, 3 months) many vendors only took cash, and were mightily confused by American cards (especially one requiring pin + signature).

I also had a brief stay in Italy (Naples, 1 week) where I found one restaurant that took any kind of card; everywhere else was cash-only.

This has been my experience. I didn't realize how commonplace card transactions actually were in America until I realized how rare they were in the places I've lived since.

I hate paying with cash because it's several extra mental steps to withdraw $X / maintain $X on hand / track expenditures / count up payments + check change / etc. It's so much easier and faster to use a card, so I hope Visa (or whomever, I don't have a preference as long as it's a card) lobbies for more widespread acceptance worldwide.

If that requires killing off cash, I wouldn't have a problem with that!

> Likewise in England (Sheffield, 3 months) many vendors only took cash, and were mightily confused by American cards (especially one requiring pin + signature).

Do you remember where? I live in Sheffield, and I'm having a hard time thinking of anywhere I would have an issue paying by card.

Depending on where you are, you might just need to use another type of card.

Many parts of Europe have payment systems that are independent of VISA and MasterCard, but provide similar (but safer and more convenient) functionality, including the German-speaking countries.

Reply on news.ycombinator.com