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Comment by RC_ITR | Hacker News Reader

What you're thinking of are wire transfers. We have that already. You can argue that they need to be made faster (I agree), but V and MA aren't the reason why they're slow (banks being lazy and batching payments is).

You may not like the logic, but the reason it was so easy for V and MA to cut porn is because the insane amount of porn chargebacks ("yeah I didn't make that purchase, it's fraud").

Crypto is just a wasteful overcomplicated bad solution that's worse than wire transfers, so I agree, let's work on visa-like payments on different rails with no fraud protections (so that way consumers can choose when they pay for that protection, rather than you and me subsidizing people who regret buying porn).

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I'm definitely not thinking of wire transfers, I'm thinking of credit cards. I want Visa and Mastercard to be required to process all legal payments. If that means certain classes of high-risk transactions have to be offered without certain protections, I think that's completely fair.

> ... You can argue that they need to be made faster (I agree)

Luckily that's already well under way. We should have RTP and FedNow next year.

> ...rather than you and me subsidizing people who regret buying porn

Good news! We're not, and at least in recent history we never were! :) Merchant acquirers charge high-risk merchants significantly more to cover chargeback risk. That risk isn't meaningfully transferred to your Costco run. While a Costco may pay 1-2% in interchange, your average adult video business may pay 10-12%. Sometimes more.

>I'm definitely not thinking of wire transfers, I'm thinking of credit cards. I want Visa and Mastercard to be required to process all legal payments. If that means certain classes of high-risk transactions have to be offered without certain protections, I think that's completely fair.

So a few things.

1) A credit card is a consumer loan and by nature, there's plenty of limits on the things you can buy with loans (both crypto and fiat), so you're at a dead end there (and if it weren't Visa, it would be the bank extending you the loan that would ban the porn payment).

2) Given that, you probably are referring to debit cards in this case. Ok that's more of a dumb utility so let's run with it. What Visa does for debit (I implore you to learn more about this!) is serve as a messenger intermediary between your checking account and the merchant's account (plus they make sure the issuer gets their cut of fees, more on that later). Ultimately, they help the banks settle their accounts via inter-bank accounts. Banks themselves can/should do this! The government should force them to do this! But that's then just faster wire transfers (look at Europe).

I mean I'm very happy to be wrong here, but you need to explain to me why Visa needs to be involved for a fraud-protection-free bank-to-bank transfer when everywhere else in the world just has that via wire transfers (which is just a fancy name for settling payments via inter-bank accounts)

>Luckily that's already well under way. We should have RTP and FedNow next year.

Yeah.

>Good news! We're not, and at least in recent history we never were! :) Merchant acquirers charge high-risk merchants significantly more to cover chargeback risk. That risk isn't meaningfully transferred to your Costco run. While a Costco may pay 1-2% in interchange, your average adult video business may pay 10-12%. Sometimes more.

Ok again so a few things.

1) You are citing the entire take rate on transactions but you're calling it the wrong thing. Interchange is the fee that's paid to the issuing bank; in the US this is, on average, 70% of the fee-rate you're citing (it is a rate set by Visa, but it is passed directly through to the issuing bank). Merchant Discount is the fee that the merchant acquirers get; in the US this is, on average, 15% of the fee-rate you're citing (but as you rightly point out, it can be anything since its a contract between a bank and a business for service). Network fees are the fees that Visa collects; in the US this is, on average, 15% of the fee-rate you're citing (Visa makes $30bn of revenue $10tn of transactions processed). Since it is acquirers who can choose to set their merchant discount at whatever they want, it is again a banking issue not a Visa issue (Visa doesn't even see the merchant discount)

2) Now that we understand who charges what to whom, you'll see that in fact, Visa does not charge a different rate for porn [1], they instead collect a pretty small fee on all transactions to support infrastructure that disproportionally serves porn users who regret buying porn. Sure sounds like a subsidy to me!

So yeah anyway, faster wires.

[1] https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...

I’ve worked in payments for 10 years I know what I’m saying, imprecise wording was just rounding for the audience.

I’m very clear that faster wires is not what I want, and neither is debit, although that’s fine too.

I want equal access for all merchants to VisaNet and its peers. Not because debit or faster wires wouldn’t meet needs but because they are not how people are choosing to pay. I’m being pragmatic.

To be clear I agree with basically everything else you’ve said in this thread.

>I’ve worked in payments for 10 years I know what I’m saying, imprecise wording was just rounding for the audience.

Ok.

>neither is debit, although that’s fine too. I want equal access for all merchants to VisaNet and its peers.

This is such an odd thing for a payment professional to say. Are you under the impression that debit transactions don't run on Visanet?

>not because they are not how people are choosing to pay. I’m being pragmatic.

Again I implore you to look to Europe/Asia, where there are plenty of non-network cards that work just fine for essentially free domestic payments (and would you like to guess how those transactions are settled? You must know...) [1]

[1] https://en.wikipedia.org/wiki/Girocard

> This is such an odd thing for a payment professional to say. Are you under the impression that debit transactions don't run on Visanet?

I think you're misunderstanding me. That's not what I was saying at all.

My argument is that payment networks, issuers and acquirers should not decide unilaterally what kinds of lawful merchants, customers and transactions they permit. I'm talking about various merchant acquirers not permitting lawful gun or drug sales, networks going after OnlyFans in 2021, and PayPal shutting down WikiLeaks' account back in 2010. [1,2]

I don't necessarily agree with what these people or businesses are doing personally but it is not my decision to make nor should it be that of any other private entity. If they are lawful, they should be permitted. If they aren't then the business owners/operators should be prosecuted - or at minimum there should be a legal proceeding that can be appealed by the target party when payments processing is suspended.

Somehow we hold domain name registrars to a higher standard than the aggregate of payments entities in this regard.

> Again I implore you to look to Europe/Asia, where there are plenty of non-network cards that work just fine for essentially free domestic payments (and would you like to guess how those transactions are settled?

That's not really the point.

My point is that these aggregated payments entities are the infrastructure of the modern economy. Giving a few private entity gatekeepers the ability to extrajudicially decide what is and is not permitted in the modern economy - without appeal or recourse - is undemocratic, and it's wrong.

While different options exist in different places, one should not be forced to seek them out to participate in the lawful economy. It's simply too important.

I am advocating for a modern, digital equivalent of '[valid] for all debts public and private.' We have granted these aggregate systems a de facto duopoly on commerce in the United States. They are quickly becoming or already are essential and so it's time we treat them from a legal and regulatory perspective more like what they are.

How long would Amazon last if they were cut off? Why do we give two private entities the ability to decide if Amazon can continue to exist?

[1] https://www.protocol.com/policy/onlyfans-visa-mastercard

[2] https://www.theguardian.com/media/2010/dec/04/paypal-shuts-d...

That's an interesting take. The actual transfer is the one big upside I see of crypto over wire. And remember 'wire' is not a currency, we're comparing transfers here not the suitability of a currency ('wire' as an independent concept has none).

I've done many wire transfers and many crypto transfers and the one consistent thing I've found is the crypto transfers are both cheaper and faster. If I could do crypto transfers with old school stable currency (not some cheesy stablecoin hoodwinker in the Bahamas) it'd be the holy grail.

FedNow instant payments?

>I've done many wire transfers and many crypto transfers and the one consistent thing I've found is the crypto transfers are both cheaper and faster.

Don't fall into the trap of "current centralized system has problems, current decentralized system is different (in your opinion better), therefore decentralized is better"

Centralized payments will always be faster/cheaper than decentralized, just from a first-principles architecture standpoint, so we should be working on making those better (cynically, we are, they just get less attention because retail investors can't speculate on those technologies as easily)

"Better" is not a universal truth. It is dependent on the context of the individual transaction.

If you simply refuse to acknowledge that crypto might be cheaper and/or faster than available traditional finance options for some particular transactions, not in the theoretical but in the real-word options present, then I simply yield that you must live in an alternate reality than many people. One thing I really hate is losing money and losing time, and the very narrow circumstances where I have used crypto to buy goods (legal goods) I sure as hell wasn't going through the pain in the ass of dealing with crypto for ideological reasons.

>"Better" is not a universal truth. It is dependent on the context of the individual transaction.

Where did I call anything better?

>If you simply refuse to acknowledge that crypto might be cheaper and/or faster than available traditional finance options for some particular transactions, not in the theoretical but in the real-word options present, then I simply yield that you must live in an alternate reality than many people.

Uhh, ok what transactions are currently cheaper using crypto? Don't you dare say Forex because you're wrong if you do.

Then what are the ones you think could be cheaper and why?

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