MasterCard Rails Against Bitcoin's (Semi-)Anonymity

angry tapir writes: MasterCard has used a submission (PDF) to an Australian Senate inquiry to argue for financial regulators to move against the pseudonymity of digital currencies such as Bitcoin. "Any regulation adopted in Australia should address the anonymity that digital currency provides to each party in a transaction," the company's told the inquiry into digital currencies. MasterCard believes that "all participants in the payments system that provide similar services to consumers should be regulated in the same way to achieve a level playing field for all."

Comments

Re:Wait, a level playing field?

[Anonymous Coward]

Look up transaction fee. Visa/Mastercard name is not free. They get a cut from each transaction done.

Not actually true. Fees are established between the banks. Different pairs of institutions have different agreements. Sometimes the merchant's institution and the card holder's institution are one and the same. In that case it makes no sense for the bank to use an outside processor, or to charge itself anything. The merchant bank will however charge the merchant for the convenience of the transaction. The card branding company (MC or Visa) never even sees that transaction, let alone charges a fee for it.

Card brand companies typically get revenue from three sources. Licensing fees charged to banks, processing fees (where they compete with tons of other processors, not just MC, Visa and Amex) and additional financial services mostly to financial institutions. MC and Visa only get a "transaction fee" if they act as the processor for the transaction, and they have plenty of outside competition from other companies and even some governments. If they do process the transaction, their cut is a tiny portion of the total fees charged by the issuer to the acquirer, and is competitively priced, given that many other companies exist that could offer to do it for less if they wanted.

The payment card industry is a lot more competitive and nuanced than most people think.

Re:I agree

[gox]

all of the protections disappear with bitcoin type anonymity

Reversing transactions requires arbitration, which is quite possible with or without anonymity (although, you wouldn't want to provide delivery receipts for physical items if you need to remain anonymous).

Actually, decentralized & pseudonymous systems like OpenBazaar which work with Bitcoin provide trustless (i.e. the notary can't steal your funds, unlike a trusted escrow) arbitration services. This sort of opt-in protection is better than what you get with Mastercard, but considering the technology is immensely more complex than what is used in centralized systems and that it is mostly open source (negligible funding), more time is needed until it matures.

I have no need of anonymous financial transactions for credit cards.

I would agree with this. Most of the problems with credit cards is because they are pull payments. The fraud levels would be immense if it became anonymous.

It's very convenient to not be required to give out personal info to prove you are not a fraud, though. It's also good for security: no "pull payment" info to steal when one of the companies you work with has a data breach. So I think from the consumer's perspective it is better in the case of push payments.

Re:they must hate cash, too

[mjwx]

They require merchants to suck up the cost of accepting Credit cards and not allowing a company to charge more to cover the credit card merchant fees. Of course 'cash discounts' can be done but that's uncommon. Most places just suck up the %3 as part of the cost of business so anyone paying cash does essentially pay more.

First I'll say that this little gem in the T&C is illegal in Australia (and anywhere else with semi-sane consumer protection). Hell, even in the United States I've negotiated better prices with cash because of merchant fees.

But this rule does not discriminate against cash accepting businesses. Everyone who accepts credit cards has to pay, even if they have no cash facilities what so ever.

In fact, it helps businesses that do accept cash because they have a percentage of transactions that are not subject to merchant service fees so they make more profit by giving a slight discount meaning a business has no incentive to refuse cash.