Comment by KirinDave | Hacker News Reader

Comment by KirinDave | Hacker News Reader

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It isn't necessarily an evil thing to want to be out from under those regulations. A lot of them are what conspire to make your banking experience terrible. For example, why can't you transfer from your savings account all you want? Regulations. Why do banks have such onerous process for signing up for a new account? Regulations.

Which is not to say that PayPal isn't sleazy-as-all-hell. The whole point of PayPal was to find a way around the regulations so that they could make a ton of money by gaming your financial transactions in their favor, and cutting out the credit card middle man. Have you ever paid attention to how ardently PayPal tries to stop you from using a credit card to pay?

The really sad part is that PayPal had the chance to become the Next Big Financial Thing. Their core ideas—if you separate away all the evil, that is—are not bad ones. “Make online payment easier and more secure.” Unfortunately, they seem to have dropped the second part and just settled on “Make online payment”. They took the short-term road to profit and missed a much, much larger play.

"Make payment easier" is a bad idea. The difficulty is designed to make it easy to track. Making it easier makes money harder to track, which is a Bad Thing.

I disagree, in the strongest sense possible. Payments are hard for consumers because banks prefer it if you funnel money through channels they make money on (e.g., Credit Cards and accounts with stiff fees).

For large financial institutions, they move money in different and less expensive ways. For example, ACH fees are a tiny fraction of the cost that you use when you move money by credit card, and they're almost frighteningly easy to initiate (there is 0 authorization for these). It's just rare for the banks to expose a way to do ACH for you except in the specific case of billpay (and even then, many institutions handle these as mailed checks rather than ACH).

The idea that finance has to be hard with big ceremony in order to be secure is a clever ruse by big banks. They're not content with the large amount of security-from-competion that regulation gives them. They want your trust, and they're not afraid to scare you into believing that they're the only option.

Credit cards have stiff fees? Seems to me it's pennies per transaction.

I really don't believe it's a ruse, or even that the fees are that large. They're large for small businesses - and that's far from the only place where small businesses have trouble competing with the economies of scale larger players can use.

The swipe fees (paid by the merchant) are composed of a switch fee (goes to the network), plus an interchange fee (which goes to the bank that issued the card). They can be quite substantial, ~1.9% on average.

Interchange fees in the US are some of the highest in the world, and rising. They are a lucrative revenue stream for banks (iirc, ~$40 billion annually). See this piece by Felix Salmon for more: http://blogs.reuters.com/felix-salmon/2010/01/05/the-interch...

Thanks to the passage of Frank-Dodd, they should be dropping soon.

I either don't agree with your point, or don't understand it. Why is it a bad thing (and who is it bad for) to make money hard to track? I'm also pretty sure payment is difficult for far more reasons than just tracking.

It's a bad thing because it requires a business model where bucking the Federal government is a key requirement.

I hate to be so flippant, but do you not care where your money is? If money is hard to track, it's hard to tell who has been paid. Money laundering, for example, would be easier if money were harder to track. So... I can't imagine that making money laundering easier, in general, would be a good thing.

You're saying that everyone should have difficulties with payments so that the government can track criminals. By this logic, why have payment services at all? Then money laundering would be entirely impossible.

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