Visa To Offer Person-To-Person Payments

angry tapir writes "Visa has announced it is planning a new service that will let US customers send money directly to one another, presenting new competition to PayPal. Visa already lets people send money to Visa accounts in many other countries, but this will be the first time it will offer the service in the US."

Comments

Credit card fees

[Compaqt]

You'd think with the enormous increase in processing power experienced over the past 4 decades, the amount of money required for operating the credit card networks would have plummeted.

So why are credit card fees still anywhere from 2% on up (borne by sellers)?

And is it (much) more expensive to send $100 vs. $10?

Re:Credit card fees

[mehrotra.akash]

I would guess the reduction in cost is made up for by the increase in salaries and fraud..

Re:Credit card fees

[viablos]

Nothing in the business is based solely on costs. Of course they will keep taking 2% if they can. What comes to person-to-person payments, credit card phishers must love this as it cuts the middle-man. No need to buy items and resell them, just transfer money directly.

Re:Credit card fees

[Anonymous Coward]

Obviously to exploit the card holders and users. It's how they make money.

Re:Credit card fees

[Tridus]

Because there's no particular reason for them to lower the fee?

VISA's not in the business of saying "well gee we have too much money today, lets cut the fees!"

Re:Credit card fees

[garytencents]

How's that rewards card treating you? Cause that's what my company and a million others are paying a good portion of those fees for. On a related note - why should they give up their profit, it's not like consumers give a rat's ass about the (hidden) cost to the merchant and you can well imagine that a set cost of those fees is used to elect US Senators (see Delaware). Gary

Re:Credit card fees

[Compaqt]

Well, I guess we're seeing market failure.

Basically, an oligopoly between Visa and Mastercard.

Re:Credit card fees

[eln]

Every time you buy something with your credit card, Visa sends that payment to the retailer in cash. It does this by carefully placing each individual dollar bill on a velvet pillow, and having it lovingly hand-carried to its destination by a Visa representative, who is dressed in a tuxedo and wearing white gloves.

So yes, it does get more expensive the more money you send, and Visa is practically running a charity by only charging 2%.

Re:Credit card fees

[milkmage]

convenience.
no matter who issues your visa, they're all on the same "network" so you can use it anywhere - visa is that network.

Re:Credit card fees

[Compaqt]

Well, not as a buyer, but as a seller. These days, a lot of professionals and small businesses are taking payment by credit card.

Yeah, I know, the fee pays for the convenience of cc billing, and there has to be a fee. What we're talking about is why, with the huge decrease in operating costs plus massive increase in volumes (everybody uses a CC these days), they're still charging the same rates.

Re:Credit card fees

[SimonTheSoundMan]

Visa offer a service. They have to make money, from for example, off debit cards.

2%, still cheaper than handling physical money.

Re:Credit card fees

[countertrolling]

Failure? In what way?

Re:Credit card fees

[Compaqt]

I take it you share my frustration. Somebody mod this up.

(Oh, and before posting a rant about CC fees, I guess I should have remembered that the electrons for higher dollar amounts weigh more, hence it costs more money to ship them through the tubes of the Internet.)

Re:Credit card fees

[poetmatt]

Why? Because Visa wants hilarious profit margins and how many competitors are going to exist?

Square is about the only one I can think of that is mainstream.

Re:Credit card fees

[stomv]

If it's the case that the costs associated with offering the product are far less than the fees, then there is market failure because in a well operating market, charging too much invites competition who will undercut your prices.

Are Visa and Mastercard charging so much that there's room to be undercut? I don't know. Ask Discover.

Re:Credit card fees

[Sky Cry]

It's because the card is issued to the customer, while the the cost of transaction is paid by the merchant. The customer has no benefit in moving from one credit card company to another. So the credit card companies have no benefit in decreasing the fees either.

Re:Credit card fees

[Anonymous Coward]

Nothing in any (profitable, ongoing concern) business is based solely on costs.

Re:Credit card fees

[denis-The-menace]

That's because there is no such thing as Net Neutrality for credit cards.
The old way of thinking was imposed and Greed was satisfied.

Re:Credit card fees

[somersault]

Would you go to your employer and say "Hey, I've figured out how to save money on my bills at home, could you cut down my salary by 10% to compensate for that please?"

Re:Credit card fees

[kvothe]

Sort of like the oligopoly in the realm of American cell phone service? Or land line internet service? Or in the gasoline market? One could argue that the American market has failed many times over, due to a few large corporations dominating the relevant market, and doing everything in their power to maximize their profits at the expense of everyone else. I wish I knew what could be done to change the situation, but it seems like so many factors went into creating the situation that we find ourselves in that it would be very complicated indeed to extricate ourselves.

Re:Credit card fees

[somersault]

MasterCard?

Re:Credit card fees

[fuzzyfuzzyfungus]

In theory, a competitive market will result in the price of a commodity or service equalling its marginal cost of production.

The fact that the amount the CC guys skim off the top of transactions(in addition to their loan-sharking business) has barely budged despite what are almost certainly declining costs leads one to suspect that the market may not be especially competitive.

The phrase "cosy duopoly", in fact, tends to spring to mind...

Re:Credit card fees

[rtaylor]

So why are credit card fees still anywhere from 2% on up (borne by sellers)?

Isn't most of that basically insurance? The percentage varies with the risk of the merchant (online shops are higher, grocery stores can get lower rates). My card has bit hit with fraud a couple of times over the last decade. Both times I called Visa and they made the charges disappear.

While they probably didn't eat most of those fees (chargebacks or whatever back to the merchant) they probably did have a fair amount of overhead for those tasks.

There was one charge that Visa probably ate. The merchant went bankrupt and disappeared after charging my card but before shipping the product. 4 to 6 weeks delivery became 8 weeks before I got Visa involved.

Re:Credit card fees

[justin12345]

Just try using Western Union. Then come back and whine about a 2% transaction fee.

It's especially hilarious because WU will actually ask you if you are sending money to make a purchase, because that is not allowed. You have to make up a story that you are sending money to your old roommate, for bills you never paid (even though you are actually buying some Japanese cell phone that turns into a small dog with laser eyes).

Re:Credit card fees

[peragrin]

Well that and it is 2% for Visa, but for American Express it is 3-4%. However American Express also doesn't normally collect interest on the monthly payments(yes there are exceptions).

Visa and Mastercard really make their money on the fact that so many people have continuos rolling debt every month that builds interest.

Re:Credit card fees

[Maximum Prophet]

I like the joke, but as the amount of the transfer goes up, so does the risk. (The risk the money won't be repaid, or the risk the transaction is fraudulent) So, yes, it does cost more to send more money. Does it cost exactly what they charge? Not at all, they can charge what they can get away with.

Re:Credit card fees

[Compaqt]

Yeah, from the perspective of many corporations, lack of oligopoly is market failure.

Re:Credit card fees

[Rockoon]

So why are credit card fees still anywhere from 2% on up (borne by sellers)?

You aren't factoring in the real costs of the service which is when the credit card companies don't get paid what is owed to them, where they end up selling the debt at a large discount to a collection agency.

Nearly 1.3 million bankruptcies were closed in 2009 alone, with only ~40,000 of them being by businesses. You can imagine that these weren't by people that owed an average of only $100. Its more like an average of $10,000+. Billion of dollars don't get paid back to credit card companies each year.

Re:Credit card fees

[JoeMerchant]

4% back on gas (that's about 0.15 per gallon, lately)

2% back on restaurants

3% back on some class of merchants I can't remember

and 1% back on just about everything else.

We get a $100ish check for every $9000 or so that we spend through the card.

Rewards cards are part of the landscape now... get used to it, or (as an industry, collectively) grow a pair and do something about it. What the "market failure" whiners fail to account for is the massive investment Visa and Mastercard made across the last 40 years to roll out their system worldwide. Of course they're entrenched, they would have been irresponsible stewards of their investors' capital if they didn't entrench themselves along the way.

As a consumer, I view cash as a "premium" payment option. If I value the anonymity that comes with cash, then I'm willing to go through the trouble to get it, the ATM fees, and the lack of rebate from my credit card. If you're a merchant who accepts credit cards, I assume you've already built in a 5% margin to cover that - if you're a small time place (like a hair salon or locally owned restaurant), I might pay cash as a sort of extra tip, both dodging the credit card fees and making income reporting potentially optional. But, most of the time, credit cards are just a built in cost, a tax paid to the money handlers, and I choose to deal with a bank that slides a little of it back my way.

Life has never been simple, when you were a child, you thought it was and you might have been taught it was, or should be, but those teachers were liars. Paybacks, graft and corruption are not just in the Mafia's domain - they have been a part of "respectable" business since long before the Magna Carta.

Re:Credit card fees

[aztracker1]

As mentioned above, the transaction isn't the only operational cost.. covering fraudulent activity is a huge issue, unless you'd prefer to have individuals foot that bill...

Re:Credit card fees

[Anonymous Coward]

So why are credit card fees still anywhere from 2% on up (borne by sellers)?

You aren't factoring in the real costs of the service which is when the credit card companies don't get paid what is owed to them, where they end up selling the debt at a large discount to a collection agency.

Nearly 1.3 million bankruptcies were closed in 2009 alone, with only ~40,000 of them being by businesses. You can imagine that these weren't by people that owed an average of only $100. Its more like an average of $10,000+. Billion of dollars don't get paid back to credit card companies each year.

Sheesh, you'd think those risks would be borne by the banks lending the money, not the CC companies. And you'd think that those banks would charge interest on unpaid debts to offset the risks of nonpayment.

Re:Credit card fees

[Anonymous Coward]

In EU (At least most of the countries that have adopted the regulation), they aren't allowed to take surcharge on any card payments.

Re:Credit card fees

[Compaqt]

This is actually a good point, and different from the fraudulent card use issue.

On the other hand, it should only apply to payments on credit, and not debit cards.

Re:Credit card fees

[rsilvergun]

One, because the can be, but two, because it costs lots and lots of money to move that much money around. Every time you swipe a Visa they're LENDING money to be paid back. They have to keep the money on hand to pay all that, which in turn means borrowing money themselves.

Re:Credit card fees

[Dragonslicer]

Visa and Mastercard really make their money on the fact that so many people have continuos rolling debt every month that builds interest.

Really? I had always thought it was the issuing bank that kept the interest.

Re:Credit card fees

[i-linux123]

In a bigger part of EU (Except for: Britain, Czech Republic, Hungary, Belgium, Ireland, Netherlands, Slovenia, Estonia, Norway, Malta and Spain), it isn't allowed to take a surcharge. Many stores are still tricking customers with the surcharge since it isn't widely known. After a google search I see that something similar is implemented in US states too: http://fso.cpasitesolutions.com/premium/le/06_le_ic/fg/fg-merchants.html#MORE:B

Re:Credit card fees

[Anonymous Coward]

No, it doesn't. Visa has zero liability, all the charges of fraud are borne by the retailer.

Re:Credit card fees

[twistedsymphony]

this could very well change with person to person transfers.... unless the fees are free or very small people who frequently make transfers would likely switch to whichever company has the lowest rate. At very least if Visa is smart they'll undercut PayPal.

Re:Credit card fees

[ArsonSmith]

Perhaps someday you will learn about supply and demand, and how the price of a good or service is only very loosely tied to the cost to create/perform that good or service.

If you don't like the fees, don't pay for the service.

Re:Credit card fees

[Anonymous Coward]

Card user -> Merchant -> Card processor -> Visa -> Bank that issues the card -> Card user

Again.. The issuing bank is not Visa. The issuing bank with the Visa logo is responsible for the users debt, payments, and the float of money from the end users. The merchant or the intermediate "card payment processor" the merchant choses to use for processing the user payments is by default responsible for any fraud unless they can PROVE they are not beyond a reasonable doubt.
Visa does not handle the consumer debt and very little of the fraud expense. The 2% is for them to shuffle money and transaction data around as the facilitator.

Re:Credit card fees

[compro01]

the risk the transaction is fraudulent.

Hahahahaha.

The credit card company has 0 risk in that regard. They simply yank the money back from the merchant and leave them without the money or the product. I used to work for a company that made POS systems and we had several customers driven out of business by that bullshit and the credit card company's disinterest in taking security and fraud seriously.

Re:Credit card fees

[lgw]

In theory, a competitive market will result in the price of a commodity or service equalling its marginal cost of production.

I've never heard that theory - sounds linke something someone would make up to discredit free markets. A competitive market should result in enough profits going to owners of capital that keeping their capital in that market makes sense.

The fact that the amount the CC guys skim off the top of transactions(in addition to their loan-sharking business) has barely budged despite what are almost certainly declining costs

Visa doesn't make any money of "their loan sharking business" - the fact that they never have is what allowed them to invent a new kind of money a few decades ago. But they're playing catch-up now.

Maybe you haven't done much with data center operations, but the cost of hardware isn't the dominant cost. And Visa in particular has traditionally been a mainframe shop, so they haven't been seeing much decline in costs over the year - but since cloud is the new mainframe I'm sure they're starting to see some now.

Re:Credit card fees

[tukang]

The risk of not getting repaid is held by the banks and not Visa. This is why Visa held up relatively well during the financial crisis while bank stocks were tanking.

Re:Credit card fees

[SwedishPenguin]

AFAIK, interest is supposed to cover that, and not all Visa cards are credit cards. Mine is debit for instance, I would never put my small purchases like a coffee on credit, that just seems insane. (I also have a Mastercard credit card, used only in exceptional circumstances)
The only reason for that 2% is to earn the banks billions and billions in profit..

Re:Credit card fees

[gknoy]

Usually they just tell us they're not increasing salaries, because they need to invest in X, Y, and Z, inflation be damned. (:

Re:Credit card fees

[Anonymous Coward]

You're correct, the issuing bank keeps the interest because they're the ones making the loan.

Visa keeps a small part of that 2%, and both the issuing (as in issuing the card) and acquiring (as in acquiring the transaction) banks unevenly split the rest of the interchange fees.

Re:Credit card fees

[DarkOx]

And do you know why that happens?

I'll tell its Government, do you think any of the big organizations in the industries you site could have gotten so big without major Government help. If you want to 'fix' this situation you need to remove the barriers to entry. Thats tough with something like land lines, but but its as simple as getting rid of the FCC when it comes to wireless providers. Big oil and gas, easy let anyone operate a refinery, and drill where they like, buy the land do as you wish with it. Stop subsidizing their operations

I suspect there would be a lot more credit card vendors without an SEC as well.

Would this create lots of other problems? Yes it absolutely would, but IMHO those would be problems individuals could cope with unlike today where most of us are basically at the mercy of mega corps and a government that is primarily run on favors and blackmail. Nobody's life would be easy though and things could change a great deal from day to day.

Re:Credit card fees

[skids]

"A competitive market should result in enough profits going to owners of capital that keeping their capital in that market makes sense."

Sure, but in a competitive marketplace less capital is needed per unit of gross as time goes on and competitors optimize their product/business model. This because they are, again, in a truly competitive market, competing with one another. Since they are, again theoretically, competing with one another they will also compete with each other over customer market share, which should result in in a smaller cost/product ratio on the customer end.

While cross-market competition for investment capital is a consideration, it should not generally be able overwhelm that trend in the long term.

That it hasn't is indicative that the "free market" system we have is not actually competitive. Some will argue that this is because we don't really have a "free market" due to regulations, others will counter that a "free market" does not emerge spontaneously from anarchy, and in the meantime, while theory is being thrown frantically against the walls, joe six pack will still be paying Visa 2% to sell a six pack to the local Visa-wielding wino, and musical chairs and golden parachutes will continue to be the tune blasting over the office intercoms on Wall Street.

Until the house of cards collapses, that is.

Re:Credit card fees

[smelch]

You answered your own question. Costs go down, fees stay the same because more and more people are using the cards, and they're making more and more money. If anything they should be RAISING the fees. Now at some point though, stores will stop accepting credit cards or as it becomes easier and easier there will be competitors to Visa and Mastercard. You already see Wal-Mart and Speedway rolling out their own credit cards, and these are not exactly high end places. How long until they decide to process the transactions on their own without riding on Visa or Mastercard's backs?

In short, your general assessment of when a market is failing is flawed by retarded expectations. The conditions for them to be undercut are in the process of forming. The market isn't a magical box that is always at optimal performance. As conditions change it needs to adjust and thats not always a quick process, especially in fields that require a lot of capital such as financial services for the entire country.

Re:Credit card fees

[delinear]

Areed - it's at the point where fees become transparent to the customer that people will begin shopping around. Currently, in the UK at least, the merchant usually swallows the fee (and probably distributes it across all payment methods so they can have a single price point). It's rare to see a fee advertised for using credit over debit cards (and when there is a fee it's usually flat across all credit cards), but for something like regular eBay purchases, a minor % difference could be enough to motivate people to move.

Re:Credit card fees

[Anonymous Coward]

I'll tell its Government

What, exactly, will you tell its Government?

Re:Credit card fees

[delinear]

Why not insurance against fraud? Ford don't charge a fee per mile driven so that they can cover the cost of accident repairs. At least with insurance you can spend more without being penalised - what, just because person A spends $10,000 more on their credit card than person B in a given year they're somehow more likely to be defrauded? Hell, the more I think about it the better it sounds. I like the idea of a no claims bonus for people who are actually careful about their card details. Put in some protections in case the card is compromised through a screw up on the credit card company's side but otherwise force people to actually make an effort, with appropriate rewards, to take better measures against fraud.

Re:Credit card fees

[green1]

fraud is paid by the retailer, but non payment is paid by the card issuer.

To clarify, if someone copies my Visa card and buys something with it, that's fraud, and the retailer is usually on the hook for it. However if I legitimately buy something, but then never pay my Visa bill, Visa is on the hook for it, they'll do their best to get me to pay, but if I simply don't have the money, they won't get it. If I declare bankruptcy, they loose. These charges aren't passed back to the retailer.

Visa does have a lot of non-zero costs and risks in running their business. That said, the amount they charge, on transaction fees, merchant account fees, monthly or yearly card fees, interest on late payments or cash advances, etc. Are way more than enough to cover all of that.

Re:Credit card fees

[fuzzyfuzzyfungus]

The opportunity cost of the required capital is a "cost of production". It would appear that we differ only in wording in that regard. If capital is fleeing a sector, even if the accountants are putting the sector in the black, it isn't breaking even overall.

Re:Credit card fees

[cdrguru]

Merchants pay for insurance against fraud because the credit card companies push it back onto them.

As a consumer, there is really nothing you can do about fraud. You hand your card to a waiter in a restaurant and he takes the number down. With 99 others he can get maybe $50 for his efforts. If you only used your card once that month and could remember the waiter you might be able to make enough noise with the restaurant manager to get the guy fired. Maybe. Maybe the restaurant thinks you are a nut and ignores you completely. The police won't do anything - you didn't lose anything, did you? The restaurant didn't lose anything. The credit card company didn't lose anything either. Nobody is complaining, so no charges can be brought.

Magnify this by 330 million people in the US with at least that many credit cards. Probably more of them that people because the people that have one often have four others to keep them company.

Credit card fraud is pretty much an equal-opportunity sort of thing. You get card grabbers that get maybe $0.50 for a valid number. This is an obvious way to get some more money in the service business where wages are low. Then you have the buyers that go out and buy stuff with the stolen numbers. They get a cut (or they wouldn't do it) and this is all the employment there is for a lot of people. They can use the numbers online or get real-looking cards made up that can even be signed and everything. Did you really think anyone wanted to steal your card with your name on it and try to forge your signature? Why? Making a nice clean fresh card costs maybe $1 if you have the right equipment. And there are places turning out 1000s of cards a day for this purpose.

From the buyers you get all sorts of people turning the goods into more cash. Ebay - unregulated. Pawn shops - regulated but loosely. Street corner vendors. Whatever it takes. So you think you got a good deal on some electronics? No, it wasn't "hot" but it did come from a credit card buyer.

We aren't talking about a lot of organization but it is at the grass-roots level. People make enough money off doing this to survive, and nobody is really getting hurt all that badly. So credit card fraud is going to continue and some people are making out very well with running the operation.

Next time, try to find someone in law enforcement that is interested in doing something about it. You could be holding the guy with your credit card number by the collar and the police will tell you to let him go. No charges. Nothing. In this environment do you really think there will be an end to this?

Re:Credit card fees

[cdrguru]

Any merchant that does a significant amount of credit card sales needs insurance. Anyone will tell you that - even the police.

If the company didn't make that clear to someone setting up a POS system they did the guy a serious disservice.

Credit card fraud is just a fact of life like rain. Sometimes you get wet and as a merchant you need to have your umbrella.

Re:Credit card fees

[cdrguru]

Banks are starting to change but until recently no bank offered any security on debit cards. If your number gets copied at the coffee shop (very likely), you would then be liable for 100% of the charges until your account ran dry.

Some banks are now offering protection against debit card fraud. But still, it may take days before the money gets back into your account. Weeks sometimes I am sure. If you have so much in your checking account that you can handle that, great.

I wouldn't use a debit card for any sort of purchase, anywhere. People taking down the numbers are everywhere. The numbers are worth something (not much, but with enough of them it is real money) and it is a way for people to supplement their income. But when they get a debit card it can really hurt people.

Re:Credit card fees

[Jurily]

A competitive market should result in enough profits going to owners of capital that keeping their capital in that market makes sense.

Staying in business is not guaranteed in a free market. A truly competitive market would result in minimal profit margins for all companies involved.

Re:Credit card fees

[mxs]

You aren't factoring in the real costs of the service which is when the credit card companies don't get paid what is owed to them, where they end up selling the debt at a large discount to a collection agency.

Nearly 1.3 million bankruptcies were closed in 2009 alone, with only ~40,000 of them being by businesses. You can imagine that these weren't by people that owed an average of only $100. Its more like an average of $10,000+. Billion of dollars don't get paid back to credit card companies each year.

God forbid they don't extend credit to people unlikely to be able to repay it. That would be, like, like selling mortgages to people who can't afford them. That is what America is founded on !

Certainly there will be unforeseeable bankruptcies. The vast majority of them is foreseeable, however.

Re:Credit card fees

[Anonymous Coward]

Bankruptcy doesn't protect you from your CC debt in the US (afaik).
Thank you CC lobbyists.

Re:Credit card fees

[ShadyG]

In this case, any "market failure" is very much the fault of government interference. The core problem is that merchants are not allowed to pass this fee on to the customers explicitly, charging an extra 2% for VISA purchases over what they would for cash. If they were allowed to do this, another company could undercut and would get business.

Re:Credit card fees

[Tasha26]

Surely there will be a cap? Or some decreasing rate as the amount increases. This sounds more fair... but left in the hand of greedy banks, I doubt they implement that. Will the govt step in? No. They are too busy securing a consultancy job at one of those places.

Re:Credit card fees

[neoform]

The bank issuing the card is the only one liable for the money, VISA/Mastercard don't pay a dime if the money is charged in a fraudulent way.

Re:Credit card fees

[AvitarX]

A few things though.

VISA used to not make money off the fees (it was a joint venture by many banks to have a service, and was not intended to make money), the presence of debit visa's pretty much shows that the fees are a worthy venture alone now, but also VISA is a company that intends to make a profit.

The problem is that merchants don't want to take dozens of competing companies (it can easily become as expensive as the couple percent fee they take), so a new comer is very unlikely. high fees are why Amex, and Discover are taken in fewer places.

Fees have gone down too, there is competition in the gateway market, and fees are about half of what they were decade ago.

Amex was from around 4% to around 3%, and VISA/MC from around 2% to around 1%.

Re:Credit card fees

[Anonymous Coward]

Improvements in technology are offset by the ever increasing cost of regulation.

Re:Credit card fees

[Anonymous Coward]

The reason it is not allowed is that unlike Visa, etc. they don't do disputes - send someone the money Western Union and you don't receive the product? Too bad, your loss.

Re:Credit card fees

[locallyunscene]

Rewards cards are part of the landscape now... get used to it, or (as an industry, collectively) grow a pair and do something about it. What the "market failure" whiners fail to account for is the massive investment Visa and Mastercard made across the last 40 years to roll out their system worldwide. Of course they're entrenched, they would have been irresponsible stewards of their investors' capital if they didn't entrench themselves along the way.

So, just suck it up and take it? Forget all that blather about competitive markets promoting meritocracy and efficiency because those CEO's have "worked hard" to stifle innovation form gentleman's agreements about pricing?

It's one thing to recognize that corruption exists and will never go away. It's entirely another to condone it and tell those "whiners" to shut up because things will never get better. Large and difficult goals are achievable over time time if enough people work towards them. The amazing advantages we enjoy in society today is proof of that.

Re:Credit card fees

[locallyunscene]

Retailers are liable for fraudulent transactions, not the credit card companies. The credit card company simply tells the retailer the offer was made in bad faith and the money is taken back. I've worked for several online retailers and a bank error is never in your favor, even if it's not your fault.

Re:Credit card fees

[lgw]

There are free markets, to be sure (except by some stident libertarian standard), for commodity products. The combination of government and private regulations at the Chicago Board of Trade work quite well, and are very focused on contract enforcement and minimizing counterparty risk.

There are less free markets as well, either due to natural monopolies or government-granted monopolies. It's not like you can make any sort of nation-wide claim that "we need more regulation" or "we need less regulation" - the problems are different in different markets.

My point though was that competition never brings prices down to where there are no profits for long. The normal, healthy pattern is that a bunch of small companies start up in the good times with clever ideas to reduce costs, but struggle or go under during the hard times (partially brought on by so much competition squeezing margins), and at the end of the bust-time you get a wave of consolidation that leaves only 3 or so players (who are finally willing to adopt some of those clever cost-reducing measures, because they're still hurting from the hard times). Then the cycle starts again with a new wave of small companies.

Usually "monopoly" problems come from the inability of that wave of new small companies to emerge, either because the big guys can use monopolistic practices to crush them, or because there's so much regulation that only a large company can afford the compliance burden - both are real problems, and it's never all one, nor all the other, nationwide.

Re:Credit card fees

[lgw]

Only briefly. A competitive free market is not some magical steady state. Lots of competitors squeezes margins until that creates hard times, resulting in only 3 or so suriviors with pricing power. Margins rise until they attract the next wave of new competitors. That's the normal, health cycle. On average, long term, the owners of capital in that market must be making enough return to justify the investment - which may meet your definition of "minimal", for all I know.

Re:Credit card fees

[Anonymous Coward]

If MasterCard would do this for free then Visa wouldn't have a choice in the matter because then everyone who wanted that feature would switch to mastercard immediately. It would be nice to see a non-profit organization attempt to create their own credit card system without any fees attached. Businesses would enjoy donating funds to them since it's a tax deduction anyway but unfortunately it would take billions to start that kind of non-profit and it would be time consuming to get enough businesses to donate that amount to get the startup running.

Re:Credit card fees

[SwedishPenguin]

I guess it depends on local laws, but at least here in Sweden, the bank is required to pay back fraudulent transfers and the burden of proof is on the bank. I lost my debit card once (my fault, I accidentally left the card on a bar counter after a few beers) and someone did steal it and apparently had a good time at a few bars before the money ran out. I got all of the money back after filing a police report and filing a report with the bank.
I keep most of my money (what little I have, I'm a student) out of my checking account and transfer money from another account when I need it.

Many bars and restaurants don't require either ID or PIN-code (which is technically against the law) though that's starting to change as more and more get chip and pin terminals, I guess they grew tired of having to pay out when they accepted a card that was later reported stolen and had to pay the money back to the bank.

Re:Credit card fees

[JoeMerchant]

So, just suck it up and take it?

No...

or (as an industry, collectively) grow a pair and do something about it.

What I have observed in the last 40 years has been a bunch of ineffective whining with regards to "fairness" in the distribution of wealth. We need to either do something effective about the problem, or just enjoy life for what it is and stop whining. There is no reason that this should ever happen in a Democracy.

Re:Credit card fees

[QuoteMstr]

Any market with a large barrier to entry will not exhibit competitive behavior in the long run. The presence of a big network effect is one of the more common causes of high barriers to entry. Regardless of the cause, incumbents corporations go on to become "natural monopolies"* and are able to charge monopoly prices higher than would otherwise be possible. The excess profit is called economic rent and causes an inefficient allocation of resources, effectively impoverishing us all.

In the past, we'd take a sober look at these situations and either regulate these markets or outright nationalize them. Today, we've been so thoroughly swayed by Laissez-faire economic ideas that we're reluctant to remedy an obvious injustice in an environment we intellectually know is not amenable to free competition.

In short, the big credit card processors have no effective competition because small players can't really enter the market, and as a society, we can choose between regulating them for the benefit of all or allowing them to skim a disproportionate amount of wealth from the rest of society. I would prefer to outright nationalize the entire financial system and run it as a public utility for the benefit of the real economy, but barring that, regulation helps.

* or oligarchies, which are indistinguishable from an economic perspective from monopolies

Re:Credit card fees

[Firethorn]

Debit card protection has indeed risen to almost the same level as credit cards here in the USA. Still, until you do those actions the money is still gone from your account, which means you can't pay bills with it. Personally, I tend to put everything on the CC, but I treat it like a debit. Then I reconcile once a month.

Re:Credit card fees

[techoi]

Maybe because the two (three?) main "competitors" behave and fee in such a similar way that is seems more than a little suspect they are actually working together and not really competing as a free market would dictate?

Re:Credit card fees

[Anonymous Coward]

Risk? They're not in any risk of losing money.
I have an online shop. I the customer says he won't pay, it comes out of my pocket, not Visa's.
In real world transactions, your PIN number guarantees who you are so you can't say you didn't make the transaction.
If the customer runs away leaving behind the transaction for someone to pay, the bank gets stuck with the bill, not Visa... (of course, legally, who owes money is the customer, not the bank) In the worst case, Visa they won't get the (2 to 5%) money for that one transaction (which costs next to nothing for them) but they also won't ever pay for the full transaction value.
I'd say there's pretty much no risk involved for them.

Re:Credit card fees

[Renaissance 2K]

What do you do when the awesome, independent coffee shop down the road has the "$10 minimum credit card payment" sign up? Consider that a premium payment, or take your business elsewhere?

I find that more annoying than having to pay the fees as a consumer. Charge me a little extra, but don't tell me how much to spend.

Re:Credit card fees

[Anonymous Coward]

100% of the fraudulent purchases are charged back to the merchant. So when your card was stolen the merchant ate it. The bank you got the card from had to deal with your call and authorize the charge backs but Visa stood in the back and took the 2%.

Re:Credit card fees

[soundguy]

As stated in the previous post, Visa (and MC) have ZERO risk. They do NOT issue credit cards. Visa and MC take in roughly one tenth of one percent of each dollar charged and do pretty much fuck-all for it. They are mostly a licensing body and keepers of "the rules". They license the use of their name to card issuers (most of the time banks, but not always) who give credit cards to consumers and businesses. The card issuers take the largest share of each dollar charged and a much smaller amount is split between the processing gateway (Global, Authorize.net, etc) and the entity (again, usually a bank but not always) who is underwriting the seller's merchant account. The seller pays all fees and "discount" along the way, which means that the final amount charged to the seller for the privilege of accepting cards is often twice the "advertised" merchant account rate (especially for online sales) after taking all the nickel and dime fees into account. It's many times worse for "high risk" sellers - porn, online pharmacy, gambling, etc who can easily be paying as much as 15% off the top.

The risk liability on fraud is born 100% by the seller and the "cash back" amount you get from your card issuer is considerably less than what the card issuers charge for handling those kind of cards (known as "non-qualifying"). All of those fees, risk, and double-dealing on cash-back schemes is why everything you can buy in this country costs at least 10% more that it would in a cash-only society. The consumer pretty much HAS to use a cash-back card now in order to get screwed just slightly less than regular card holders.

Re:Credit card fees

[drsmithy]

God forbid they don't extend credit to people unlikely to be able to repay it.

With all the problems I had getting credit cards and such (couldn't even get a car loan for half the value of the vehicle) after moving to the US, despite a very well paying job and no debt, it blows my mind that bad risks ever manage to get credit in the first place.

The only conclusion I could come to, was that once you were "in" the (utterly insane) US credit rating system, it was nearly impossible to get yourself thrown "out".

Re:Credit card fees

[Anonymous Coward]

I thought Square just made video games - now I find out they're a money transfer agent as well? JRPGs, what well they do next?

Re:Credit card fees

[tompaulco]

In theory, a competitive market will result in the price of a commodity or service equalling its marginal cost of production.
Yes, but the credit card industry is not a competitive market. The barriers to entry are prohibitively expensive and there are legislative regulations in place which help to prevent newcomers from entering the market.

Re:Credit card fees

[John_Yossarian]

Sometimes an oligopoly is the healthiest outcome for a market - for buyers as well as sellers. Telecoms, energy companies, and credit processors have major investments in infrastructure that let them offer the service they do. It isn't always possible to have thousands of companies competing to serve every market.

But that's OK, because Game Theory demonstrates that Oligopolies cannot collude and keep prices significantly higher than their true market value for any length of time. Basically, whenever prices are held artificially high, any company in the Oligopoly that "cheats" and lowers its prices will steal customers from its competitors.

The real problem with credit cards is not their market structure, but the fact that costs are not visible to the customer.

Re:Credit card fees

[John_Yossarian]

Visa & Mastercard have no risk whatsoever when you swipe your card. They process credit card transactions, but they do not provide the money. That comes from the bank or financial institute that provided your card (Chase / BofA / Capital One / etc).

Cards like Discover & American Express do have the risk that a cardholder won't pay their debt, but they get plenty of money from bad cardholders in terms of fees, penalties, and high interest rates.

Actually, the biggest risk to credit cads is lawsuits by vendors, cardholders, & lending institutions. That's why Visa had to do an IPO a few years back (symbol V).

Re:Credit card fees

[Anonymous Coward]

Square payments a competitor to Visa?

You do realize that the point of square payments is to let people more easily take payments via credit cards right?

Re:Credit card fees

[AK Marc]

I suspect there would be a lot more credit card vendors without an SEC as well.

I don't disagree. However, I expect the number of people losing their life savings to shady operators will increase greatly. Eliminating the FCC will hurt wireless operators. Right now, there are rules. They know how to use equipment to make a link. Get rid of the FCC (and all rules made or enforced by them) and your competitors can deliberately sabotage your network with jammers. Do you really think that will help things?

We've had a lack of rules. It's called anarchy. And anarchy is most certainly not a free market. People prefer the predictable evil to the unpredictable good. When you are offering the very unpredictable evil that may be slightly less evil than the current known evil, you will never sell it, and with good reason.

Re:Credit card fees

[AK Marc]

From what I can tell, the costs aren't that high. One reason PayPal is cheaper is that they take no responsibility for anything. They never foot the bill for fraud, even if they negligently enable it. Credit cards contain insurance. 1% for the insurance isn't that bad. You get to do chargebacks. You often get special warranty. Given the choice of only credit cards or only PayPal, I'd choose the well regulated one every time.

Re:Credit card fees

[AK Marc]

100% of the fraudulent purchases are charged back to the merchant.

That's false. In the case where the merchant is fraudulent, the issuing bank eats it and pays that out of the 2%. Also, even if you were correct, there is still quite a level of bureaucracy in enforcing those rules fairly, requiring costs for that insurance.

Re:Credit card fees

[Anonymous Coward]

The merchants aren't allowed to pass the fee on to customers because of contractual obligations to the card companies. So the problem is not a fault of government interference. However, government regulations could help solve the problem of this broken market.

Re:Credit card fees

[Anonymous Coward]

It is not government interference, its the pure fact that Visa and Mastercard have pretty much a virtual monopoly on the payment systems. Not to mention that all the major banks are jamming the Visa/Mastercard debit cards down everyone's throat.
Here in Australia, American Express has had a surcharge which is added onto your bill by the merchant (last I looked it was 4%), Visa/Mastercard use usually has a surcharge of 1-2%.

All of these surcharges are explicitly mentioned when you use your card...
(Visa/MC have a monopoly on the credit system due to the fact that it is really expensive to setup and secure a new system, much in the same way that ISPs are a monopoly in the USA due to the expensive nature of setting up a new network)

Re:Credit card fees

[thsths]

Just imagine your banking taking a 2% cut from each cheque... how do you think that would go down?

Luckily in Europe wire transfers are regulated, and while they are not always fast, they are nearly always free.

Re:Credit card fees

[Skal Tura]

The ability to "skim" disproportionate amounts of wealth from the rest of society is what allows some people escape the rat race slavery called money and steady employment to be able to pay off car, rent/mortgage and food, and truly enjoy their life.

Removing the ability for some to earn more (or "skimming" as you prefer) would essentially mean going back to full slavery.

You might argue we are not slaves, but consider what happens to your lifestyle if you quit your job, or what happens if you change to 3 day work weeks, or the amount of work is at your preferred level. The ability to choose what kind of slavery we commit to does not mean it's not slavery. Almost all people on this earth are subject to this slavery.

Re:Credit card fees

[AmiMoJo]

Credit cards and Person to Person payment schemes are not a free market.

Credit cards are all tied up because of the massive investment that would be needed to introduce a new player - infrastructure, payment processing machines, getting a good percentage of shops to accept them etc. People have tried and failed.

P2P payments are a bit better - I use Google Checkout. The main problem is eBay has banned everything except PayPal. eBay is, unfortunately, the biggest market for P2P payments. Amazon is probably number 2 but they also limit your options for payments and their fixed postage costs can be an issue too.

Gotta hate monopolies.

Re:Credit card fees

[Anonymous Coward]

I don't see the government interference. Is there some law that makes this illegal that you aren't dropping a hint to?

Where I live, there are plenty of businesses that used to surcharge for credit card use.

There are still businesses that will discount if you pay cash (and yes, I get a receipt and one I use for my own business). I go to 2 regularly (vehicle, hardware). I also know at least heating and plumbing places that do this. I realize this may not be concrete evidence of legality, but one of the stores has a freaking sign next to the register specifying the policy.

Re:Credit card fees

[Geminii]

Have government-provided services in those industries which only provide the most basic service, for the lowest price. Postal services which can go anywhere for pennies, but they're slow. Bank accounts which pay no interest and charge no fees. Free 56k dialup from anywhere.

It leaves plenty of room for commercial interests to provide additional services as people demand them, but it does mean that it's possible to opt out of playing the big boys' game without being relegated to the sidelines.

Finally.... PAYPAL sucks!

[Anonymous Coward]

Finally.... PAYPAL sucks!

Cut out the middleman

[Anonymous Coward]

Less people to pay for services, more competition, lower prices, better service. We like this.

Wait

[countertrolling]

The money isn't stored on the card. Everything still goes through Visa. I can hardly wait to see the fees for this one... How's this different from any other transfer? How do you have a *Visa* account without a bank account?

Re:Wait

[schnikies79]

A Visa (or Mastercard) debit card.

Re:Wait

[countertrolling]

Which still be tracked and disabled by a central bank.. Not good. Same shit in a different package. And the tax is too high..

Re:Wait

[Anrego]

Shitty as banking looks down there (I'm Canadian) .. I have to imagine US banks are a hell of a lot more regulated than paypal, which can pretty much do whatever the hell it wants and answer to no one.

Re:Wait

[countertrolling]

Paypal didn't crash the economy... The law doesn't do much good when the cop looks the other way. There's nothing here that's a game changer, not that it was meant to be.. It's there to drive the hook a little deeper.

what about privacy?

[Dr_Ken]

Look for the government and lesser snoops to dive on this like a duck on june bug.

Re:what about privacy?

[somersault]

What about it? How is this any different to using PayPal?

Re:what about privacy?

[fuzzyfuzzyfungus]

You might want to take a look at the financial data that banks and similar institutions are already required to divulge...

Re:what about privacy?

[Dr_Ken]

Oh I know. That's why I prefer my PTP transactions to be me handing over (or accepting) banknotes. Unfortunately this is hard to do if you're in Michigan and you want give your pal in Ontario $12 USDs. Not a big deal really but who wants the "imperial entanglements" that go with converting USDs to CDs and paying the conversion fees, showing ID (which will be recorded), and etc.? And of course if what you're buying or selling is pr0n or something else you'd rather not disclose (or be able to be discovered) what's the alternative? Not PayPal that's for sure.

Re:what about privacy?

[Dr_Ken]

It's not. That's the problem.

Re:what about privacy?

[BJ_Covert_Action]

...like a duck on june bug.

Do ducks dive on june bugs a lot?

Re:what about privacy?

[mxs]

Oh I know. That's why I prefer my PTP transactions to be me handing over (or accepting) banknotes. Unfortunately this is hard to do if you're in Michigan and you want give your pal in Ontario $12 USDs. Not a big deal really but who wants the "imperial entanglements" that go with converting USDs to CDs and paying the conversion fees, showing ID (which will be recorded), and etc.? And of course if what you're buying or selling is pr0n or something else you'd rather not disclose (or be able to be discovered) what's the alternative? Not PayPal that's for sure.

This is by design. The effective untraceability of cash has long been a "problem" for police states such as the US and most European countries. They will make sure no other form of monetary transfer developed from hereon our will ever have that same design flaw. All you need is a boogeyman (for most people, money laundering mafiosi type stories will be sufficient, for the rest use terrorists and child molesters) and suddenly you get access to a vast database of who exchanges money with whom for what when and how often. And it will most definitely not be used primarily to catch aforementioned boogeymen (which can still just deal in ... cash. Or bearer bonds. Or goods). Bonus points for slowly making people who use cash seem suspicious and giving cash an air of criminality (for 500€ notes, for instance, there are bunches of stories about how they are used by criminals).

Things like anonymity or even just simple privacy are not desired. Which is a shame -- I don't exactly want all my trading counterparts to know my physical address, or even my name. Not because of what I am doing being shady in any way, but I simply do not trust most people to use and discard, let alone protect, my data responsibly.

Re:what about privacy?

[Dr_Ken]

It just an expression used in Michigan and Ohio a lot. I'm not sure if they do or not. My limited experience with ducks is that they love big fat juicy insects for snackage.

Finally...

[hesaigo999ca]

Something that makes absolute sense, business and personal.
I like VISA better now...but will this be also for canada?

Re:Finally...

[Carewolf]

I was more surprised this wasn't available before in the US. Now I can better understand why anybody would ever use PayPal. I never understood what they offered that wasn't already available for free with any major bank.

Just how many things that the rest of the world takes for granted is unavailable in US?

Re:Finally...

[DanTheStone]

In the US, Paper checks are free and transferring money electronically costs us money.

Re:Finally...

[Carewolf]

But why? Paper checks cost the banks money to process and the banks can't wait to get rid of them (and cut down on personal...). Well, couldn't wait to get rid of them of them, they are practically non-existing and only used when doing business with US partners.

Re:Finally...

[mxs]

But why? Paper checks cost the banks money to process and the banks can't wait to get rid of them (and cut down on personal...). Well, couldn't wait to get rid of them of them, they are practically non-existing and only used when doing business with US partners.

Greed. Sure they don't want to support paper checks anymore. But they want to offer "new" services for less money even less. Banks operate on the principle that nickle and diming their customers is the best foot forward, and any services offered for "free" are just to get them in the door or offer a competitive advantage they'd rather do away with were it not for the pesky morons a decade or two ago who thought free cheque processing should be something to compete on.

Re:Finally...

[Slashdot Parent]

I was more surprised this wasn't available before in the US. Now I can better understand why anybody would ever use PayPal. I never understood what they offered that wasn't already available for free with any major bank.

Just how many things that the rest of the world takes for granted is unavailable in US?

This is one of the areas where the US is woefully behind. Stay tuned, though. There are some services popping up that will fill this need (popmoney, etc.)

My bank (State Farm Bank) actually offers a person-to-person payments service that is free, but it's pretty rare still.

Re:Finally...

[Slashdot Parent]

But why? Paper checks cost the banks money to process and the banks can't wait to get rid of them (and cut down on personal...). Well, couldn't wait to get rid of them of them, they are practically non-existing and only used when doing business with US partners.

Legacy. Inertia.

People here expect checks to be free, so they are. Even though they cost the bank much more money to deal with.

To give you an idea of how ridiculous it is, one of my banks, Bank of America, gives me free Cashier's Checks (i.e. certified funds). These cost the bank a ton of money because an actual teller has to issue them (and a manager has to approve it if the amount is large enough). On the other hand, they charge $3 for ACH transfers (electronic) and $25 for wire transfers, neither of which cost the bank much of anything.

This is finally starting to change, but change is slow. Checks are so ingrained here that we now have apps for our smartphones that can take pictures of checks for remote deposits. But really, I don't want to take photographs of checks and try to tell myself I'm all modern. I just want to be able to make a fucking electronic payment in the first place.

Re:Finally...

[kidgenius]

ING Why more people use them, I have no idea.

PayPal advantage?

[fahrbot-bot]

From TFA:

As the leader in global online payments for the last twelve years, PayPal has unmatched advantages that we believe put us ahead of the competition...

For example. Since we're not regulated like a bank or real credit merchant, we can do things like freeze or disable your account simply because we feel like it or someone complained about you, or whatever. Don't worry though, customer support will explain everything and get you sorted out in a jiffy.

Re:PayPal advantage?

[MichaelKristopeit414]

paypal stole $200 that was in my account paid by players of my online market simulation game... the game included narcotics, so paypal assumed the drugs in the simulation were real. not real enough to contact authorities, just real enough to steal my money.

paypal will answer for their transgressions.

Re:PayPal advantage?

[TheThiefMaster]

Paypal is a bank. A European bank.

Re:PayPal advantage?

[fahrbot-bot]

Paypal is a bank. A European bank.

Well... perhaps in Luxembourg. From PayPal Bank Status:

Peter Thiel, the founder of PayPal, has stated that PayPal is not a bank because it does not engage in fractional-reserve banking.

In the United States, PayPal is licensed as a money transmitter on a state-by-state basis.[47] PayPal is not classified as a bank in the United States ...

Commencing 2 July 2007, ... PayPal moved its European operations from the UK to Luxembourg. As a Luxembourg entity, it is since regulated as a bank by the Commission de Surveillance du Secteur Financier (CSSF) and provides PayPal service throughout the European Union.

So *that* clears things up. :-)

Re:PayPal advantage?

[Anonymous Coward]

They are the best CC processor around if you are a small business or especially a small non-profit. Their rates are lower then anyone else. They have a well documented and quite popular API for integrating with your web-site. They have a virtual terminal for CC processing that does not require a dedicated locked down computer subject to random inspections for which you have to pay.
Anecdotal evidence: In my 7 years with them I had zero problems with them.

Re:PayPal advantage?

[TheSpoom]

To be fair, my very long-time account (since 2001) was once frozen, and I only had to call once and be on the phone for about two minutes to get it unfrozen. That said, I probably do trust Visa a smidge more than PayPal.

Re:PayPal advantage?

[tlhIngan]

I don't see how Visa will fix things up, either.

Credit card processors are pretty slimey, so much so that even Paypal looks good. It's just like cellphone carriers - they're all pretty horrible, adding competition just results in the new guy ending up as bad as the incumbents.

Honestly, it won't be long until we start hearing of the same things that Paypal does, except it's being done vy Visa instead. The only thing possibly keeping sellers honest is that payers get the seller's Visa number.

Why did it take so long?

[Just_Say_Duhhh]

Paypal mapped it out years ago. The fact that Visa (and AmEx, Discover, etc) haven't been all over this idea by now makes me wonder if they're even paying attention.

I, for one, welcome competition amongst our financial overlords

Re:Why did it take so long?

[countertrolling]

I, for one, welcome competition amongst our financial overlords...

Then use cash.. preferably unmarked bills

Re:Why did it take so long?

[Anonymous Coward]

They are scared:

https://squareup.com/

A twitter co-founder seeks to "democratize" credit card processing. They must feel threatened.

Re:Why did it take so long?

[fuzzyfuzzyfungus]

Why would a credit card issuer feel threatened by somebody who is trying to increase the convenience and reduce the cost of accepting their credit cards? Some of the bloated incumbent processors are evidently shitting bricks; but why would Visa object to a company whose product offering should markedly increase the number of people accepting credit cards, rather than cash/checks only...

Re:Why did it take so long?

[Anonymous Coward]

That's neat - but why would they be scared of it, exactly?

Looks like that's just a credit card scanner, made for smartphones, with app and back-end service. Their take is 2.75% (more if you enter data manually). But they don't offer their own card, which means that a good chunk of that 2.75% - say 2% - still goes to the traditional credit card companies. If anything, they should welcome this development (or copy it). I, for one, would much prefer to pay via card (though I'd prefer my Dutch PIN card over a credit card) than paying cash (exact amount) to the postal services for select packages (import duties, usually).

Unless your post is just an ad, of course. In which case - it's still cool, so spam away.

I wonder what the adoption rate of Google Checkout these days is, though.. seemed like the only reasonable competitor to PayPal, but I've never seen a Pay with Google Checkout button in my browsing along the web.

Off-topic: "It's been 1 hour, 1 minute since you last successfully posted a comment." Seriously, Slashdot? *VPNs and hits Submit*

Re:Why did it take so long?

[Anrego]

Probably too high up there on their tower of money.

Seriously.. it must get to a point where you make such obscene profit that it's not even worth your time to look into making more.

Re:Why did it take so long?

[JoeMerchant]

Then use cash.. preferably unmarked bills

Um... those would be counterfeit.

Real bills have serial numbers - which can be read by machines these days, and probably are in some cash counting machines.

Re:Why did it take so long?

[Anonymous Coward]

You don't think it's possible that if Square gets large adoption as a payment platform, a next logical step could be to cut out Visa and have some other form of credentials to verify the funds?

By setting up a person-to-person payment system, Square becomes less necessary and therefore the old establishment hands keep total control.

Re:Why did it take so long?

[olsmeister]

The phrase 'unmarked bills' does not refer to currency without serial numbers, it refers to bills that have not had anything additional done to them to allow them to be traced.

Re:Why did it take so long?

[RobertLTux]

geek challenge:

figure out a way to add serial number recording to the most common type of bill counters.

note the scanning process should not add more than 5% to the time it takes a current counter.
Limiting the reader to US currency is fine.

Re:Why did it take so long?

[JoeMerchant]

should be doable with off the shelf tech, as long as the counter flashes the bill for at least one video frame (three frames would make it much easier....) I just saw a 640x480 camera that records at something like 340fps.

Is the post so corrupt in your country...

[Anonymous Coward]

Is the postal system so corrupt in your country that simply sending CASH to someone is dangerous? In 50+ years of sending and receiving gobs of cash in birthday cards and christmas cards, I've never had any problems.... and we're talking thousands of dollars here...

Re:Is the post so corrupt in your country...

[robot256]

I see why you posted Anonymous Coward, otherwise you might end up with hoards of vagrants opening all your mail before you get home in the evening. Some of us prefer to avoid that worry altogether.

Re:Is the post so corrupt in your country...

[subanark]

Its not the post office, its the people at both ends.

1. Although it is a federal offense, it is often easy to steal people's mail and thus the money simply by taking mail out of the mail box on either end.
2. Cash isn't traceable, you can't go to court and claim you payed your bills in cash unless you did it in person and got a receipt.
3. Cash needs to be processed manually, if you send cash to a business, someone has to open the mail, count the bills, store the bills, and make a note that the payment was received. People cost money to hire, and people tend to make more mistakes than computers.

Re:Is the post so corrupt in your country...

[Anonymous Coward]

Yes, it is. I think almost every kid in the USA is told growing up not to send envelopes that are obviously full of cash.

Re:Is the post so corrupt in your country...

[subanark]

4. Cash takes time to get to the recipient, usually 2 days (The US has a lot of sparely populated land).

Now, #1 and #2 can be mostly mitigated by sending a check. Sending checks in the mail to pay for many items is a very common practice here in the US. It doesn't help #3 and #4, but it avoids the fees involved in using credit cards. Checks are much safer than cash for non-person exchange (the downside of checks is you don't know they are good until you cash them in, which is why many walk in stores don't accept them).

Re:Is the post so corrupt in your country...

[icebraining]

That may be fin for birthday gifts, but it obviously doesn't work for payments; systems like Visa or Paypal provide you with a proof of payment.

Re:Is the post so corrupt in your country...

[Anonymous Coward]

1 is a non-issue pretty much everywhere but the US. I put outgoing mail into a pillar box and incoming mail is pushed through a hole (a letter-box) in my door. Mail can't easily be stolen from either end.

Re:Is the post so corrupt in your country...

[Lifyre]

Actually it typically resolves #3 as well. All of the information is on the check for the computer to automatically record and process it. The MOST a person would have to do is manually enter the value if the hand writing is particularly poor.

Re:Is the post so corrupt in your country...

[Anonymous Coward]

Is the postal system so corrupt in your country that simply sending CASH to someone is dangerous? In 50+ years of sending and receiving gobs of cash in birthday cards and christmas cards, I've never had any problems.... and we're talking thousands of dollars here...

Agreed...I've never had problems sending cash to strangers, despite always being warned. It is people in person that you know that are crooked.

Re:Is the post so corrupt in your country...

[Anonymous Coward]

Is the postal system so corrupt in your country that simply sending CASH to someone is dangerous?

Yep, it is. I live in the UK and have even mailed stuff to myself to test the postal service as so much stuff never turns up. Also, difficult to know whether it is this end or the other end but I frequently send small items to my family in South America.... around 1 in 5 items actually gets through.

Anything better than Paypal

[HForN]

In my opinion, any competition to Paypal is a good thing. The less power Paypal holds over its users (i.e. because it is not regulated as a bank), the better it is for everyone else.

Re:Anything better than Paypal

[Dr_Ken]

And so the best thing about PayPal is also the worst thing about it too.

Re:Anything better than Paypal

[countertrolling]

You're no better off than before. It only solidifies their control over personal finance. Don't forget that VISA also blocked his account.. We give them all too much power.

Because they can.

[Anonymous Coward]

They charge the fees because they can.

Myself I'm okay paying 1-2% for the convenience of not using cash.

I can carry thousands of dollars in purchasing power, and if I lose it, no big deal.
I don't have to manage cash, count coins etc.
I get full detailed records of what I spend money on.

Seems like a pretty nice deal to me.

Re:Because they can.

[delinear]

I have a credit card and a debit card. I enjoy all of the above with my debit card without a per transaction fee.

Good Grief

[Frosty Piss]

People who keep any significant balance in their PayPal account are idiots anyway. It's certainly not necessary to pay with PayPal. When your balance get to over 100$, have them cut you a check. If you are conducting enough biz that you have a ton of money in your PayPal account, you're a moron for many reasons if you leave it sitting there.

PayPal's "bad behavior" is a non-issue if you manage your account with even a grain of intelligence.

Re:Good Grief

[|Cozmo|]

That won't help you if they decided to take the money back out of your bank account without warning.

Re:Good Grief

[Frosty Piss]

Please stop with the FUD.

Re:Good Grief

[nolife]

I have a separate account at a local small bank that is ONLY used for Paypal. My service there is "free" (checking, check card etc) so it doesn't cost me anything other than driving to the ATM on occasion to withdrawal/deposit for my various paypal needs. I'm usually in the area anyway because I frequent the grocery store in the same shopping plaza. My two forms of Paypal funds are my check card with a MC logo and that verifed checking account, both come from the same account pool of money in that bank.

Maybe this level of concern is not required but back when I got my Paypal account, many people were complaining about getting accounts locked, reversed payments etc...

Re:Good Grief

[Anonymous Coward]

Getting a check takes like 2 weeks. They can take your money in the mean time. Get one of their free debit cards, then go to a supermarket and buy a 99c bag of chips and get $400 cashback. Its what I do, and it works well. Hell, even a bank account transfer takes 3 days...

newclear age offers human to human equity

[Anonymous Coward]

no cash, or gadgets, usery fees, etc.... see you at the play-dates, georgia stone editings, photon showers etc... guaranteed to activate all of our sense(s) at once. hand in hand.

Yeah

[Anonymous Coward]

Yeah man!

Ripe for abuse

[creamy_red]

Seems to me like this will be an open invitation for hackers since you send and receive the funds by putting your full credit card number into their website. Who wants to give someone else their CC number so they can give you money?

Re:Ripe for abuse

[lgw]

That would be a startling bad way to implement this. Any CC number should only ever be entered into Visa's website, much like any Paypal authorization is done at Paypal's web site. Of couse, everyhting is vulnerable to phishing.

If you enjoy having all your purchases tracked...

[unil_1005]

...this is the one for you!

Re:Greed

[TaoPhoenix]

Greed is never satisfied.

Re:Wait a minute...

[khr]

The money isn't stored on the card.

Wait, what are you talking about? I always take my cash and my card to a friendly neighborhood merchant who puts the money on the card. He says he has a machine in the back room that does it, so he takes both and after a couple of minutes he returns and gives me the card back.

Probably Wasn't Enough Money In It

[Greyfox]

When you're bringing down double digit growth due to practices with dubious moral and legal standings, a couple extra percent on transaction fees in a niche market doesn't look so great. Especially when you were probably in the loop at some point anyway. Now that people are actually being more careful about their credit and Congress is making noises about investigating their questionable practices, they feel the need to start diversifying.

Check out Hawala for a better alternative

[Squiff]

The elephant in the room here is the Hawala system (http://en.wikipedia.org/wiki/Hawala) quicker, far cheaper, no accounts getting suspended- as reflects it's origins as a money transfer system designed to work in a hostile environment without regulatory authorities. And it does work, has worked for centuries. The only brake is the media scare stories on 'Islamic terrorist banking'...

Re:Check out Hawala for a better alternative

[Dishwasha]

As quoted from Wikipedia: "Hawala has been made illegal in some U.S. states[3] and other countries[citation needed] as it is seen to be a form of money laundering and can be used to move wealth anonymously."

There's no elephant here, move along, move along.

Re:Check out Hawala for a better alternative

[Anonymous Coward]

There is also bitcoin. What VISA does for 2%, bitcoin does for free.

Re:Check out Hawala for a better alternative

[Anonymous Coward]

Wouldn't most hawaladars be reluctant to deal with atheists, though? Or even non-Abrahamics?

Switching from Paypal to Visa...

[GameboyRMH]

...is like working for Mussolini instead of Hitler (GODWIN TIME!)

Reverse Analogy

[Comboman]

Would you go to your employer and say "Hey, I've figured out how to save money on my bills at home, could you cut down my salary by 10% to compensate for that please?"

Maybe not, but if your employer found out there's someone who's willing to do you job just as well as you for 10% less than you make, guess what happens?

Re:Reverse Analogy

[somersault]

You have him deported?

citizen: "Only criminals use cash."

[iiiears]

Electronic transfer is safer. faster. more traceable welcome to the brave new world.

Annoying names

[Anonymous Coward]

Whoever came up with "ZashPay" and "Popmoney" should be popped right in the zash. Hard.

Why not just use bank transfers?

[timbo234]

In every country I've lived in (Australia, the UK, Germany) bank transfers are completely free and easy to do over online banking. If I book holidays with my friends and we don't settle who owes what to who in cash during the trip we can simply transfer the difference over to them once back home.

In Germany it's particularly pervasive - you pay for everything with bank transfers, it's even the preferred method to pay on ebay (preferred by users not paypal/ebay obviously).

Re:Why not just use bank transfers?

[Slashdot Parent]

In every country I've lived in (Australia, the UK, Germany) bank transfers are completely free and easy to do over online banking. If I book holidays with my friends and we don't settle who owes what to who in cash during the trip we can simply transfer the difference over to them once back home.

I know it's hard to believe, but we don't really have that here in the US. Some banks offer a similar service, but it's difficult to use. It sucks, but it's how it is right now.

There are some services popping up that are going to get us pretty close to where we should be (popmoney, this visa thingy from the article, etc.) But these are really in their infancy. Paper checks (yes, paper checks) are still king over here. Drives me nuts, but it's true.

Re:Why not just use bank transfers?

[kidgenius]

ING does it. It's quite easy. You need your friend's account number and routing number, and you can send money to their account anytime you want. I just set it up with my dad the other night so I could make payments to him once a month. It's quite simple.

Re:Why not just use bank transfers?

[Slashdot Parent]

ING does it. It's quite easy. You need your friend's account number and routing number, and you can send money to their account anytime you want. I just set it up with my dad the other night so I could make payments to him once a month. It's quite simple.

Yeah, state farm as it too. I use it to pay my Au Pair. I do not consider the process to be simple, but for now, it's the best we've got.

In order to use it, you need to know the recipient's routing number and account number. Who knows this about their friends? Also, in the US, this information is not safe to divulge to untrustworthy parties. That same information can be used to initiate an ACH debit against your account.

The rest of the world is way more advanced than we are in this regard.

Re:Why not just use bank transfers?

[White Flame]

Bank transfers cost something like $25 last time I used them here in the USA.

It's ridiculous that one of the most labor-intensive ways of transferring money (handwritten check) is still the only free option, that none of these technology-oriented transfers have found a way to make free transfers for the customers & merchants, but that's I believe due to the government mandating free check processing.

Re:Why not just use bank transfers?

[Tacvek]

Yes. The US has a very bizarre system. Paper checks have no per transaction cost. However some banks still charge for ordering even basic preprinted checks.[1]

Banks often seem to allow transfers between any two accounts (even those owned by different people) at the same bank free of charge.

Standard wire transfer (domestic) frequently has a $20 or more fee. International wire transfer is more ($30 fee at my Credit union). In the US these are intended mostly for large (several hundred dollar), or huge (thouands of dollars or more, like closing out an account) transactions.

Customer Initiated ACH transfers to another account are less expensive, but there can still be a fee of $5 or more.

Footnotes:
[1] You can print your own (entirely legal and well accepted, although most people don't know about it). You can completely handwrite a check on blank paper (also legal, but this WILL cause problems, including banks refusing to honor them, or delayed processing, since not only will magnetic reading of the account number fail, but the OCR based reading that would work on printed checks will also fail).

Already at least one cheaper Paypal competitor

[Anonymous Coward]

dwolla.com

25 cents a transaction, regardless of size

Only available in the US currently though

Worked for me

[Anonymous Coward]

I ditched $80k in CC debt through a chapter 7 last year.

$100 on credit card costs VISA more then $10

[perpenso]

You'd think with the enormous increase in processing power experienced over the past 4 decades, the amount of money required for operating the credit card networks would have plummeted. So why are credit card fees still anywhere from 2% on up (borne by sellers)?

That increase of processing power is accompanied by increased use of credit and debit cards. Also there may be some requirements of locality, that a transaction processor must be inside some jurisdiction. Quality of service may also dictate locality. So its not clear that they can use consolidation and other techniques to reduce their costs.

And is it (much) more expensive to send $100 vs. $10?

Think of other credit card benefits like automatic extension of your warranty. I had a TV go bad 13 months into a 12 month warranty. The manufacturer's warranty did not cover this, the credit card's extended warranty covered this. This extended warranty has to cost something proportional to the charge.

Astroturf?

[tqk]

I'm pretty sure I transferred money via on-line banking to my sister five years ago. WTF is wrong with VISA?!? A little slow to the party?

Everything I read about markets, "Banksters", the financial sector, and all their regulators just reminds me of that "Scream!" painting that was so easily stolen a few years ago. It's like they think they're in a safe, cocooned environment where nothing can affect them. Meanwhile crackers hammer on their doors, taking down one of them after another, ...

How the hell do they hide out from so much reality for so long? 'Cause they can. It's like they're subsidiaries of the Catholic Church (which, no offence meant, has got away with atrocities for centuries - Giordano Bruno, ...).

re: its Government

[whistlingtony]

That the big corps spend so much time, money, and effort trying to neuter the FCC and the SEC (not to mention the EPA, etc) should tell you that your facts are based on your ideology instead of your ideology being based on facts... You may want to look into that....

Re: re: its Government

[techoi]

Well said. Mod parent up.

Here's a novel idea...

[Anonymous Coward]

When I want to send someone money, I give them cash. Done.