Even today many people in Germany still don't have a credit card or if they have one largely use it for travel. Of the people (in Germany) I know, they also never use charge backs on the cards (I suspect many don't even know that you can do it) and instead rely on the court system to get refunds etc..
To be fair, things are improving a little bit. But we're still so very far behind the EU banking system. Instant, cost-free transfers between any two accounts, completed faster than you can lift your finger off your smartphone.
This is available to most people in the US via Zelle. I have been using it for nearly 10 years I think.
https://www.zellepay.com/get-started
Ideally, the federal government would have already made it a utility available to all, but for now the functionality is there for those who can get a bank account.
It sucks for the 0,0001% of people who get scammed some time but is it really needed that the bank takes on this role?
The protections are part of the regulations.
A consumer can reverse a SEPA Direct Debit transaction at any time. This is called a chargeback. A chargeback is allowed up to 8 weeks after the date of the direct debit with a valid mandate and up to 13 months without a valid mandate. At most banks, the consumer does not have to give a reason for the reversal.
https://help.mollie.com/hc/en-us/articles/115000796469-How-d...
ADDENDUM: The official marketing page for Zelle at https://www.zellepay.com/faq/how-long-does-it-take-receive-m... has this to say about transaction speed:
> Money sent with Zelle® is typically available to an enrolled recipient within minutes.
> If it has been more than three days, we recommend confirming that you have fully enrolled your Zelle® profile, and that you entered the correct email address or U.S. mobile number and provided this to the sender.
Note the weasel word "typically" in the first sentence. If all Zelle transactions went through Visa, all such transactions would be instant and they wouldn't have the need to add the word "typically" in the first place.
The second paragraph asks you to wait three days. That's basically the Zelle fallback path when it uses ACH under the hood.
ADDENDUM 2: This HN conversation really piqued my interest and did more research. So apparently Zelle now uses one of three different networks. According to https://www.americanbanker.com/payments/news/how-the-clearin... :
> The Zelle P2P service currently uses two separate rails to settle payments, depending on the particular transaction, including the ACH network and the two debit card networks: Visa Direct and Mastercard Send. By adding the RTP network, Early Warning will be able to reduce its reliance on ACH, which can at times take days to settle and is operated only in batch mode during business hours.
So it is owned by the banks, but the banks that own and offer it don't give any protections.
They do try very hard to suggest this doesn't apply. This isn't true in practice, but I'm certain many would give up without trying.
https://www.bankofamerica.com/online-banking/zelle-transfer-...
You can also schedule in advance “standing orders” which pay money to an account on a certain day. This is how pretty much everyone pays rent. We have direct debits where you can pay companies on a regular basis and almost everyone uses this for bills like for local government taxes, energy, water. With this, the company asks for permission to withdraw money for your account on a recurring basis with your details and you have to approve it. Guarantees are built into this system though, so if the company takes more money than they are supposed to, you can call your bank and they are able to pull back the funds.
Both of these have been around since the 60s so when online banking came along it was just implemented in that. It got faster at some point I don’t remember - it used to take about a day for UK transfers but it’s usually seconds now.
You can also send money abroad but it has slightly different limits and takes a bit longer. You just need the IBAN of the account though and can still all be done online in a few clicks.
Meanwhile, in the US, I was stuck listening to radio trying to figure out if my school was closed or had a delayed opening on any inclement weather day.
You may also be interested in Paym which uses mobile numbers https://paym.co.uk/
- Limits how much you can send
- Identity is based on email or phone number (what?!) that then needs to be managed/tied to the bank account. If you switch banks or whatever, you need to re-active with the new bank.
- For awhile, I could only associated one email with one account in Chase (despite having 4 checking accounts for business, etc.)
- Recipient also needs a Zelle account setup.
UK system is simple: give me your sort code + account #. Done.
As I understand things, the US equivalent to BACS would be ACH. Which is also sort code and account number, but allows pulling money without further authorisation as well as pushing money. Obviously doing that when you're not supposed to would be very illegal, but unfortunately that's not enough to stop everyone.
Zelle launched in June 2017
> In April 2011, the clearXchange service was launched. It was originally owned and operated by Bank of America, JPMorgan Chase, and Wells Fargo.[6][7] The service offered person-to-person (P2P), business-to-consumer (B2C), and government-to-consumer (G2C) payments.[8]
basically friends in the same country using a select few major banks are likely to have instant sepa available between them and it seem like the normal thing, while the reality is that instant-sepa is a massive patch work of availability between countries, banks, currencies
an outsider to the EU trying to do business is unlikely to be a part of a social circle where everyone is using the same thing
theyll encounter super slow multi business day SEPA, where no bank knows where the transfer is yet, the same as ACH in the US
It's possible that it does require both banks to have implemented these instant payments. Both side have the ability to delay the transfer, but it's possible that these days they're required to support instant transactions.
The only exception to this is restaurants, however that is also the case in Canada, and even if I use my debit card, they still bring me the reader, make my stick my card in, print the receipt, and sign by hand.
Where are you in Canada? I regularly visit parts of eastern Canada, including Toronto and Quebec.
I haven’t signed in the US for a credit card transaction in at least 5 or more years.
I do if I use my card outside the US.
Credit card processor doesn't require a signature.
So I can understand why nobody any longer wants to have to verify signatures.
Most people that ask me for a signature (usually deliverymen) don't care what I scrawl on their device; it's usually not even an attempt at a signature, it's just the simplest <squiggle> I can manage on those awful devices.
http://www.citi.com/chipandpin (note, pdf link)
BillPay seems the only viable option and that ends up with a physical paper check being mailed to your landlord every month so you have to set them off a few days early to account for possible delays in the mail.
They are working on it: FedNow https://www.frbservices.org/financial-services/fednow/about....
Is there any percent chance that the government doesn't wiretap all those transactions?
The government doesn't hide the fact that all this data can and will be used by the IRF equivalent in Brazil (Receita Federal)
I would assume the same for any credit card payment in the US
My auto loan credit union offers 0.5% off on loan APR if I bring my direct deposit to them, but doesn't support zelle.
> Zelle (/zɛl/) is a United States–based digital payments network owned by Early Warning Services, LLC, a private financial services company owned by the banks Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo.[1][2][3][4]
Those are all the biggest banks, so they probably have all the transaction information anyway.
https://www.nytimes.com/2022/03/06/business/payments-fraud-z...
> “It’s like the banks have colluded with the sleazebags on the street to be able to steal,” said Bruce Barth, another victim. In late 2020, Mr. Barth was hospitalized with Covid-19 and his phone disappeared from his hospital room. A thief got access to his digital wallet and ran up charges on his credit card, took out cash at an A.T.M. and used Zelle to make three transfers totaling $2,500.
> All three accounts were at Bank of America, where Mr. Barth has been a customer for more than 30 years. When he filed fraud reports, the bank quickly refunded his cash and credit card losses. But it denied his claims for the Zelle thefts, saying the transactions were validated by authentication codes sent to a phone that had been previously used for that account. Bank of America was essentially saying that the Zelle transactions were authorized — even if his phone was stolen.
Check it out: https://en.wikipedia.org/wiki/Unified_Payments_Interface
Unified Payments Interface (UPI) is an instant real-time payment system developed by National Payments Corporation of India (NPCI). The interface facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions.[1][2] UPI is an open source application programming interface (API) that runs on top of Immediate Payment Service (IMPS).[3][4] It is regulated by the Reserve Bank of India (RBI) and works by instantly transferring funds between two bank accounts on a mobile platform.
Singapore has an equivalent system called PayNow, which is equally instant and ubiquitous.
And when Indian Government declared BankNote Demonetization in 2016, it further boosted UPI because people don't had the cash, so ultimately online transaction is the only option. At that time, E-Wallet also made a hype but it wasn't feasible.
UPI has many advantage for both users and merchants. And further Google also introduced their UPI app Google Pay along with some local players like PhonePe and PayTm which makes UPI transaction easy not just to send money to other be it friends or a merchant but mobile recharge, Bills, insurance, etc. can be done from these apps via UPI.
We are behind the times even with our own "hack" invention. Remarkable.
Edit: Both debit and credit card payments use chip-and-pin or tap everywhere, and have for a well over a decade.
When I want to do a domestic transfer in Germany, if the recipient's bank does not accept SEPA Instant Pay (looking at you, Baader Bank), then it takes around 2-3 _days_ for my funds to get to the other person. That's insane. In India, our slow transfer (It's called NEFT. UPI is the new shiny instant transfer system) takes at most a day and even before UPI no-one was using NEFT because there were faster alternatives. I've always thought that the slow fund transfers were a German thing and that the US would be better. Guess the grass is not greener on the other side.
If you're referring to SEPA transfers, then frankly that's a joke. There are 40 cent fees for every transfer and it usually takes hours if not a full day to process as the bank closes the system at like 4PM for some gdamn reason and all further entries have to wait until tomorrow. Like are they processing this shit by hand by actual workers or something?
Maybe my bank just sucks.
This difference is a consequence of law, not payment technology. It's entirely possible for someone to make fraudulent charges on a card up to its limit (which would be the analogue of draining a bank account), but CC companies are required by law to absorb fraud beyond a token amount. There's no technical reason why bank accounts couldn't be similarly protected, but banks have thus far been successful in preventing such laws from being enacted.
With credit cards, you get an invoice with fraudulent charges at the end of the month. You can choose not to pay those charges, citing fraud. The bank will clear the charges if they agree.
With debit cards, the money is withdrawn directly from your account. You can report the unauthorized withdrawal, and the bank will reimburse you if they agree. In the meantime, you don't have access to the money.
I usually keep around $200 on my debit card, which means I lose at most $200. This way I also get a sense of my spending in terms of how often I have to transfer.
If I need to pay for more, I just transfer before paying. Takes me about 2 seconds with an SMS or through the bank app.
For example, US also has similar laws for debit cards, but, by definition, when a charge is made to your bank account, it is made to your bank account.
My bank's (Chase) policy limits debit card customer fraud losses to the same $50 that the law requires of credit cards.
Not sure about other banks, but while I'm not sad that I have this protection, Chase's anti-fraud measures for debit cards (mostly programmatic, I'm sure) are pretty draconian.
If I travel any significant distance from my home, transactions with my debit card are almost always declined and I either have to contact customer service (a big time waster) or use a credit card.
That's incredibly annoying, although if that's the reason my debit card fraud responsibility is limited to the same as a credit card, that's a trade off that some may be willing to make and some will not.
Given that my debit card has been the subject of fraudulent activity several times and the bank has made me whole every time, perhaps there's something to be said for the harshness of the debit card anti-fraud algorithms.
But it's still incredibly annoying.
Yes, many banks do. But be aware that when using a debit card, it's just the bank policy of being nice that protects you. They have the right to change that policy on a whim.
When using a credit card, that protection is built into the regulations so you can count on it.
Always use a credit card, never a debit card, is the safest approach.
Yes, that's the beauty of it. When using credit cards you can know you're not liable for losses, full stop. The bank can't suddenly change their policy because it comes from regulation.
The big problem with credit cards is that all the info needed to authorize a transaction is right there on the card. The second problem is that quite often you submit that data directly to the merchant or to whichever payment provider the merchant chose.
With a credit card, on the other hand, you see what was taken _before_ you pay them. So you can tell the credit card company "this amount that was charged to me is not me, I'm not paying that". Then the credit card company has to look into it; they have incentive to figure out what happened (unlike banks) because they aren't getting payed back their "loan" to you until they do.
Merchants will usually not ship goods or provide services for a direct debit alone.
Same with my (UK) DD card, when I use it online. I occasionally get challenged by Visa/Mastercard for some passphrase or whatever. For retail purchases, I can usually just swipe. Periodically I'm asked for a PIN.
I prefer DD over CC, because I have full control over my liabilities, should someone try to drain my account, just by adjusting the balance on the account (and I can't link my deposit account with the card; so that's where the rich pickings are kept).
Also, way back when, I was pretty relaxed about credit balances, and the CC company kept raising my limits; I got into a lot of debt. Nowadays I don't use credit unless I'm forced to (which hasn't happened for 20 years). So I have a CC, with a zero balance (and the CC company is going to shut it down, because I'm not using it).
AFAIK none of the banks will reverse this activity, since technically you've authorised this transaction.
Laws and security adapts to whatever medium people tend to use, so common problems tend to have solutions. The laws in Europe are made to make debit card transactions and security reasonable, because almost everyone uses debit cards.
My credit card was compromised and AMEX has a problem. My debit card is compromised and I have several problems.
[0] https://plaid.com/resources/ach/how-does-an-ach-transfer-wor....
A notorious celebrity in the UK famously revealed his bank details as a stunt to show that a large-scale data loss incident wasn't a big deal and he ended up making an unexpected payment to a healthcare charity shortly afterwards.
Direct debit instructions require nothing beyond a name and account number.
You need a SEPA dd "mandate" which is a (paper or electronic) document account owner asks their bank for, containing a unique identifier
There's two ways this could happen, but neither is super easy:
1) You've handed over your physical debit card and it's PIN code to a baddie and not informed your bank. Unlike the security code on credit cards the PIN code is not on the card. Unlike credit cards you need the actual physical card to transfer money.
2) You've given a baddie your online login info and had him send you a QR code which you then scan and approve the amount.
Notable what does not happen, which does with credit cards, is making a payment at a webshop and that webshop then leaking your card info to a baddie. No one other than the bank ever sees the "secret" part of the card info.
In the UK we have a system of Direct Debits that is popular particularly for making recurring payments like household bills or subscriptions. You provide your bank account numbers to the merchant and they can collect the required money directly.
It sounds like a huge opportunity for abuse by merchants but the easy setup is balanced by a universal Direct Debit guarantee for account holders that basically says if any erroneous charge is made then you get your money back from your bank first and questions are asked later. Merchants are required to provide all customers who pay this way with certain information about the guarantee scheme (and everyone actually does).
That in turn sounds like an opportunity for abuse by customers but having personally run a business that accepts Direct Debits I can tell you that we have never seen a single abusive reversal of a Direct Debit payment. In contract we've had a few problems with legitimate charges to cards being reversed later and the whole system around chargebacks with credit cards seems to be unreliable for both merchants and cardholders.
"SEPA Lastschriftverfahren" is what it's called.
"Immediate refunds. You can get a full and immediate refund from your bank (also known as an “indemnity claim”) for any payment taken in error."
https://gocardless.com/guides/posts/dd-guarantee-in-plain-en...
You'll have to explain to the company that deducted the money why you reversed the charge though, and if it was legit after all you still need to pay them.
https://www.europeanpaymentscouncil.eu/what-we-do/sepa-direc...
No proof or even reason for this is required in the first 8 or so weeks since the charge (or more than a year if the debiting merchant does not have a "direct debit mandate", which essentially means some sort of evidence of the account holder agreeing to be debited).
According to stats I can find, the European central bank reported 1.03B Euros of fradulent transaction via cards back in 2019 (https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudre...).
So the only way those fraudulent transactions won't hit your bank account is if your bank account is not directly tied to the card, which makes it a credit card by definition (because you are being given credit for purchases and not having to pay for it immediately).
So it seems like what the parent is saying is true outside the US as well?
The benefit of credit cards is...credit, and the ability of the card to abstract the idea of spending money away from the consumer. Few things exemplify "out of sight, out of mind" better than credit cards. The model is amazingly profitable as well. Like printing money, literally.
In other words, you'd go to some electronics store and by a $2000 TV and they'd ask "how many payments". You'd say 10 and you'd end up paying $200 a month. I don't know the origin of why they did it that way. To be clear, this was bank credit cards, not store cards. I imagined it was something to do with the commitment and knowing you couldn't just pay off some minimum. Purchases under a certain amount and/or by store you were not allowed to divide up.
I've had Japanese friends come to America and want to buy something for $500 and ask if they can have ask for 4 payments and have to explain that system doesn't exist here. If you want to make 4 payments you make 4 payments.
I've never looked into if the bank is giving all the money to the merchant and then charging the customer per month or if they're sending to the merchant per month. Nor did I ever look into interest fees. I just know it is (was?) common.
Your spending limit is reduced by the whole amount but those interest free installments can be useful. Esp when you get 12-24 for stuff like TVs or furniture.
Other than that option, they act like normal credit cards. Pay next month, minimum payment, huge interest if you don't pay them in full, can contest any transaction, yadda yadda.
I suppose someone should tell the criminals.
> there's a limit (which I can change) to how much can be transferred per day.
I expect many banks/cards have this ability as well. People just don't use it.
Hell, I have a virtual card I frequently use on websites that has a $50 limit per day. I'm sure most other companies have something similar available.
Outside of the US, the banks do tell the criminals - otherwise the banks would be the hook. This is the fundamental difference between the US and the RoW: in the US, fraudulent withdrawals are the depositors problem[1] which banks don't expend too much effort into, elsewhere, it's the banks' problem, consequently banks go the extra mile to prevent fraudulent withdrawals, and when it does happen, are quick to make the depositor whole.
1. This and "identity theft" are emblematic of a mostly American tendency to pass the buck (and losses) to the least powerful and least informed entity (the depositor) for fraud committed against financial institutions using depositor's information.
I think they already know, because their efforts are mostly focused on trying to get that authorization. But whether you know about it or not, no authorization means you can't access the money. Requiring explicit authorization is key to security, and I'm extremely wary of payment systems that don't require it, like credit cards.
How does the German banking system prevent an unscrupulous online retailer from charging you 500€ for a 50€ item? Or charging you twice?
There are related payment schemes though that do initiate a push payment (i.e. SEPA credit transfer), giving the accountholder control over the amount and payee, but they are not yet as ubiquitous or usable internationally.
The payment page spins until I click ok on it in the phone, since my bank wont accept the transaction otherwise.
What you are referring to is called 3DS, and it's a feature of both credit and debit cards. (It's available worldwide, but most commonly used in the EU, since it's mandated for ecommerce card transactions in many circumstances.)
I do think it's possible to authorize an unspecified amount; automated gas pumps seem to do that, but they seem to be the only ones, and it probably has a hard maximum.
Of course any PIN transaction that goes through the merchant's equipment is not quite as secure and relies on a level of trust that's not necessary for online payments, where I give my authorization through my own bank's website.
shop [> mollie] > iDEAL > ABN > shop
or
(pc) shop QR > (phone) photo app > iDEAL > ABN
It isn't more work than credit either, instead of paying it off every month you fill it up every month.
And for fraud protection, 3% is only worth it if every 30'th purchase is fraud in some way. Personally I've never lost my card and never fallen for fraud, so it would just be 3% of my money thrown away for nothing.
2. Most cards have a cash-back arrangement, where you earn credits for what you spend.
Together, that means you're generally not paying anywhere even close to 3%.
(Before 2018, it could also apply to personal credit cards. It seems a step backwards to exempt them, as the national sysetem, Dankort, has much (much!) lower merchant fees, but now there's no incentive for people to prefer it to Visa/MasterCard.)
Legoland example: https://servicecenter.legoland.dk/hc/en-us/articles/20258981...
For people with good credit, as the article mentions. It's effectively yet another tax on the poor.
You're not paying anything for the protections the credit card offers.
Or more precisely, you are but we all are, even if you pay cash or with a debit card, since the vendor prices the items accordingly and there's no cash discount. (There are exceptions, but very rare in the US.)
And most credit cards give you cash back so it's actually cheaper.
Do you really think that banks and card networks work for free?
Even if you use the best rewards card and never pay a cent of interest or fees to your bank, you can bet that the program on aggregate is running a profit for the issuer, or they would not be offering it in the first place.
In effect, your rewards have to be either paid by the merchant (i.e. you, in the end, in the form of higher prices for goods and services), or by other cardholders in the form of interest, fees, using a suboptimal card/rewards category combination etc.
> Do you really think that banks and card networks work for free?
They certainly don't work for free, I addressed that above.
The credit card fees the merchant has to pay are bundled in the price of each item, so you can't escape them. By using a cash back card you can recover some of it, so you're leaving money on the table if you pay by any mechanism other than a cash back card.
A few gas stations around here offer a discounted cash price. In those, I'll pay cash.
You can set up daily/weekly/monthly limits for debit cards, and separate ones for online purchases, physical terminals or ATMs, if you want.
At first I hated the rule, but then I realised it was exactly a rule that put the decisions in the hands of the customer and the merchant and took power from the card networks.
(I don't live in Australia at the moment so maybe this is changed. I gather there is now also app-based credit payments which have eaten into Visa/Mastercard's market, both for credit payments and for POS transactions. But how significant, who knows)
And yes, it's reflected in the fees that a card issuer is allowed to charge.
Its kind of a messed up system honestly. The people who are already well off and can get the top of the line credit cards get all kinds of great benefits. And the costs are subsidized by those who cannot get them.
If I owned a business, I wouldn’t accept cash at all.
And no, it’s not a federal law that you have to accept cash except in service of debt.
Youre right about the rest but in the US card acceptance is very very high (same in the UK, Nordics, etc). Germany definitely is not a shining light of electronic payments imo.
This seems to indeed have started to rapidly change with covid.
The only way it makes sense is if you are evading tax, as you'll happily pay 1-2% in cash losses to save 20, 30, 40%+ in taxes.
It doesn't make sense to me however that the economics are ostensibly so different between e.g. Germany and France, where in the latter basically even small shops don't care. Either it's something to do with taxes like you said, or German shop's margins are razor thin.
If you buy stuff from e.g. C&A or H&M (two clothing chains here) and pay by invoice (which is basically always a wire transfer you initialise), then there is always much more hassle. My ex-girlfriend had to have 3-letter discussion with them that they had to find the stuff she didn't want in their warehouse. If she'd just paid via credit card, this discussion wouldn't have lasted that long, because we could have had the bank take care of it. And I'm reasonably certain that ability influence their CS department's behaviour
I was married with kids 13 years ago and I never touch checks - that’s not a wide spread US thing, it’s a generational thing. Anyone who used checks for ‘everything’ 13 years ago was a massive outlier.
Neither SEPA direct debit nor SEPA credit transfer offer any means of dispute resolution, though (SEPA direct debit defaults in favor of the payer, credit transfer in that of the payee).
This means that all but the largest retailers (which can afford to do fraud management entirely in-house) still depend on third parties to arbitrate the risk of non-payment (for merchants) and non-delivery (for customers).
> Of the people (in Germany) I know, they also never use charge backs on the cards (I suspect many don't even know that you can do it) and instead rely on the court system to get refunds etc..
This indeed seems to be the case, which is unfortunate e.g. in the case of travel provider insolvencies. The card scheme rules are very clear in this case, but way too many German banks have in the past declined these disputes (claiming that they are "incompatible with German bankruptcy law"). Cards (both credit and debit) do offer more customer protection that almost any other widely accepted online payment method.
Float. If I charge $10k to a card, I get an interest-free loan until the balance has to be paid off. In a zero-rate environment that's meaningless. But even at the 30-day's 2.22% [1], that's almost twenty bucks. I'm probably paying about 1% more for the CC fees, but I can use my card that gives me 1.5% back on everything.
[1] https://home.treasury.gov/resource-center/data-chart-center/...
But in Europe credit cards don't give cashback.
And the pin is required here on both (and rightly so IMO to protect against skimming). Only for minor contactless payments it isn't. But the same goes for both.
And we don't get much additional fraud protection or other benefits like insurance on them that we don't get with our debit cards.
I'm surprised the payment systems are so completely opposite. Despite being the same tech from the same companies.
The only reason I have one is that my work insists that I get an Amex due to some dirty deal they have. Which is a horrible card for traveling in Europe, nobody accepts it besides hotels. Try getting a taxi in Paris for example..
I also had my personal one as my debit sometimes didn't work but these days it works everywhere.
In the US, loans are distinct from lines of credit and credit cards. Just having a credit card won't make it easier for you to get a loan, but having a history of on time payments while making use of the credit cards will increase your credit score. Having high utilization on your cards will decrease your credit score. Mortgages will take a variety of factors into account, with credit score being among them.
>The only reason I have one is that my work insists that I get an Amex due to some dirty deal they have. Which is a horrible card for traveling in Europe, nobody accepts it besides hotels. Try getting a taxi in Paris for example
I've actually been quite successful in utilizing my Amex card across roughly two dozen countries in Europe and Asia, so this doesn't really match my experience. I haven't specifically tried to use it for a taxi in Paris, however. I do keep a Visa in my wallet in case I need it, but my bigger issue has been places that don't take cards at all, and having to carry cash. Cash only locations are basically nonexistent in the US - even the smallest hole in the wall type places and random food stalls in gas stations tend to allow for cards ever since Square became popular.
I've never used it in Asia, but for example the main Taxi companies like G7: https://www.g7.fr/en/paris-taxi-fares do accept credit cards but are very difficult about amex. When you wait at Charles de Gaulle airport there's some bouncer in the taxi queue who will ask specifically what card you have and if you have Amex then they have to haggle with the queue of waiting taxi drivers for one to accept it. And often when you do get to your destination the machine is suddenly 'broken'.
One of the taxi drivers told me that amex charges them a lot more than the others.
In Romania you'd be hard-pressed to find a taxi that accepts cards at all and if you show them an Amex they will laugh in your face (though taxi drivers aren't very nice people there generally speaking, two of my colleagues even got literally robbed).
The same with other minor expenses. Like rail tickets, food in a 7/11 style shop etc... The big hospitality outlets like upmarket restaurants and hotels do generally accept it. But my work requires me to pay all my travel expenses with amex and I get a lot of bitching from them if I don't. But especially in Eastern Europe I just don't get anywhere with it.
Amex gives its customers great benefits. It charges merchants an arm and a leg to do that. Literally double the fees. Merchants then refuse to accept it a lot of the time, but every time a customer "only has an Amex card" they lose business, so a lot do accept it, grudgingly.
Of course customers prefer to use their Amex card whenever they can, because benefits. So they often pretend to "only have an Amex card" (much like "the machine is broken" in taxis, that then miraculously fixes itself when you pull out some loose change as "the only cash I have").
the customer is king, as always.
Which part of Europe? That's not how it works in the UK. You build up a record by using credit products and it benefits your score to keep them in good order.
Though it is how it works here in Australia. When you apply for a mortgage they take your credit card limit into account as a negative.
> And we don't get much additional fraud protection
That's interesting. The UK (again) has significant legal protections for credit that mean the credit card company is jointly liable for the debt in some circumstances, like fraud, and must return your money pending an investigation. There's much less protection with debit cards.
Good point, Europe is not one entity. The UK is more aligned with the US legally (common law etc) than the rest of Europe. Especially now with Brexit.
In the Netherlands it's definitely something that works against you. Even something simple like a phone contract with subsisided hardware will lower the credit score.
And the advice for customers is often to buy mid-to-high value items using a credit card for this reason. If you order £10k of furniture for your new home from an online retailer that goes bust before delivery and you paid by credit card then you might well have a claim against your card provider instead for example.
Of course the direct connection between whether you have certain consumer protections by law and whether you technically paid on credit doesn't actually make much sense today and mostly exists for historical reasons. The corresponding risk created for card companies also contributes to the raw deal that merchants get in the terms for accepting card payments, which is a drag on the whole economy.
Lots of (for example) food stalls in London were popping up as card-only businesses over the last few years, because it was easier than dealing with cash. The EU rules (which presumably still apply until actually repealed) capped the fees pretty effectively.
Typical terms for merchants accepting credit card payments are probably the most one-sided legal agreements I've ever seen.
Across Italy, France, Britain, the Netherlands and Portugal, over the last thirty days, I never had to provide a PIN over contactless. This was true for minor purchases to €5,000+.
But on the card itself I have to above €75 (or after transactions accumulating to that amount)
Mobile wallet based payments also don't need one, usually (since authentication already happens on the customer's device).
There's also generally a limit over the volume and the amount of consecutive payments, so that if someone steals your card, they won't be able to spend huge sums with contactless. It is set by your bank though
But I haven't been to France since I got Samsung Pay so I haven't had the chance to try it out. Here in Spain it works with any amount. Well, up to a few hundred anyway, I haven't bought anything over 1000 in ages :)
I really wish US credit cards would finally switch to PIN as well. We all end up paying for lost/stolen card fraud indirectly, and PINs are extremely effective at preventing that.
The downside would be if banks would use that as an opportunity to shift the liability for all remaining fraud onto cardholders as well, but the same scenario already exists with ATMs and debit cards.
> Also less fraud protection
Practically, not really. Most banks go above and beyond the legal requirements for limiting fraud liability for unauthorized debit charges and offer zero liability as well. The same chargeback framework that exists for debit also applies to most credit transactions.
While with a credit card, you do still have money in the bank and less instances where you are assumed to be the liable person.
Also culturally in the USA it's a common feeling that debit is not as good or the consequences are more dire with debit cards and fraud.
Bank balances are very important for most Americans to avoid late fees and so on to pay their bills, while you can hypothetically walk away from a credit card debt.
Card companies decided that the friction & support burden that PIN entry gives is not worth the revenue decrease vs. the cost of fraud AFAIK.
IMO I want push permissioned payments and not have this basically auth-free pull system of payments, but that wont happen for a long time. Subscriptions should be a subscription request send to a card, you approve in your bank app and then you can cancel unilaterally on your side on you app. None of this pull crap. Same with tap to pay.
In many circumstances, banks are required to either resolve the issue quickly or provisionally credit you in case of disputes. Fraud liability is also limited by regulation, in addition to card scheme rules and bank policies:
https://www.forbes.com/advisor/banking/what-is-regulation-e/
> Also culturally in the USA it's a common feeling that debit is not as good or the consequences are more dire with debit cards and fraud.
I suspect that it's primarily that: Common knowledge with a lot of truth to it, but not entirely up to date and correct in many instances. Germany obviously has a lot of that as well, but with very different axioms leaving to very different outcomes in terms of guidance and behavior ("only cash is real money", "debt is bad/a moral failure" etc.)
> Card companies decided that the friction & support burden that PIN entry gives is not worth the revenue decrease vs. the cost of fraud AFAIK.
The problem is that due to market dynamics (leaving aside card scheme rules for the moment), it's really not up to individual banks to change that. The first bank to introduce a PIN on their credit card would lose a lot of purchases to their competitors due to convenience, forgotten PINs etc.
In Europe, it took heavy regulation to get banks to use 3DS – the dynamics there in terms of a first-mover disadvantage were very similar, and the existing (significant!) financial incentives were not enough.
> IMO I want push permissioned payments and not have this basically auth-free pull system of payments, but that wont happen for a long time. Subscriptions should be a subscription request send to a card, you approve in your bank app and then you can cancel unilaterally on your side on you app. None of this pull crap. Same with tap to pay.
The various stakeholders (card schemes, regulators, banks) are well aware of that customer demand. This industry is one full of legacy technology, and it'll take a while, but I think we'll get there eventually.
2. Fees. The whole point of credit cards - for the CC companies of course - is fees.
On the merchant side, yes.
On the consumer side, no. There aren't many examples than Amex which is mostly popular in US charging high fees for their credit cards.
Most credit card companies make money from merchant run programs and overdraft & interest on late payments and penalties. They make half of their profit from vulnerable and poor people to pay rewards.
They offer excellent customer service, the concierge offering has done quite a few excellent things for me (for free!), every time I have had to perform a chargeback the experience has been painless and the investigation concluded quickly, they generally have promotions related to merchants I frequent, etc. It's a much better experience as a customer than any bank I have ever had an account with.
Nearly every (probably every) bank issues credit cards (they'll ultimately be Visa or MC, but cobranded by your bank) if you want to get everything from one place.
> Fees. The whole point of credit cards - for the CC companies of course - is fees.
What fees? There are no fees. In fact there are nearly always cash back (or points, or something) that benefit you.
Sure, the merchant pays CC fees, but those are bundled in the price of the item so you'll be paying those even if you pay cash. So might as well use a credit card and get all the legal protections that only credit cards guarantee + some cash back.
I guess that depends on the legal system. In some places the merchant frequently passes the fees on to the customer (and any contract between the payment network and the merchant which prohibits it is invalid to that extent by law). Then you need to consider the rules of the place you're in and decide which card to pull out, and you probably have your default card on Apple/Google/Samsung Pay set to be the debit card.
I think it's also common for a credit card to have an annual fee that probably doesn't apply to a debit card.
In the US that is exceedingly rare. The only exceptions I've seen are the government and a few discount gas stations.
But, you're right, in the end it's important to always be aware of the payment rules of each place and optimize accordingly.
> I think it's also common for a credit card to have an annual fee that probably doesn't apply to a debit card.
Most normal credit cards (at least in the US) have no annual fee. A good one is the Citi Double Cash card, no annual fee and unlimited 2% back on everything.
The premium cards have fees, those are rarely worth it unless you travel so much that you can take advantage of all the discounts.
Yes, the money is always coming from somewhere and arguably products might be cheaper without credit cards. However, it’s the game we’re in, so why leave money on the table?
Please don't use your credit cards for cash advances unless you REALLY know what you're doing and why.
> Get up to 3% cash back on every purchase you make
https://apply.applecard.apple/
I've always assumed I'm paying that 3% so might as well try to get some of it back.
It's an interest free loan for upto 45 days. Many banks will provide 3.5 - 6% interest without risk. If you spend a lot monthly, it's a free nice dinner every month without doing anything. If you can use the capital, it can be worth more.
They provide free lounge access and food at airport + concierge service for discounted bookings at hotels.
Chargeback protection is necessary in India.
Why?? Practically all transactions using debit card/UPI require PIN/OTP.
I've had official employees from a big company try to scam me. I now only pay using credit card.
2. The law requires banks to pay for any fraud
Disagree.
This is like saying "This illustrates that the US bankruptcy system is a solution for the deficiencies in the US credit industry".
What you see as a "deficiency" I see as "pro-consumer". As a credit card customer, I carry almost no risk of fraud. Why? Because my credit card company controls payment and will just reverse it if needed. They are also happy to keep retailers in line by holding them to contractual obligations.
It's a system I'd prefer than some direct payment from my bank where the risk of fraud and its resolution is entirely on me.
Your friend is strange, the only thing I used checks for 13 years ago was rent.
Especially because in Europe we lack all the cool payment protection and insurance stuff that US cards offer.
In the USA, gas station transactions only had this shift in 2021.
> The magnetic stripe will start to disappear in 2024 from Mastercard payment cards in regions, such as Europe, where chip cards are already widely used. Banks in the U.S. will no longer be required to issue chip cards with a magnetic stripe, starting in 2027. [1]
My cards' magnetic stripes haven't been used for at least 10 years.
[1] https://www.mastercard.com/news/perspectives/2021/magnetic-s...
Not being able to use my card in remote areas abroad without chip+pin is not an issue for me. I'm much more concerned with skimming. Especially because even if the bank guarantees it, it's still a big hassle.
Here it's been banned from all payment terminals since 2014 IIRC. But skimming is still a thing because they send the card scans to other countries where magstripes are still permitted :(
As for charge back, this is not something you can do yourself, you need to complain to the bank. By law they have to credit you back and investigate (and possibly charge back)
However I love cheque, it is still available in France and I use them regularly. You can actually use it to pay your shopping, it is accepted in a lot of shops. It is perfect to pay something by mail, or to pay sports clubs license. No need to request the IBAN, no need to type it and hope you didn't make a mistake, no need to confirm with 2FA using your secret code and no need to wait for the transfer to go through.
Fraudulent charges can be reversed immediately, don’t impact you at all (since the money isn’t yours). Chargebacks can force a retailer to give your money back.
The benefits are endless.
This isn't really a benefit, it's a fix to a problem caused by credit cards that doesn't happen at all (or at least rarely) with debit cards.
the x% CC processing fee is essentially fraud/non-payment insurance
"There is no chargeback right however, which can be considered a disadvantage for the consumer using this payment method."
Outside the US, credit cards are much less common outside the US. The alternative to credit cards isn't CoD, it's debit cards, which are connected directly to a bank account. Merchants love debit cards because they have near-zero transaction fees.
You don't need credit card for chargebacks, just strong consumer protection laws that permit the bank to claw the money back from the merchant.
As for fraud, I don't have any data, and I'm sure there's plenty, but we have had chip-and-PIN in Europe for decades, and for more than a decade cards have been protected with 3D Secure and similar types of mandatory 2FA, so having the card number is not enough to complete a transaction.
People seem more wary of accruing debt in Europe; it's easy to lose control over your personal finances with a credit card. But we have middlemen like Klarna now that offer credit-card-like payment deferral. Klarna appears as just another payment processor, but takes on all the risk, similar to a credit card company.
The only thing I miss from US credit cards are cash back rewards.
> People seem more wary of accruing debt in Europe; it's easy to lose control over your personal finances with a credit card.
Well using credit means you're taking a loan, and subsequently paying interest on that loan even if it's just a month. Why would you pay interest on a loan that you don't need and pay an exorbitant amount in monthly fees just to have the card? Seems like absolute lunacy. And here it doesn't tie into the credit score system much so there isn't a reason to do it solely because of that.
Luckily these days there are fee-less prepaid cards that work like debit cards, but function as credit cards. That's my go-to.
Huh? That hasn't been my experience. At all.
I make online purchases nearly (yesterday I made two!) daily with my debit card with no problem at all.
Perhaps that's an issue where you live. I'm in the US, so YMMV, I guess.
The lower fee debit card networks operated by the interbank networks that run the ATM system (Pulse, NYCE, STAR, etc) do not seem to be available for online purchases.
So while you absolutely can pay with them online from the merchant's perspective it is a credit card, and only the issuing bank is treating them differently.
While Visa et al do know this is a debit card, and could could offer lower interchange fees, I'm not sure if they do, and they certainly don't lower it to the same level as the debit networks.
This may very well be different outside the US, as they may not be fully seperate networks in every country.
Yeah. So what?
It doesn't make any immediate, practical difference to me.
Sure, it would be great if fees were lower. That would (presumably) reduce price increases over the long term and allow merchants to increase their gross profits. Having high "processing" fees is rent seeking at best and is likely a drag on the economy.
That said, GP's comment[0] (which is what my comment was addressing) that "The thing about debit cards though...they don't work for online payments which makes them effectively useless." is (at least in the US) flat wrong.
Edit: Removed extraneous editorializing.
For example, in The Netherlands *everyone* uses iDeal. Basically, the store does a 302 redirect on checkout to your bank, sending along the money owed and the destination account. The bank authenticates the user, confirms that they indeed want to pay it, and redirects back to the store. It... just works!
Please tell me how the hell I should input a 19 digit debit maestro card into 16 digit credit card number slots. It even has letters.
> iDeal
Seems like it's only a Dutch thing according to the wiki.
There are also credit + debit combination cards, which have two different numbers to use. They also let you choose which side to use on the payment terminal.
Actual debit cards are issued by banks and only have the much longer account number on them.
Maestro, given you mention it elsewhere, doesn't necessarily have longer payment card numbers than most credit cards (which are mostly 16, except for Amex which is mostly 15): it merely has a number made up of a number of different prefixes, and the final section is determined by the issuing bank… and several of these are variable length.
Anecdata: I'm from Germany, which is one such country. I've recently had a conversation with someone who had a "credit card" that charges directly to their bank account.
Everything in your opening sentence is incorrect.
The only hick-up is that they default to 2FA: using a smartphone (domestic bank system) or card-reader (chip-and-pin). My bank has supplied me with a small card-reader for home use, which I also use for on-line banking. To order from an on-line vendor that does not support chip-and-pin, I'd have to also log into my bank and temporarily enable "Internet payments". This has worked for me every time I've ordered from US, Australia or Japan.
To be clear, they're VISA cards issues by the bank with a 16 digit main number and the payment appears on my bank statement within about 5 minutes.
In addition, visa Mastercard can cut off any business from doing commerce, and often do for political reasons.
A much better system is one with: - extreme low fees (like 0.1%) - consumers can dispute anything within x days and merchants have to issue a refund. No administration. - any merchant with a bank account can use it (or similarly broadly available)
Er merchants will get instantly crushed with first party fraud. As soon as people realize they can acquire a good and then get an instantly approved dispute the day after, game over. Unless thats not what you mean?
As a merchant, credit cards suck.
No matter how you argue, the people who do not abuse the system and are honest to the degree of hurting themselves will always be at a disadvantage versus the people who either refuse to replace an item or just file a chargeback instead of even contacting the merchant.
Or the customer support is so bad that you enjoy filing a chargeback.
"Hello, the tracking site says the item was delivered. It was NOT delivered and I asked the neighbors, it's not here." "Thank you for contacting us, the tracking site says the item was delivered. Have a nice day!"
2.1 Why does the proposed Regulation cap interchange fees at 0.2% and 0.3% for debit and credit card transactions respectively?
The 0.2% and 0.3% caps were proposed by schemes (Visa Europe, MasterCard, Groupement des Cartes Bancaires2) in competition proceedings and appear practical as providing legal certainty while not threatening the viability of these schemes. These levels are based on an estimate of the fee at which a merchant would be indifferent between being paid by card or in cash. The figures have been developed using data from the central banks of Belgium, the Netherlands and Sweden on the cost of payment instruments.
I ask because most lower-margin businesses tend to be brick-and-mortar and service-based, like a restaurant. If a typical restaurant's profit margin is ~3-5%, then going from 3% credit card fees to 0.1% fees could conceivably increase their profits by 60-100%. So, if your margins are <10%, then I understand how transformative lower network fees could be hugely impactful.
For ads: Many ecommerce businesses spend far more than 3% of their gross revenue on acquisition/marketing costs. So, in some ways the 3% credit card fee is closer to a marketing expense that increases conversion rates - and payment network fees are often less than overall facebook/google ad spend. So, if you're spending >3% of your gross revenue on ads, then the high conversion rates of credit cards factor into your advertising acquisition costs.
This. There's so much incentive to encourage shitty consumer behaviour on the CC side and it destroys margins on ecomm.
Those who are interested in learning more should read this article[1] on a cycling ecomm company and their issues with fraud and chargebacks. It's very accurate with what I've experienced.
1 - https://cyclingtips.com/2022/07/interview-silca-on-amazon-e-...
I only have anecdata about this, but every taxi driver (50+) I've ever discussed CC vs. cash (this is in NYC and limited to medallion taxis) has said they prefer cash every single time.
That's mostly because of the 5% CC processing fees on every transaction, as well as delays in receiving their money from CC transactions.
I imagine it's different elsewhere, but not (at least AFAICT) where I live.
Edit: rather, it's easier to not declare cash income, than income from credit cards. Also keep in mind that the taxi company may take a cut of the revenue too.
In NYC medallion cabs, all taxi rides are recorded by the taxi meter in each car. It records the distance and the fare charged, regardless of payment method.
So that's not really the issue.
And $2500 dispute fee for each order deemed against their Acceptable Use Policy.
- Consumers can pay stuff on credit
- Consumers can 'chargeback' if they feel something went wrong
These two mechanisms are the lubricant that provides a +% in online commerce greater than the % charged for processing payments.
The reality is very few people know they can chargeback and most use debt & instant payment option for low ticket high volume transactions.
If something was holding crypto from being used to pay for daily essentials, it is not charge back ability.
The bigger point of crypto is that this trust can be parametrized and made transparent in a public ledger with less intermediaries. I see it as getting to feature parity, not as something that undermines trustless-ness - don't throw the baby out with the bathwater.
To extrapolate the idea some, I’d be comfortable using an irreversible payment method for various B2B SaaS subscriptions. Those can reach perhaps more meaningful amounts to you.
It seems that you’re rather dismissive of this conversation, so I’ll wish you a pleasant day/evening.
Not only is the irreversibility less important, but potentially some of the usability/security issues for users (hacked/stolen wallets etc...) become less important as well (assuming users keep only smallish balances in crypto wallets).
I've been testing out the Lightning Network (Layer 2 of BTC) recently and it seems that the future has arrived. I can accept micropayments in BTC over LN, which get immediately converted to dollars and deposited to a bank account in USD. All for ~$0.01 fee per transaction. Here's how:
1.) Open an account at https://strike.me. This app is very similar to CashApp, but supports getting paid on the Lightning Network. I believe CashApp is also working on this functionality.
2.) Set up your own self-hosted install of https://lnbits.com (or use cloud hosted version at https://voltage.cloud for ~$10 USD/mo).
3.) Connect LNBits to Strike. (Note: there is an open PR for this, if you want to test then check out the PR on Github)
4.) Set up a Point of Sale (or paywall, or event tickets, or tip jar, or line-item invoices, or anything else) on LNBits.
5.) Collect a payment in LNBits.
6.) That BTC is immediately forwarded to Strike, converted to USD and available for withdrawal to your bank account.
Following these steps you can collect micropayments in USD for next-to-nothing fees and have no exposure to the volatility of BTC.
Your potential customers can hold their balance in USD as well, if they don't want to hold any crypto. They just deposit some USD into their Strike account to pay these micropayments.
And these services do exist and are in use on some tor network marketplaces.
I don't expect fees to be much lower for a third party human-in-the-loop escrow system. And there's nothing wrong with "re-inventing" either. I think it's critical however that you can have strong censorship resistance and opportunity for innovation. So personally I'm more interested in the unknown unknowns, rather than recreating exactly the same.
While possible, this is a claim made without evidence.
Explains why so many real world shops are still cash only.
That's a major reason Argentina is taking steps to mandate acceptance of debit cards - so that income is accurately reported for tax purposes: https://www.bcra.gob.ar/MediosPago/Politica_Pagos-i.asp
Cash isn't some 'free' panacea for a business.
The EU has capped debit interchange at .2% and credit at .3%, Australia in the low 1s if I recall correctly. They just don’t really have rewards.
We don't have them in Europe, and some people in the USA think they have them.
What they have is crazy high credit card fees and the need to juggle a bunch around to get a few things credit card companies decided to buy for you en masse.
When I buy a $5 latte, I give Visa $0.01. When you do the same, you pay $0.15.
Come the hell on. "REWARDS". Smh.
My regular Chase card gives me 1.5% of everything I spend back as cash. That's typically about $1k/year.
I pay nothing in (direct) card fees at all.
Just on credit cards we get:
- 7-10% back on flights (Amex Platinum and transferring points to airlines)
- 10%-14% back on hotels (Amex Hilton Aspire)
- 5% - 8% back on dining and groceries. (Amex Gold)
- 4 - 8% back on Uber (Amex Green)
- 2-4% back on everything else (any of the above cards).
This doesn’t count hotel and airline loyalty points.
Yes, I’m taking into account annual fees. But all of the cards above have enough perks that they more than make up for annual fees - Uber credits, Clear credits, credits for hotels and airfares etc.
I’ve estimated that’s about 6.5% back a year on our budget. That’s more than we were paying in state taxes before we changed our official residence to a tax free state.
I also work in consulting, while I only travel 5-6x per year for work, many of my coworkers spend 40 weeks a year traveling a rack up credit card rewards by putting expenses on their personal cards and getting reimbursed. But they keep the rewards.
There is also an entire culture of “churning” credit cards for their sign up bonuses.
But I agree, for most people it isn’t worth it.
[1] we do have investment property that we have to pay the mortgage and a few bills on.
> This doesn’t count hotel and airline loyalty points.
Can you show your calculation for this? Hilton pesos get devalued on a daily basis in my experience, and they even nerfed their free weekend night with the Aspire credit card so that it is only useful for “standard” reward nights and not “premium” reward nights. Of course, all the nice hotels like Waldorfs and Curio will require premium reward nights.
I have never seen Hilton points worth more than $0.005 per point.
But I’ve literally been looking at points vs money in every major city in the US and a few in Canada as I’ve been creating our itinerary.
With Hilton, when you pay with all points, you don’t pay taxes and fees and if you stay five nights and use your points, you get the 5th night free.
We stay exclusively at Embassy Suites, Homewood Suites and as a last resort Home2Suites so we can have two separate rooms (Embassy and Homewood) or at least have more space and a full refrigerator (Home2Suites). I work remotely and need the separate room to work.
You can’t really stay at a Waldorf or Curio when you are staying at hotels 280 days a year. During the winter we stay at our 2nd home/investment property.
Next year, we will be staying at the following places with all points for 7 days and getting values between .7 cents and 1 cent each: Los Angeles, San Diego, Santa Fe, NYC, Chicago and San Juan. This is just staying in mid range Embassy Suites. San Juan is at the Caribe for 10 days.
We won’t make it to the following cities until 2024. But I’ve seen good values in New Orleans, DC and Hawaii.
I was just referencing credit card rewards above. But you get 10x per dollar at Hilton, 10x for being a Diamond member (automatic with the Aspire card) and 14x with the Aspire.
The calculation was based on .007 * 14.
There are a bunch of free 2% cash back credit cards, so people would at least break even if they wanted to.
This is correct. But it's a far cry from "nobody really has rewards." Framed a bit differently, our credit card system is a regressive tax on consumption.
I am going to have those same investments anyway in VOO at one brokerage or another, so there is no opportunity cost.
You are correct that it is sort of a wealth transfer from poorer to richer. But merchants are free to offer discounts for non credit card purchases, and they do many times.
Which credit card do you have? I'd like to ugprade to that one.
Interchange benefits merchants too - there's real costs associated with holding cash, and average cart sizes are significantly bigger for credit cards. They also miss out on fewer sales.
You may not value rewards programs but customers, card issuers and certainly those who operate those programs do. They're massive business. Frequently the only profitable part of a US domestic airline is its frequent flyer program - which gets the bulk of its money from credit card reward programs.
Credit card companies have even provided debtor in possession financing for airlines in the US by pre-purchasing multi-billion dollar blocks of frequent flyer miles. Here's when Amex did it for Delta in 2011. [1]
[1] https://www.eastvalleytribune.com/money/american-express-rea...
The cynic in me wonders how long before they devalue them. It's easier to start changing the rules for "points redemption" when they aren't saying outright "You have $112.75 in cashback value" on the statement.
They recently had a promotion-- use the points directly to buy on Amazon, but if you paid that way, it was debased-- something like 120 to the dollar. It was actually better for me to buy what I wanted on credit, redeem the points as a bank transfer, and settle the bill at the end of the month.
Wells Fargo Active Cash is the other such card that I know of among big banks.
Chase - United
Citibank - American Airlines
AMEX - Delta
You're wrong, the rewards (cash back) is real.
At some philosophical level you're correct. Sure, the merchant is being charged extra fees and the cash back is less than that.
But pragmatically, the merchant already included that cost in the price of the item so it is what it is.
You buy that $5 latte cash, it costs you $5. You buy it with a debit card it costs you $5.
I buy it with a credit card it costs me $5 but I get 10 cents back at the end of the month.
Its annual fee is a seemingly ridiculously-high $550.
However, it automatically offers reimbursement for the first $300 in "travel". The definition of travel is very broad - we're not just talking airplane tickets, this can be taxis, parking lots, trains, buses, highway tolls, hotels, and many other things. And I do mean automatic - I don't even need to log in and select which charges, it just happens.
As such, the annual fee is really $250.
Still too high? Let's say you ignore other specialized perks (reimbursement for TSA Precheck/Global Entry, premium memberships such as Doordash (through 2024) and Lyft (in the past, expired now). Let's ignore real perks such as PRIMARY rental car coverage that means you can decline the pricey loss/damage waiver when renting vehicles and Chase takes care of any claims before your insurance - there have been years when I made most of that $250 back from that single perk alone. Let's just look at cash back.
At an absolute minimum, you're getting 1% back on everything. 1% means 1 Ultimate Reward point, or UR. At an absolute minimum, you can redeem 100UR for $1.00 in straight up cash/statement credit. The actual value is higher (we'll get to that later) but we'll start with this baseline.
You get 3% when dining or travelling (with the same broad definition of "travel" above that probably covers some of your commute to work if you take transit, pay to park, or pay tolls). If you pay attention and use Chase's portals for various travel purchases you can earn 5-10% back (to be honest I'm lazy and almost never bother).
So we're already at the point where depending on your lifestyle, if you put 15-20K on credit cards each year (that's less than $2000 per month) you're probably breaking even - assuming the absolute lowest valuation of points. But why do that? It's trivial to redeem the points at 1.5x for travel by booking through Chase - that is, if you use their portal you can book a $150 hotel room for 10000 UR points. So now we're at 1.5% on everything or 4.5% on travel, and needing to spend only more like $12000-16000 per year to come out even. During the pandemic they made it even easier and let you get reimbursed for various purchases such as restaraunts at that same rate, so even when I wasn't travelling I was getting that full benefit.
If you want to minmax and are flexible on your destination/time, you can transfer UR to various airline/hotel portals and get higher values: https://thepointsguy.com/guide/sweet-spots-chase-ultimate-re...
Did I mention that when you sign up, if you spend enough in the first few months you get a bonus of enough UR to more than make up for the first year or two of fees?
I've had a CSR for quite a few years now (back when I signed up the bonus was 100000UR) and have redeemed the points I've earned each year for more than the annual fee. That is, every year I've had this card I've profited to the tune of hundreds of dollars.
In response to other complaints about spending requirements, the Chase Freedom line earns UR points (without the 3X dining multiplier or the ability to redeem at 1.5X on travel) with no annual fee and no deposit requirement.
We do have a non-Visa/MC payment system here in 'eftpos', which is ubiquitous. AFAIK this is exclusively debit not credit, but this isn't my area, I'm just a consumer.
I don't know when I last used EFTPOS.
There's a terminal, I wave my [phone|watch|card] at it, it beeps, I walk away. Happy days.
In that case if it's a Visa card, is Visa the processing entity?
So, if you have a Visa credit card, and the money comes from your credit account, like many, then it is clearly using Visa Paywave.
But historically, it was Visa and Mastercard that started it with "no pin required" as an opt-out thing(IE it was enabled for you by default), and their main market is credit. Most people just rolled with it.
Using the phone NFC however should give you more control I would think. But I honestly have never set it up.
[1] https://www.bankrate.com/finance/credit-cards/why-american-e...
They do of course make money by charging a high annual fee, but another commenter already explained how the rewards offered by this card can still give more in value than the annual fee costs. This is absolutely true in my case.
That seems like circular logic. If there were alternatives to credit card and CC companies, SaaS would use that. In fact, in some countries, there are and it does.
> The ability for a merchant to pull payments on a recurring basis from a credit card requires an incredible amount of trust.
Why? If the merchant can't pull this month's payment, then services stop. Perhaps you mean making a large payment in arrears?
Such as?
Andorra, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom, Vatican City
They all use the same system, namely SEPA Direct Debit. It has only been around for 13 years or so. The Stripe website has a decent introduction: https://stripe.com/docs/payments/sepa-debit
So yeah, as a Dutch person all of my subscriptions use this. In fact, I get a bit annoyed when someone does not offer it, because I do not own a credit card.
There might be an opening in subscriptions. Those merchants know their customers, and may be willing to take on fraud risk for material bump in revenue.
But, then you're trading one evil for another - because Apple will want their cut, too.
At the end of the day - it's a battle between value centers and cost centers. Businesses would generally rather make more money than save money.
You have to get one side to trust it. Visa and MasterCard succeeded by making it easy for consumers. The counterpunch is likely in winning over merchants. If Netflix or Spotify gave me a small discount for running over alternate payment rails, I don't need to trust the intermediary, I trust Netflix or Spotify to not screw a decade-long customer over pennies.
Or a 0.1% fee.
You make it sound like that is a good thing. They are loose cannons that time and time again have shown they shouldn't be trusted.
The institutions (at least in my country - UK) are not interested in dealing with that. Police will not view it as fraud (unless they get a massive number of enquiries, but still they may be ignoring for a long time before it comes on their radar), the Trading Standards will say talk to your bank, bank will say I should have done more due diligence. Then you won't be able to take the seller to court if they used fake address. Police will not be interested in finding it for you. You can hire a private detective to locate the seller, which will cost probably many times over the loss. Now even if they locate them, they may not have a permanent residence, which again makes it difficult to lodge the case in court and before it happens you have to first try to mediate. Good luck with that. Basically the current system is created for fraudsters to thrive.
How long will Apple selling in-store products to 800 FICO score consumers be willing to subsidize eBay vendors and gift card resellers?
Apple likely has a deal that borderline costs merchant acquirers money and that gift card vendor is probably paying 10%.
Disliking wallet-draining, hard-to-cancel subscriptions, I'm not entirely opposed to this scenario.
Recurring bank transfers are not that hard to setup and would probably be even easier by now if credit cards weren't available. If your argument is that this would give users better oversight of their recurring payments and the ability to cancel ahead of time without restrictions then I fail to see how this is an argument for the current credit card system.
The recurring option, yes I wouldn't give out a bank account or a debit card for recurring payments even with high trust SaaS merchants, even if they accepted one ( most don't ).
American page:
https://faq.usps.com/s/article/Collect-on-Delivery
Canadian page:
https://www.canadapost-postescanada.ca/cpc/en/support/kb/sen...
So on delivery I pay either contactless by NFC or by QR code. Super easy, barely an inconvenience.
Reeeeally now. You don't say?
What a wonderful world that would be.
Is that true because credit cards mean there's no incentive to make the court process more efficient?
That is, without credit cards playing that role courts would become more efficient and less expensive.
My issue is that that they should be regulated as such.
They shouldn't be allowed to unilaterally withdraw access (eg wikileaks).
That sounds amazing. Let's do that.
Agreed. A dispute resolution mechanism baked-in would go a long way toward making crypto a more viable alternative, especially if it delivered more effective justice than the credit card companies' stale policies and their opaque decision makers who don't really give a crap.
Systems of justice are probably the earliest institutions of civilization, and have evolved over millenia. There's lots of runway to learn from what's worked and what hasn't.
A potential starting point might be an arbitration approach where multiple parties are selected at random from a pool of candidates who gradually build reputation as fair and impartial adjudicators. They'd review evidence and arguments independantly and issue their vote for the verdict.
Commerce, including crypto, is as much about people as it is anything else.
PayPal are a dick on fraudulent merchant account detection and it’s well know assets can be frozen on a whim, but at this point it’s the one of the few other options.
He had to do a chargeback with his credit card company and got his money back that way, but of course PayPal banned his account in response.
Mindlessly clicking through OK buttons is end-user negligence, not fraud. Your brother presumably had multiple opportunities to notice something was not okay before completely signing off on it. It's tantamount to signing a contract without so much as even glancing through the terms, then turning around saying you never meant to sign it.
Fraud protection does not absolve someone from being a responsible adult.
PayPal's "redirect the user through our services" flows provide more uniformity than some random site with a hosted-- or even baked-into-the-shopping-cart-- credit card form-- but I wouldn't say it's uniform enough that people would be able to reliably identify something outside the norm.
Just think of currency-- could you spot a decent quality counterfeit? Particularly if you're dealing with a more edge-case design that you don't encounter every day (say, a Series 1934 $50 note)?
I hate to say this, but there will always be loopholes as long as scamming js lucrative enough.
When it's easily verifiable that actual fraud has taken place I would say yes. It would've taken them literally 5 minutes of their time to investigate by going to the website, seeing it presents itself as a retail furniture store, and to go through the checkout process and seeing that it ends up at a form for a personal transfer, and that no goods ever end up being delivered, all of which clearly indicate the transaction is 100% intended to be fraudulent by the supposed seller.
Fraud management is hard. Most actors in the domain are also jerks, but that's orthogonal to it being hard I think.
The reality is that most low-margin B2C businesses are brick and mortar service-based businesses, such as restaurants. And, therein lies the problem for Paypal and for crypto payments: The low-margin businesses that care about CC fees are not early-adopters of payment networks. Restaurants can't conceivably introduce a non-traditional payment network as their exclusive provider.
For online your choice is to poney up the fee or not get paid at all. You’ll also probably target a wider audience and region restricted payment networks become less viable.
Offline credit cards processing currently has super low fees, but it’s also a field where there is already way more competition than VISA/Mastercard, in particular there will be national card networks, and prepaid NFC that rise up as an alternative.
> Restaurants can't conceivably introduce a non-traditional payment network as their exclusive provider.
In my experience they do. They always have cash as the fallback, so they can pick and choose more freely than other businesses (think of all the restaurants that won’t accept anything other than cash)
For instance a lot of lunch focused restaurants won’t serve much alcohol if at all. High volume low check size restaurants also abound. Do we also call cafes “restaurant” if they serve hot food at the table ? etc.
A tourism oriented restaurant will go so far as to accept American Express and swallow the fees, while a local restaurant can refuse anything other than cash and the local prepaid card, it really varies a lot.
PS: we might be missing context on if we’re only taking USA, as the article is about that, or on more global range, which I think is more interesting on the Visa/Mastercad discussion.
If I end up on a random, self-hosted ecommerce site and decide to make a purchase - what guarantee do I have that the item will show up or be as-described? If I bought something through a bank transfer, reversing that purchase would be incredibly difficult. And, suing a merchant is prohibitively slow, expensive, and arduous.
Also, modern B2C SaaS is built on credit card subscriptions. The ability for a merchant to pull payments on a recurring basis from a credit card requires an incredible amount of trust. If consumers had to push payment every month or year to continue subscriptions (instead of having it automatically debited), then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it.
So, I'm sure online merchants are happy to keep paying their ~3% fees as long as sales continue. Nobody wants to go back to "Cash on Delivery", and nobody wants to hire workers to knock on doors asking for bills to be paid.