There might be a nice business in there somewhere, but disruption is overstating it quite a lot I think.
Have you heard of Standard Oil?
The (US) regulations around liability for fraudulent charges for debit cards are totally different those for credit cards [1]. Specifically, consumers bear far more potential liability if their debit cards are used fraudulently than if their credit cards are used fraudulently.
The money quote from the section on what the consumer is liable for if their debit card is used fraudulently: "All the money taken from your ATM/debit card account, and possibly more; for example, money in accounts linked to your debit account."
By contrast, credit card liability tops out at $50.
Given the regulatory environment, it is not very consumer-friendly to encourage wider use of debit cards online.
If you have access to a credit card, you should use it instead of a debit card when purchasing online. (And in person, but the OP is about online payments.)
[1] https://www.consumer.ftc.gov/articles/0213-lost-or-stolen-cr...
Yes. Debit is actually more popular than credit for online transactions, according to one survey.[1]
> Should they?
Kind of an orthogonal question. The fact is people use them and there’s an opportunity to process them more cheaply.
[1] https://www.digitaltransactions.net/consumers-increasingly-p...
How? All I see is $0.30 + 3-5 % (which means 10 % from every $5 transaction - I'd love to lower this!) https://www.paypal.com/us/webapps/mpp/merchant-fees
Kind of mind blowing, right?
[1] https://usa.visa.com/dam/VCOM/global/support-legal/documents...
[1] https://www.nerdwallet.com/blog/credit-cards/credit-debit-su...
"...average individual credit card debt stands at $5,331 in 2019. Additionally, on a monthly basis, most Americans don't pay their credit card balance in full every month - 55% don't regularly pay in full."
https://www.thestreet.com/personal-finance/credit-cards/aver...
Citation needed. I hate points.
I get a flat 2% back on literal everything. I agree that points would be a pain, but extra cash is nice. (I know this functionally means everything is x% more expensive, something something tragedy of the commons externalities blah blah blah.)
That's the why I want a system that completely bypasses the insanity that are current credit/debit cards and goes directly to a modern approach (but isn't some blockchain, kill the planet with mining power, fad).
Exactly! I hate all rewards systems because they wouldn't be offering it if it weren't a scam. If you don't know who the fish is, it's you.
I pay off my bill every month. I pay no interest, no fees, and get free stuff for it. You should do the same.
Points are useless.
Obviously in the current climate, a card that offers points is going to be more competitive than a card that doesn't, but that doesn't mean that points aren't a mind-bogglingly stupid proposition to begin with.
Little known fact: Major debit card interchange is regulated by law at 0.05% + $0.22.[1] That's right, a twentieth of one percent. The gross margin for a processor like Stripe that charges 2.9% + $0.30 on these transactions is just astronomical. A U.S. payment gateway that specializes in low cost debit card processing arbitrage would instantly start saving startups money. It also give them the option of steering their customers to low cost debit, for example by requiring it for discounted annual subscription rates.
This would work where other efforts have failed. Crypto never took off for consumer payments for a variety of reasons, among them no wallet penetration and no consumer protections. ACH is inconvenient to set up and also has poor consumer protections. Debit cards on the other hard are widely available, safe and easy to use.
[1] https://www.burlingtonbankcard.com/home/interchange-plus-cre...