Comment by ian0 | Hacker News Reader

Comment by ian0 | Hacker News Reader

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Everything about how they make money and the value of the business model is correct, but i'm not sure its the time to be bullish on schemes:

- National switches are surely eroding domestic transaction volume in the markets where they are deployed

- Im not aware of a schemes playing a central part in any of the big wallet based payment systems taking over POS

- Non-bank / non-scheme pay later systems are growing extremely fast amongst younger demographics at least here in SEA

- (Im guessing) that with increased financial literacy the profitability and popularity of credit cards is decreasing

There have been some really interesting developments (Eg MC assisting international cash out for large marketplaces), but the core business isn't looking anywhere near as stable as it was 10 years ago.

China is also an interesting example of a large, increasingly developed country where credit cards are barely used: they went straight to electronic payments with Alipay/WeChat Pay. There are a number of companies in SE Asia and India trying to replicate the model, and many are starting to get traction: PayTM, GrabPay, Gojek, etc.

As far as I know, most of these payment networks don't extend credit to customers in the same way that Visa's network enables. Consumer credit is a very powerful force that is often under-appreciated, and that benefits all parties involved in a transaction (e.g., consumers, merchants, and banks).

I feel credit-cards-as-credit is mostly an American thing, basically everyone I know in Europe treats their card effectively as a debit one, the only difference being you could not rent a car with a debit one.

Some people don't even know the difference and get surprised when their card cannot be used for some credit usages.

(That is just my anecdotal evidence, of course)

You're definitely right. Different countries have varying degrees of credit vs debit penetration. US skews more credit.

Yep. Typically the the role of credit facilities is supplied by a different class of app, eg. Klarna, Kredivo, Akulaku. Though the wallets are now providing their own, eg Alipays Check Later, Gojek & Ovos Paylater.

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