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

Decentralization, do you speak it?

[Megane]

They should go after Bitcoin Inc. and force them to comply, amirite?

Re:Decentralization, do you speak it?

[mcelrath]

The non-anonymity of MC transactions is a huge liability. Not only does my MC payment for my coffee allow me to pay for my coffee, but it also allows the merchant to perform future transactions (whether valid or not). It's an authorization not a one-time transaction. This price is just too high and is the source of all CC fraud. There is no reason why any merchant needs to know who I am. If customers choose to disclose their identity to sign up for their email spam, that's their problem, but I should not have to pony up my identity to perform most consumer transactions. The only reason merchants check ID's on transactions is as a flawed fraud protection measure. It protects them, but at my expense.

Anonymous transactions are be better.

Re:Decentralization, do you speak it?

[AK Marc]

Nope. You authorize that one and only one transaction. This has been tested in court with the car rental places that have you sign and authorize a final bill, then charge you later (without specific authorization) for parking tickets or speed cam tickets sent to them later.

If you didn't authorize that transaction, it's fraud. If Starbucks uses your card info later, they committed fraud. And you, as a cardholder, is 100% "safe" from those charges.

The only reason merchants check ID's on transactions is as a flawed fraud protection measure.

That's a violation of the merchant agreement for all merchant agreements I've read. When you only deal with merchants acting illegally, you get a bad picture. Where are you going where they check ID and charge you later for things you didn't buy, didn't want, and didn't authorize? It's never happened to me, or most people with cards.

They may check your signature on your card. That is the only "ID" they are allowed to check, to keep the process simple and fast, and encourage users to use it.

Re:Decentralization, do you speak it?

[AK Marc]

Ah, so you were lying for effect. The "coffee" example was to hide the real reason. The *only* people who routinely charge without authorization are rental agencies, and if you read the contract, they gives them permission to charge you. That's (often, perhaps not always) a breach of their merchant agreement. And you shouldn't need to fight them in court. Just reverse the charges. "I never authorized that charge" should be sufficient.

And that's not fraud. And certainly not the "major source" of credit card fraud. That's skimmers.

they must hate cash, too

[TheGratefulNet]

since that's the ultimate anon payment system.

of course, we know what's going on. they hate having to compete against another company.

poor babies!

Re:they must hate cash, too

[Impy the Impiuos Imp]

Exactly. One of the benefits of a cash is anonymous transactions, one of the rights people reserve unto themselves.

Making everything electronic so government can track it is just another sad cog in the panopticon the government is building, a precursor to a 1984-like dictatorship.

Re:they must hate cash, too

[mjwx]

since that's the ultimate anon payment system.

of course, we know what's going on. they hate having to compete against another company.

poor babies!

They absolutely hate cash... but seeing as the same forces who issue cash also grant them license to operate, they cant do jack shit about it.

But Bitcoin... there's people they can sue.

Seriously, if it were legal for MasterCard to punish businesses who accept cash, they would.

Re:they must hate cash, too

[witherstaff]

They already do try to punish businesses for accepting cash. 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.

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.

Re:they must hate cash, too

[mjwx]

Larger businesses can find the cost of handling cash is larger than the merchant fees

Sorry, but this is utter bollocks.

I've worked deploying EFT systems both large and small. I can tell you there is a large American petroleum distribution company who's merchant fees utterly dwarf their staff costs. I'm sure they're not the only ones. A large Australian supermarket chain has stopped buying card only automatic checkouts because they aren't being used enough.

Cash and debit are far cheaper than credit. The problem is banks have addicted people to credit using rewards programs and charged the merchant to accept cards (which well and truly pays for them and some).

Re:they must hate cash, too

[ultranova]

Cash and debit are far cheaper than credit. The problem is banks have addicted people to credit using rewards programs and charged the merchant to accept cards (which well and truly pays for them and some).

People are "addicted" to the idea that some fraction of the increases in productivity show up as increased income. That hasn't been true for a long while. Cheap credit has been used to mask this robbery of the working class, but now the ride is over and the bill is in the mail. And since middle-class buying power is no longer supporting the economy, it's slowly collapsing.

Oh well. At least future historians should find it interesting to compare this collapse to the collapse of communistic economies, seeing how they happened just a few decades apart, and were caused by failures to keep up the opposite sides of a complete economic system, supply for communism and demand for capitalism.

I agree

[Charliemopps]

. "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."

For the first time in my life I totally agree with the credit card industry!
Mastercard, please immediately start providing anonymous transaction services so we can level this playing field ASAP!

Re:I agree

[bloodhawk]

no thanks, I like knowing I have a way to reverse transactions for scumbags that scam, I also like to know their is financial obligations on places like mastercard to reimburse me for fraudulent transactions, all of the protections disappear with bitcoin type anonymity. I have no need of anonymous financial transactions for credit cards.

Re:I agree

[ShanghaiBill]

I'm sure they would like to, but they can't. Have you heard of something called financial regulations?

Can you cite a financial regulation that prohibits anonymous financial transactions? Since cash, bitcoin, and anonymous prepaid debit cards are all legal, I doubt if any such regulation exists.

Re:I agree

[bloodhawk]

I'm sure they would like to, but they can't. Have you heard of something called financial regulations?

Can you cite a financial regulation that prohibits anonymous financial transactions? Since cash, bitcoin, and anonymous prepaid debit cards are all legal, I doubt if any such regulation exists.

I can, In Australia it is the financial transactions reporting ACT, meant to prevent money laundering and it is imposed on all financial institutions. As I understand it many other countries have similar financial regulations for both money laundering and "terrorism" finance tracking. It kicks in at various amounts.

Re:I agree

[Pax681]

Money Laundering Laws... pretty much EVERYWHERE

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:I agree

[bloodhawk]

transaction reporting requires you to be able to identify both parties, not just report a transaction took place.

Wait, a level playing field?

[Anonymous Coward]

I don't hear them complaining when it's tilted their way.

18-21% and higher interest rates? Obscene late fees on top the the obscene interest rate?

Yeah, I don't feel sorry for them. Not even a little bit.

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.

Smaller retailers refuse to swipe a card if it is less than a particular amount. Because that fee eats their margin.

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:Wait, a level playing field?

[Your.Master]

Okay, that was a lot of talk about people being raised in shitty situations, which totally happens.

I still say that you don't need a financial education to know that you shouldn't buy something you can't afford, or that you should read the credit card application that you're filling out. A much better argument could be made about extreme emergencies that can hit poor people ("my kid broke his arm, we have no health insurance, no cash on hand, but there was this credit card...").

Re: bitcoin is NOT anonymous

[tlambert]

And you do it with a unique MAC address, duly recorded by the ISP that provides service where you slurp your caffeine.

The AC already stated that the MAC address was spoofed. Good luck finding the hardware device that has 0a:0b:0c:0d:0e:0f.

Digital

[Meneth]

MasterCard writes:

Consumers have no recourse if a digital currency loses its value or if the digital currency system fails.

Consumers have no recourse if a national currency fails either.

Also, national currencies are mostly digital nowadays. MasterCard themselves do nothing but digital transactions.