Basically, other countries can bank in USD sometimes, so there's a weird corner case that you can send USD to a merchant but can land in their account as $converted_currency or USD that isn't so corner. I'll let patio11 cover this (if/when he gets to it) as there are details I no longer have access to and thus can't do the subject justice.

If you choose USD, then the merchant gets to choose whatever exchange rate they want to convert at, and will be far from the spot price (hence some merchants go out of their way to ask you if you want to pay with USD). If you choose the local currency, then your American bank will give you an exchange rate extremely close to the spot rate and the transaction ends up being much cheaper for you.

Once you start investigating, you will find many different reasons. Some cultures favor cash because it's concrete, or for privacy reasons. In some countries, banks prioritized efficiency and were quick to phase out checks in favor of wire transfers. In many cases, stores were used to cheap domestic payment methods and didn't start accepting international credit cards until banks made them cheap enough. And in some cultures, there is a deep aversion to anything related to debt. If you dig further, many of the reasons can be traced back to adverse experiences in the 20th century, including world wars, the hard times after them, hyperinflation, and living under nazi/communist rule.

this applies only to a subset of Europe or european banks.

Instant transfers may cost fees

Europe is bigger than EU.

> Europe is bigger than eu

Condescending much? Especially since this doesn’t mean anything for the question asked

Separately, is the "credit score" system a particularly American concept? In the UK the credit report companies will give you a number, but it seems to be something they make up to fill a consumer demand rather than something card issuers actually use. Do you know how the FICO score became such a central thing in US consumer credit, and does Japan work differently?

The U.S. has the world's most developed and widely relied upon credit reporting infrastructure, by a substantial margin. The history of FICO doesn't quite fit into the margins of this comment but I'd love to do an issue on it someday. Credit scores per se are less a thing in Japan but there are cross-issuer I-can't-believe-its-not-bureaus which have information sharing agreements, the dominant purpose of them being identifying fraudulent actors and account takeovers rather than credit risk (nearly zero in Japan, historically).

> nearly zero in Japan, historically

That surprises me actually. I know Japan has a very, let's say, high conscientiousness culture but do they never get into economic problems and are simply unable to pay card bills?

[0] I feel it necessary to say "I am not making this up. It happened at first-rate financial institutions many times within the last 20 years."

I was told in no uncertain terms by my real estate agent "Do not move company until your loan is approved. You're already impacted by the fact you work for a foreign company, and you will probably get declined if you start somewhere new."

The fact that I'd likely be looking at a substantial raise and therefore be in a better position to pay off any mortgage is irrelevant, the bank just cares about stability.

(I'm sure you already understand this, this story is for the benefit of other curious thread-readers)

Not debating you but a random reddit commenter says a (pseudo) "credit score" in Japan is implementation and semantics. The CIC, Zengin, and JICC organizations' credit histories data functions very similar to a USA credit score.

https://old.reddit.com/r/japanlife/comments/goy0vv/are_credi...

Thanks for this. I'm earlier in my career but very interested in fintech, so as i explore where i want to go, your writing has been immensely helpful and informative!

I am particularly fascinated at the moment by the world of differences in how finances work for people vs businesses. (eg. People typically pay taxes in income, but businesses pay taxes on profit. That leads to differences in how money is made/spent between those groups.)

I guess one suggestion i have for your newsletter is in how credit is given to businesses - humans (at least in US) have fairly well understood credit scores. Its well documented how credit card companies, consumer loans, mortgages evaluate individual credit from those scores, but how does a business acquire credit to for short term spending (corp cards), what about to make big CapEx purchases like buildings, maybe even for financial funds and speculative transactions? How are those businesses evaluated, underwritten, etc? What about banks borrowing from other banks?

What did you mean by this? I get that raw customer transaction data might not be as valuable as one would think, but you seem to suggest that there is another thing they do with the data that DOES make money. Can you elaborate?

Corporate cards actually earn significantly higher interchange, but even those don't aggregate out above 3%. Actually, the networks spend a lot of time policing banks from trying to arbitrage the difference by issuing corporate cards to individuals.

Payment processors like Square just know that their margins will vary by the type of card used by consumers, but aim to have an aggregate positive margin across all cards. Once you get into enterprise contract negotiations with them though, they'll look at your card mix to make a pricing offer.

2. Parallel graph of dominant internet access points and type thereof (fixed/mobile) per market vs. dominant payment systems and payment characteristics such as payment size, card not present, etc.

3. True history of SWIFT.

4. Parallel graph of Chinese mobile payment growth vs. historical credit card payment growth.

5. Overarching trend in bank points of presence including ATMs and branches across multiple developed markets vs. mobile.

6. Trends in subscription payments as a percentage of overall credit card spend + subscription support in alternate settlement systems.

The terms & conditions on my credit card sound like it should work (I shouldn’t be charged interest if I have a credit balance), but I’ve never tried it.

Failing that idea, do you have any tips for frequent American travellers on how to get foreign cash without paying excessive conversion fees?

Many credit union deposit accounts with ATM access can use some foreign ATMs with no fees and reasonable forex rates. Some online deposit accounts with ATM fee reimbursements will also reimburse foreign ATM fees and have reasonable forex rates. Things like Schwab and Fidelity, IIRC. My personal experience is a bit dated, but I'd try to have two separate cards on different networks if possible, because my ATM card only worked in half of the UK ATMs I tried, and that wasn't very convenient, as the ATMs I couldn't used were at the chunnel station and I needed cash for an unlicensed taxi.

Some people advise sticking with four-digit PINs for compatibility with older ATMs [1] but I don’t know if that’s a practical limitation at this point.

[1]: https://www.latimes.com/travel/deals/la-tr-spot-20140713-sto...

There are plenty of debit cards that you can use at foreign atm's with no ATM fee or foreign transaction fee.

(2) How do you think crypto & defi will change the credit card markets?