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

[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

[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

[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

[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

[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

[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

[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.

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.

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