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MasterCard Forcing PayPal To Pay Higher Fees
iComp sends this quote from El Reg:
"PayPal, Google Wallet and other online payment systems face higher transaction fees from MasterCard in retaliation for their refusal to share data on what people are spending. Visa is likely to follow suit. The amount that PayPal has to pay MasterCard for every transaction will go up as the latter introduces new charges for intermediated payment processors. This change is on the grounds that such processors don't share transaction details, which the card giants would love to get hold of as it can be used to research buying patterns and the like. Companies such as PayPal allow payments between users, so the party (perhaps a merchant) receiving the money doesn't need to be registered with the credit-card company. PayPal collects the dosh from the payer's card, and deducts a processing fee before passing the cash on to the receiving party. MasterCard would prefer the receiver to be registered directly so will apply the new fee from June to any payment that is staged in this way."
I smell some antitrust concern here...
I know! It's like watching two school bullies argues start to argue over something, as you're secretly hoping they'll get into a fight and both be suspended.
I could see MasterCard taking more of the hit for this though, Paypal funds can be added without any fee from a bank account, or with some new MoneyPak thing I'm just reading about for the first time - I forsee more people using this option if they have hefty fees when transferring from a credit card (Because the whole reason you're using Paypal is because you can't use your credit card in the first place, the money will be transferred if it has to be).
Global warming and other natural disasters are a direct effect of the shrinking number of pirates - Gospel of the FSM
Perhaps if Mastercard and Visa hadn't allowed PaypaI to usurp what they could very well have done themselves, long ago, they wouldn't be in this situation. I've always wanted the ability to painlessly send someone money, directly, and it's idiotic that paypaI (and other 3rd party wallet services) are the only way to do it. Completely redundant.
The problem with those kinds of transactions is that they are inherently risky, since there is not a merchant on hand to blame in the event of a chargeback. Visa and Mastercard stayed the hell away from that nightmare, and it is telling that only a company as skeezy as PayPal has managed to make it profitable for so long.
It used to be that Paypal and similar services weren't there to take away transactions from normal merchants (since only small "peer to peer" transactions, like you mention, went through them) but Paypal has grown to be a behemoth that has elbowed it's way into every online merchant's payment options, for some strange reason (what good is it unless you for some reason already have money stored at the bank of paypal?). Mastercard and Visa are naturally skeptical, because PayPal is basically taking mindshare that they could easily shift to their own credit service (if they wanted to start being regulated like a legitimate business, that is.) This is the writing on the wall that PayPal should either rethink their strategy, or accelerate it. Visa, in their own right, has started basically a competitive service (V.me) and is actively going at merchants to reclaim some ground.
MasterCard already has access to personal data from the card issuing side (they can know everything your bank knows about you, which is considerably more than what a merchant might know). The issue here is that PayPal is acting as a screen so MasterCard/Visa cannot be sure of the nature of the downstream merchant (this is the data they are not getting from PayPal). This has monetary consequences for MasterCard because some of their fee structures differ by industry, but more significantly they track chargeback and loss rates by merchant industry. I think this is less about monetizing purchasing data (though there is certainly an element of that) and more about scaling their fee structure to known loss paterns.
Actually, they'd love to know about a lot of your spending. For instance:
- If you buy a gun: Then they'll know who to search if/when they decide to confiscate them.
- If you buy gold, silver, or other long-term store-of-value commodities: If/when the dollar weakens they can make those illegal to possess and confiscate them to try proping pu the failing dollar and heading off a competing currency, forcing people to stick with the printing-press fiat money. (They already did that with gold during the Great Depression.)
- If you buy a bunch of long-shelf-life food or other "survivalist" supplies. It's stuff to raid in a crisis and an indicator of who the non-sheep are.
- If you buy political literature of a non-mainstream nature.
I could go on for pages.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
But only if you also trust PayPal. PayPal is not regulated well under most banking or consumer protection laws. PayPal will lock up your money if there's a disputed transaction, with no recourse for the seller (it's hard to separate PayPal from eBay here, since eBay mandates the use of the PayPal option and it's the biggest use of PayPal). I'm baffled why someone would be worried about security of banks or credit cards but then happily get into bed with PayPal.
"That wasn't viable until the Check21 act was passed in October of 2003. Paypal was already 3 years old by that point. And really, it wasn't until the past 2 or 3 years that banks have been accepting customer-side deposits by scanning."
That's not even remotely true.
A check is nothing more than an order for a bank to pay somebody money. While banks prefer that they take the particular form that the bank issues, they don't have to. Checks have been written and accepted on underwear, and even on the side of a pig.
A check has never had to be scanned. It can be handwritten, printed, or anything else. Ever since the 90s, you have been able to get check printing software (and even the legit kind of machine-readable magnetic ink) that let you print your own checks with any bank and account numbers on them. And they are legally LEGITIMATE checks, as long as they are authorized by the account holder.
I had somebody pass a printed check on my account once, without my permission. It didn't look anything at all like a normal check from that bank. But the bank didn't bat an eyelash. They just paid it.