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

[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

[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

[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

[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

[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

[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

[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.

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

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'...