by dismal2 on 5/23/18, 2:56 PM with 135 comments
by chatmasta on 5/23/18, 4:25 PM
The reason the banks are scared is not because "banks" are not involved. They're scared because these apps have successfully vertically integrated to become banks. This is the logical next step for Apple / Google Pay and I'm sure it has consumer banks shaking in their boots, because there's no way they can outcompete those companies in tech. So instead they focus on regulatory capture and making it as difficult as possible for tech companies to play in their sandbox without banker supervision.
One only needs to look at the adoption rate of Apple Pay outside the US to see this system at work. In parts of Europe and the UK it's extremely popular because the banking systems have much friendlier regulations and fewer integration points. In the US the uptake has been slow because the integration is so cumbersome and the banks / payment networks control the entire cycle from point-of-sale to deposit.
by kevin_b_er on 5/23/18, 3:38 PM
So once they achieve their goal of preventing me from paying someone else $10 without a 3rd party getting a 2-3% fee for the privilege of exchanging money between two private parties, it won't be them getting the 2-3%? Cry me a river.
by dzink on 5/23/18, 4:12 PM
1. Money transmission regulations require at least $2 million in reserves and 2 years to get a license to transmit money in all 50 states.
2. Knowing the credit and identity of your customers is critical in preventing fraud, illegal transactions, and other issues which cost huge $$$ to payment ecosystem providers with the current consumer guarantees in the US. Only a company with mass market deep data on every user’s consumer patterns can pull this off cheaply, and Amazon is far closer to this than anyone else.
3. Getting plugged into the trusted banking ecosystem for deposits to consumer accounts and the whole ACH process is a total mess. Banking regulation puts a wide number of restrictions on anyone who tries to act like a bank to get access to those payment networks. A mass market company could probably replace that, but it has to have a way to do what it does whiteout being regulated as a bank.
These will be broken down one at a time.
by PeterisP on 5/23/18, 4:08 PM
The main difference for accessibility of such payments is that, unlike cards, there's no percentage fee involved; and that, unlike paper checks, processing them can be so automated and cheap that payments can be offered for free or nearly so.
by hclalpha on 5/23/18, 3:29 PM
by awat on 5/23/18, 3:26 PM
by TACIXAT on 5/23/18, 8:37 PM
The basic design was ACH money into the wallet, transfer money between balances for ultra low cost (1%), ACH money out of the wallet.
The difficulties are regulation. Doing this would make you a money service business and banks really don't want to touch that. Plus it costs a nice chunk of change to register in every state.
If card processing companies are taking around 3% + 30 cents of each transaction, they've effectively devalued our money by that much. I think you could skip all the NFC terminal nonsense and just do QR code based payments with the camera. Make low fee transactions a reality. Then you could pay for individual news articles online, support forums monthly (no way to pay a fraction of a cent for a page view), or tip your favorite streamer. It would be beautiful. It could also set us free from the ad based tracking economy.
Maybe one of the big players will implement it (Google, Apple, Walmart), or at least figure out the business model for someone to copy. I think it could really change the US economy.
by solotronics on 5/23/18, 4:31 PM
- who is liable or who will make it right when your money is stolen? - retail banking in the US sucks in every way except that they will reimburse you for fraud
if it was up to me all my payments would only happen on a cryptocurrency layer and all my cash storage would happen in an account you could only withdraw from in person to the crypto account. the pull model without credentials banks work under is totally flawed and wont last much longer.
by drb91 on 5/23/18, 3:42 PM
by sevensor on 5/23/18, 3:36 PM
by mwexler on 5/23/18, 10:33 PM
In the US, where the single purpose Starbucks wallet is outpacing Apple Pay (https://techcrunch.com/2018/05/22/starbuckss-mobile-payment-...), most users pay into the thing with a credit card, so the banks still get their cut. Sure, they aren't getting the cut when it's spent on coffee like they would with a credit card, but in some ways, they already got it on the front end.
Is the bank totally out of the picture in the Ali/Wec version? Do people put cash money into Ali/Wec via top-up shops or other experiences? Direct deposit salary? Or is it a free transfer from a bank?
by intrasight on 5/23/18, 7:57 PM
by forkLding on 5/23/18, 5:27 PM
This is basically Paypal's dream scenario to become a bank because they already deal with the regulatory stuff but don't get the full money earning potential of a bank.
by gruez on 5/23/18, 3:40 PM
but there are plenty of "bank -> wallet -> merchant" services in US as well. most notably paypal: you deposit money to your paypal wallet, and spend that money at various online merchants, no credit cards involved.
by the_watcher on 5/23/18, 3:42 PM
by xstartup on 5/23/18, 6:08 PM
It should be a fundamental right in the capitalist country, right to process payment for any party. Today, we need special license/approval for this which limits the "access to disrupt" to few lucky people who have a connection in the big banks. Startups like stripe have to give away a chunk of their equity to old guards at big banks in return of access to a market.
Is this the best a capitalist country may offer?
by azinman2 on 5/23/18, 4:14 PM
by Fjolsvith on 5/23/18, 4:19 PM
by ksec on 5/23/18, 3:24 PM