The US seems to be so far behind. For example, in Poland, Europe, you've had online instant bank payments for over 10 years. You’d go to a merchant’s site, click 'pay with my bank,' and an OAuth-like mechanism would log you into your bank to confirm the payment. Now it’s even easier with the introduction of BLIK, which lets you pay in shops, online, etc. Online payments are super simple: you click 'pay with BLIK' on a merchant’s site, go to your bank app (web or mobile), click the BLIK icon, and get a six-digit code valid for 60–180 seconds. You enter that code on the merchant site, and your mobile app shows 'Do you want to pay [xxx amount] to [merchant Y]?' You click yes, and that’s it.

FedNow is cool but it has nothing to do with B2C payments. Think: wires, but cheaper. Or ACH, but faster. Do you frequently pay for goods or services with wires or literal ACH transfers? (No.)

The key thing to remember about credit cards is "credit", "CREDIT" You can have literally no money to your name but if you have a credit card, you can spend up to whatever the balance is. Someone is loaning you money, someone is taking risk that you will pay. You are protect by government regulation so that if you file a dispute, you are protected until it's proven that you actually did spend the money. With debit card or FedNow, you need to have the money, you don't have dispute protections.

Will take years for banks to adopt FedNow. Regional banks and credit unions probably a decade out. Then another cycle of adoption by merchants and buyers (4-5 yrs).

Pretty much all of South America has some version of this as well. Colombia has “transferencia” which is awesome and even as a foreigner I could pay someone using cash at an ATM machine.

FedNow is for institutions not individuals

Can ordinary people use FedNow right now? How?

> without a credit card company in the middle extracting rents.

This is way too reductive. In the US, credit cards are complicated. For instance, I get about 2.5% of every purchase back, either in cash or kind. Yes, the merchant pays 4%, and VISA/matercard take a bit, and my issuing bank takes a bit, but calling that "extracting rents" feels like pure rhetoric.

FedNow is awesome and will make the market more efficient, but merchants aren't going to lower prices due to lower fees, especially while there's a mix of fee-less transactions and credit card transactions. At least in the short term, adopting FedNow is just giving money to the places you buy from (for retail transactions).

FedNow will not become an alternative to consumer payment cards anytime soon, if ever. Visa & Mastercard work very well for payments between strangers.

Pix [1] is super successful in Brazil though.

[1] https://en.wikipedia.org/wiki/Pix_(payment_system)?wprov=sft...

The lawsuit is not about credit cards or instant electronic fund transfers.

Visa (and MasterCard as well) have colluded with banks in multiple countries (not just in the US) to eradicate national debit card payment networks that cost consumers either $0 or a very small flat fee per a transaction (e.g. $0.10) and replace them with their own branded debit cards that attract fees for the consumer, for the merchant and generate revenue for the payment network. The revenue is tiered (e.g. premium debit cards attract higher interchange fees that go directly to Visa/MC), hence the proliferation of Platinum debit cards. And consumers are now left with debit card transaction surcharges that have been passed on to them whereas Visa is profiteering from every single party involved in the end to end payment processing.

National debit card payment networks are now dead, courtesy of Visa/MC.

Most banks just receive, not send via fednow so not possible to use right now.

The DOJ explicitly isn't comparing using Visa to handling cash, they're comparing it to what it would cost if Visa didn't allegedly manipulate the market.

Buying from Standard Oil was more efficient than trying to stick with non-oil-based alternatives, but that doesn't mean that Standard Oil didn't illegally manipulate the market to maintain a monopoly that hurt consumers.

> ... shows that cash handling costs many retailers between 4.7 and 15.3 percent.

This feels like a weaselly way of putting it. I want to know the average (or median) cost of cash handling, not what it costs for "many" (whatever that means) retailers. It could be that the 15.3% figure represents costs that 0.01% of retailers have to bear, and that 4.7% is for 10% of retailers. And it could be that 90% of retailers spend less than credit card fees managing cash.

Or they could mean what you want them to mean, and it really is more expensive than credit card fees for the median business to manage cash. But from their wording, it's hard to know the truth behind it.

Sniff-test-wise, I find it hard to believe that gas stations (and other retailers) would offer a cash discount if cash was actually more expensive for them to handle than credit cards. It seems unlikely that they wouldn't have come up with that without at least some research to quantify their cash-handling costs.

Relatedly, I know of an excellent local bakery that only takes cash or check. A regular birthday cake of generous-but-not-huge size is around $60, and it's worth it.

But when you go in to pay, the price after sales tax ends up being something like $57.63 (or whatever, you get the idea). So for checks, not an issue, but for cash... they now have to keep loads of coins on hand, lots of small bills, and presumably reload those often.

Either raise or lower your price. Someone buying a $57.63 cake isn't going to balk at paying an extra $2.37. And if you make it $60 even, after tax, you don't have to keep anything but $10 and $20 bills in stock for your best-selling cake, because you'll get a mix of bills in, but the only way you give change will be from a $100 bill (2 x $20) or a $50 and a $20 (1 x $10). You will still get other bills in sometimes, and some coins, and of course they do sell other sizes (but they don't do a lot of small-scale things like cupcakes). Most sales require an order in advance.

Just cutting down on all that cash handling would be advantageous (and that's why one of the owners is always at the register).

> It looks like Visa debit fees are about $0.21 + 0.05%. Compare that to cash handling...

Debit fees are that low because of the Durbin Amendment, which legislated caps on debit card fees (amongst other things). Credit card fees are where the real money is made, and the meat of the complaint here.

> This means for every $100 sale, a business is paying between $4.70 and $15.30 just to manage their cash.

I'm pretty skeptical of that number, but more importantly

> And, the cost is only increasing as more businesses and consumers trend away from cash.

That should be excluded here. We want to look at the baseline cost of cash as a major payment method, not the effects of a payment method becoming overly niche.

Well, the comparison is not cash but a counterfactual market that's more competitive and where fees are lower.

That's the interchange (i.e. what the issuing bank earns), not Visa's fees.

Visa charges both the acquiring and the issuing bank on top of that; that's then called "scheme fees".

The issuers pays these out of the interchange; the acquirer charges the merchant for them, so they end up paying a bit more than the figure you've quoted.

>The idea that accepting cash is cheap is actually a myth. While some business owners might think the 3 percent fee for processing credit cards is a burden, research from IHL Group shows that cash handling costs many retailers between 4.7 and 15.3 percent.

How cute. The value proposition of accepting cash isn't to save on transaction fees, it's to save on Uncle Sam's fees. Cash doesn't have to go into a register and get Z'd at the end of the day (or have a Quicken invoice to go with it, depending upon the type of business). Although I neither condone, participate in, or tolerate tax fraud, it's absolutely a thing, and their failure to mention it doesn't inspire confidence in their conclusions.

The cost of handling cards is more than the fees, obviously the machinery and network needed to use them costs something. It's always going to beat cash, but cash should always be available as a fallback for disaster situations and "off-grid" individuals.

I don't think government should be setting prices. But disrupting monopolies is one of those things governments are good for.

The question is not how much better it is to pay by debit card than cash, but how high the margins are compared to the costs. If the margins are high there may be possible to improve the competition of the market.

One big reason that it’s still favored is because it allows some tax evasion

I don't think that a lot of people realize that this is why cashback exists, to get physical cash out of the drawers and electronic cash into the retailer's account where they can spend it.

Ever heard of FedNow? Payments is going to change here soon enough. If you've ever paid a merchant with Zelle, imagine a better system than that which everyone can use. Instant push payments.

It should be treated as a natural monopoly (i.e. digital utility) along with all that it entails.

You can't process a Mastercard transaction over Visanet even if you wanted to: * The network won't know who to route the BIN range to * Even if it did, they may not be connected * Visa and Mastercard, although very similar, put different pieces of data in different places and have different business rules, so you're not necessarily going to have the information you need to process a transaction where you expect to find it nor is your processing of that transaction necessarily acceptable to Visanet. * Visa doesn't know Mastercard's PEK, so they cannot encrypt the PIN as the issuer would expect it even if they wanted to * The EMV crypto might not work, although I'm not sure

These are just the problems that occur to me off the top of my head. They are solveable, but it would require a decade-long regulatory commitment with serious weight behind it.

Why? If I want to make a terminal, why should that be illegal.

What regulators should really focus on in my opinion is any uncompetitive contractual obligations visa is imposing on vendors.

They do, sort of. What happens IME is that the terminal is linked to a gateway, and then the gateway links to a processor, and then the processor contacts the issuer through the payment network. Most gateways can contact many processors, and many processors can contact any issuer through several payment networks.

What seems to be happening is that the payment networks are making exclusive deals with big issuers like banks and these deals are allowing specific payment networks to have a lot of pricing power with merchants, who have to pay a fee to everyone involved in the transaction(gateway, processor, etc).

Or we could, you know, just have a reasonable government option. Like ACH for debit cards.

This seems like a perfect opportunity for a common good. Something to make transactions easier and cheaper and help keep the economy running.

But that would be big-government-communism-anti-jobs-whatever-people-are-mad-at. So that’s not how we do it.

We’re getting FedNow (eventually). Seems like you could built a debit card processor on top of that.

You may still need Visa/MC/whatever for international customers to use debit. But American has a lot of Americans doing debit from American bank accounts.

And every transaction should have a fixed cost, no matter what the amount is.

I mean that is what I would assume (specific steps allegedly taken) given the title has the word "monopoly" in it.

My wife runs her own occupational therapy business (OT is consistently assessed to be one of the jobs least likely to ever be automated). Credit card processors still rule her life.

This article seems to specifically be talking about debit transactions, rather than credit cards (unless I misunderstand it).

It is more the others that don't exist.

visa was able to "impose a web of exclusionary agreements on merchants and banks. These agreements penalize Visa’s customers who route transactions to a different debit network or alternative payment system."

It's not just the political appointees. One pillar of Project 2025 is that OMB will make a rule by which almost any employee of any executive agency can be ruled a "political appointee" and fired and replaced by the president at any time.

I think this could happen even if Harris wins. There are a lot of big donors to her campaign that want Lina Khan out.

I don’t think the modern Democratic Party the same pro-worker, anti-corporate greed version a lot of us grew up with. Don’t take this as an endorsement for Trump mind you. Hardly. Democrats still have basic human rights on their side.

Corporate greed and military spending aren’t up for debate though. We can bicker about guns and immigration policy all we want but some topics aren’t even on the table for discussion.

You are confusing the DOJ (here) and the FTC (lina).

Lina in fact, has repeatedly lost in court and is widely viewed, by both antitrust hawks and doves alike, as being remarkably ineffective.

You'd be very hard pressed to compare her record to any effective FTC chair (IE in reigning things in) and say "yeah she's doing great"

Instead, she's showboated and lost repeatedly, which has only emboldened most companies who feel that she is so inept that they having nothing to fear.

In fact, she's lost so much she has been getting asked if she's doing it on purpose to try to get more power (lol):

https://thehill.com/opinion/finance/4490640-internal-ftc-ema...

Career FTC employess, who (despite what HN may think) are very very good lawyers and very good at antitrust law, have no faith in her "honesty and integrity":

"The annual OPM poll of federal employees shows morale and respect for the “honesty and integrity” of FTC leadership plunging from the highest level among federal agencies to the lowest levels under Khan."

That's not really a great sign. The biggest win they've had is basically "A settlement that blocked anticompetitive harms of pharma giant Amgen’s $28bn acquisition drug maker Horizon"

In the same time period, they lost 6 much more major cases in a row (microsoft/activision, etc). That's unheard of.

If you want someone who cares about the press, and will file lawsuits at the drop of a hat, take Lina. If you want someone who is actually going to achieve meaningful change, she ain't your person. I'd rather have an FTC that anyone is actually afraid of.

So the patent system and medical device regulations that prevent imports, two things specifically controlled by the government, create a situation which allows the maker to charge a ridiculous price.

I would rather they reformed patents for pharma and medical devices, and fought regulatory capture more than intervening more.

Small government types are often caricatured as being blindly pro business, but they realize that every new regulation is a chance for regulatory capture and help businesses to build a moat.

> With just a threat.

This is actually the ideal state of regulators. That they take action against a select few, which in turn 'scares' everyone else into complying with the law. Self regulation is much better than actual regulation.

The government is ineffective, and companies can be policed but often the government chooses not to because it is corrupt, when it's not simply because they are incompetent. Often the smaller companies or ones who haven't bought enough politicians and bureaucrats are over-"policed" in order to benefit other companies.

> That's all capitalism does: it builds enclosures, on this case on "intellectual" property and by buying the government to create a monopoly by banning imports and banning Medicare from negotiating prices.

Patents and import restrictions are orthogonal to capitalism as an economic system. They're obviously not the invisible hand of the market, but the actions of the very draconian hand of the government

Lina hasn't revolutionized anything except the crazy number of stupid cases brought, which have been thrown out of court over and over again. Everyone wants her fired because she's a nuisance and out of her depth.

I'd say the bigger issue was the speculative trading. Why would you use it to buy things that will depreciate in value if you think the currency itself will go up in value? Likewise, why would you buy currency if tomorrow its value can tank really hard?

The reason floating crypto isn't viable as a domestic currency is it's a taxable capital gains/loss event every transaction, and not directly useful in paying those taxes. A recordkeeping nightmare, intentionally created by the tax masters.

FTC is staffed with people that think monopolies are bad.

Because the Biden administration has effective antitrust regulation as a policy goal and has staffed the FTC with competent people empowered to pursue that.

Anti-trust/monopoly doesn't actually hinge on a magical percentage number.

The quote from the DOJ:

> “We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,”

This is the thing that's illegal, not some forbidden percentage of market share. Illegally using your position in the market to distort it to your advantage, to prevent competitors from existing, and (generally) to raise prices.

From the actual legal complaint https://www.documentcloud.org/documents/25173584-visa-lawsui...

> Visa is a monopolist in the general purpose debit network services and general purpose card-not-present debit network services markets in the United States with market shares of at least 60% and 65%, respectively, by payment volume. Mastercard is the second largest debit network in the United States and processes less than 25% of debit transactions in either relevant market. No other competitor has more than a single digit share of debit transactions in either market.

> Visa has monopoly power in the relevant debit markets because it has the power to control prices and exclude competition in each market.

Of course, the whole court case will be arguing whether Visa has the power to control prices and exclude competition. DOJ thinks they do, I'm guessing Visa thinks they're fine!

I think of it this way: does a business have an option not to do business with Visa? Realistically no. They have all the market power that a monopoly has.

> Also, if you factor in that cash is an option, and the significant inroads being made by options like Square and Venmo

The real competition is the NACHA's ACH system. Square and Venmo ride atop existing payment networks. The innovation is adding another level of ease of use over another layer of rent-seeking largely because Visa is slow to innovate and ACH is effectively a government product.

> Visa, Mastercard, and Discover's primary value they provide is fraud detection and prevention.

Most of this value is provided by the MSP and merchant banks, not by the card associations. ACH fraud protection is mostly reversable transactions.

> independent, fly-by-wire cut-rate providers is in the public's best interests long term

That is what we have today - tons of small MSPs and a few big ones. Square, for example, is a big one.

Don't both Square and Venmo still have to interface with the Visa / MC / Discover / Amex networks? And therefore pay some fees?

Whether 60% technically comprises a "monopoly" is a technical legal question that will be determined by the courts. Whether Visa carries an enormous amount of traffic and charges too much is an opinion, and it certainly feels like they do. Keep in mind that some percentage of fraud detection and prevention is determined by the vulnerability of the underlying technology used: fraud from card skimmers should not be a thing in 2024, yet it still is, and these payment networks are responsible for that.

Monopoly is about far far more than market share. That’s a bit of it, but you can be abusing a monopoly at far far less than 95%.

> Also, if you factor in that cash is an option

Lots of places stopped taking cash. In many places my only option is to pay with a card.

Square is part of that $7 billion VISA makes.

The only reason fraud is such a huge problem (and resolving it is such a 'benefit') is because credit cards are an obsolete, insecure model.

Cash is not necessarily an option. Did you know there is no federal requirement for a business to accept cash?

Come on. When you combine Visa and MasterCard, you have clear oligopoly and near-monopoly. And the situation is terrible for businesses, who are getting ripped off on every credit-card transaction with ever-escalating and variable percentages. A lady running a small diving shop told me that Capital One is the worst, jacking them for 4.5% or so. They are now out of business. Some businesses' entire profit margin is being wiped out by monopolistic middlemen.

A business can't be cash-only and survive today; so no, cash is NOT an option.

As for your assertion of fraud-prevention as a benefit, it's a joke. Credit-card issuers have, for some reason, ENABLED fraud in the USA. First they dragged their asses on issuing chip-based credit cards for what, a decade or more after the rest of the world had adopted them. And now that we finally have them, what did the issuers do? Defeat their purpose by neglecting to implement PINs. WTF. "Chip & PIN" is standard operating procedure across the industrialized world except in the USA.

You could drastically curtail fraud overnight by simply implementing the PIN requirement. But we've gone the other way, with a lot of retailers giving up on ANY attempt at validation.

There must be some tax benefit of fraud for the card issuers. Or they're clinging to the extra profits out of fraudulent transactions that are perpetrated but not caught. Regardless, there's no excuse for abetting it, or tolerating this consumer- and business-harming oligopoly.

Luckily for the government, the law doesn't say "monopoly" or require them to prove there is only one company operating. The law just says that anyone that has market power (which one might have with only a tiny percent of the whole market) can't do certain things. It's anti-trust law, not anti-monopoly law.

Yes, when taken in this context, the Monopoly argument makes sense:

> The DOJ said Visa imposed “exclusionary” agreements on partners and smothered upstart firms.

As with many things, it’s a duopoly with Mastercard that has another 30% of the market.

Luckily for the government, the law doesn't say "monopoly" or require them to prove there is only one company operating. The law just says that anyone that has market power (which one might have with only a tiny percent of the whole market) can't do certain things.

That works out to ~$22 per American per year. Not sure what Visa's operating costs for their network are, and I'm no big fan of them (or any other credit card company) but that's far cheaper than I would have expected given the convenience provided by almost never needing cash or checks. So as far as its impact on prices go, it doesn't sound like it's really a huge amount.

Part of the design of modern credit cards is that even authorized purchases can be reverted if the customer is not delivered the promised goods. My understanding is that crypto people think that is a design flaw, not a feature, but most folks disagree and that's what counts when trying to get most people to adopt your solution.

> This will eliminate most of the types of 'fraud' where thieves or scammers charge a card in an unauthorized way, because cryptocurrency does not require giving away credentials with that capability.

Please get back to us when the cryptocurrency ecosystem has a lower rate of fraud than the mainstream ecosystem. Until then it looks like you've just traded each episode of one kind of fraud for twenty episodes of another kind.

> If you want to add middlemen as companies built on the cryptocurrency, you can and for some things they might be useful.

Moxie's article on why centralization is inevitable resonated with me [0], and all the evidence I've seen suggests that crypto is just as vulnerable to it as anything else. The middlemen who are initially optional inevitably become a core part of the ecosystem that you can't get away from. See Gmail. The decision you get when building an ecosystem isn't whether there will be middlemen, it's whether to plan around them or not.

[0] https://moxie.org/2022/01/07/web3-first-impressions.html

Not having any middleman at all is a non-starter if buyer and seller don't know each other yet. (Note that any form of escrow service, even if "on-chain" or "trustless", is a middleman, whether overt or covert.)

Bootstrapping trust is a hard problem and arguably by definition requires some middlemen, some of the time.

I'm old enough to remember https://en.m.wikipedia.org/wiki/The_DAO