[minimaxir]

Yesterday, 21.co made a blog post proposing a micropayments API: https://medium.com/@21/the-first-micropayments-marketplace-3...

The two key value propositions noted in the post are:

> Buy APIs instantly without signup or credit card

> Sell APIs instantly without a bank account

...which are solutions looking for a problem. If you are working with legal businesses and dealing with signup, credit cards, or bank accounts are deal breakers, then there are other significant problems with your business model.

[kuschku]

Take for example most Germans.

We don’t have credit cards. At all. We use EC (the E in EMV), which is a completely independent payment system, but isn’t used at all outside of Europe.

So, no US websites accept it.

I’ve been trying for 3 years to find an actually free way to send Google money to get a Google Play Dev account, but the only way is to pay money to get a credit card.

Seriously, if companies in the US would just accept a fucking international wire transfer – globally standardized, free to send and accept, processes in a few minutes – I could use a lot more international services.

But the way it is, I can’t.

[maaku]

You need to pay money to get a credit card?

As for wire transfers, they are most definitely not free to send or receive in the US. Fees are on the order of $25 each way depending on the bank, and actual humans and faxed forms are involved.

[halviti]

I don't know how it is in Germany, but in my country you pay for credit cards, and the amount you pay for the card determines how much insurance you have, as most all provide some type of travellers/medical/theft/etc. type of insurance.

Everyone pays their credit cards off every month because it's the law. If you are unable to pay, you can work out arrangements with the bank. If you need to use lots of money you don't have, you ask the bank for a loan and pay it back gradually.

It's my understanding that in the US, card companies make their money off fees and interest, which to me sounds like a much less appealing system designed to take advantage of the consumer.

[throwaway160303]

I suspect the fees+interest thing is mostly a cover story. As unflattering as it seems, I'd be unsurprised to learn that the three pages of fine print are a calculated display, to make it seem as though they're merely not-entirely-oriented-to-the-public-good but otherwise aboveboard private corporations. And it's not as if they don't get some income from putting the screws to those short on cash, but if that were the extent of it then I should never get a credit card offer, ever. My only credit history is on-time rent payments, and my employment history + no dependents + no college loans should make it obvious that I would never generate any income from late-payment fees or interest. And yet, I've received offers throughout my adult life.

But even if they never saw a penny of income directly from me, what they would still get out of it would be the data. And insight into the purchase habits of consumers with plenty of expendable income - the same people that would otherwise be a losing proposition for a business that actually relied on failure to pay on time to stay afloat - seems like it'd be far more valuable than the entirety of what they'd be able to squeeze out of the already-cash-strapped.

I'm actually highly impressed at the extent to which they're completely successful in focusing the public discussion on their "outrageous" and exploitative policies. They put on a thoroughly convincing show of fighting tooth-and-nail against regulations to reign in that behavior. But I think it's because, if it ever got seriously done, people would start asking how it was they were still in business - and they would definitely still be in business. But the finance operation is just how they collect the raw material for their actual product.

[eyeJam]

I think you have an interesting argument here but I would like to raise some points as counter-arguments:

1. Your argument is premised on the fact that since you personally have been offered a credit card, and you personally have almost no credit history, that therefore credit card companies don't make money from charging interest on late-payments. That's an absurd premise.

2. I believe, based only on my subjective observations, that you are the exception in your use of credit. Many people are irresponsible in how they use credit cards and end up paying exorbitant interest to credit card companies. Mostly lower-middle class individuals who are trying to live beyond their means. In Canada the average citizen carries ~20 000$ of personal debt (excluding mortgages) and the majority of that is credit card debt.

3. I think you're ignoring the "brand" value of having market saturation for your product. For example, Coke vs Pepsi. Yes they are not exactly the same product but they're very similar and there's no doubt that Coke has reaped a huge benefit from having dominant market share. When you go to a diner and order a burger, and they ask you what you want to drink, if you want a cola you say "I'll have a Coke please". Its understood by that request that you want a cola, and would likely be okay with either a Coke or a Pepsi, but regardless you said Coke, and there's the value of market saturation. So yes the credit card companies want to get as many customers as possible to use their product in an attempt to saturate the market.

4. Credit card companies also charge merchants for using credit cards so even if the customers paid all their bills on time the credit card companies would still be making money. I don't imagine they make the majority of their money from charging merchants but it is still revenue they want in their coffers.

5. Your final point borders on a conspiracy theory.

[maaku]

Perhaps. But it means that in the US banks pay you to setup credit cards. Rewards credit cards can have sign up bonuses valued in the hundreds of dollars. They also have annual fees though, but anyone without terrible credit can get a no fee card with a smaller bonus. Most credit cards pay yoy to use, in the form of cashback bonus or rewards. Insurance is provided without fee and to some extent by law.

Wire transfers are absolutely unheard of at the consumer level outside of things like escrow for a house.

[yardie]

This is why I prefer to work with international banks, even in the US. If they don't know what an IBAN is I don't bother. HSBC is pretty good in this regard. Minus the money laundering.

[justincormack]

I can make them online, but they are still stupidly expensive

[mappu]

In New Zealand we also have our own card payment network (EFTPOS). It has the same problem of being unable to make online purchases, where websites only expect Visa/Mastercard.

Luckily all eftpos POS terminals have a quite strict protocol upgrade regimen, and in the last ~5 years or so, it's becoming more common to request a Visa/Mastercard debit card (for a low but non-zero price) instead of an eftpos card (free with a bank account).

[jkyle]

Honest question. Why not get a credit card? They don't cost anything and would open up a new market for you.

[bildung]

Because they are usually aren't free in Europe. And it doesn't feel like a new market opening, it usually is just that single shop once every year.

And additional ancedata because I don't know whether that's a US <> Europe thing: Personally, the idea of going into dept for private consumption is completely foreign to me and most people I know, so the idea of a credit card is very unappealing.

Wire transfers OTOH are simple, practically free and fast enough (<1 day inside the country, ~1 day inside of Europe).

[jkyle]

> Personally, the idea of going into dept for private consumption is completely foreign to me and most people I know, so the idea of a credit card is very unappealing.

Though I know many don't follow this rule, I never purchase anything on a credit card I don't have cash for. It's purely for the convenience factor (and the 1-3% discount on all purchases).

I wouldn't pay for one though.

[tommorris]

Here in the UK, one advantage to using a credit card (even if you don't need credit) or a charge card is that the Consumer Credit Act 1974 gives you a whole bunch of extra consumer protections that you wouldn't get if you paid cash or debit card.

The main reason I got a credit card initially was because when I visited the US, nobody understood what a Maestro card was.

[mrsuprawsm]

In the UK, credit cards (and bank accounts) are free to open.

In the Netherlands, both bank accounts and credit cards require a monthly fee (€5 / quarter for a bank account, €17,50 / year for a credit card).

I have accounts in both countries and I rarely need to fall back on my VISA card. Indeed, online payments here use an NL specific payment system called iDEAL, which makes use of your bank's online banking - it's far faster than entering 16 digit CC numbers and can integrate with your bank's app on mobile.

[ersii]

Most, if not all credit cards in Sweden cost at least an annual fee of 225 SEK.

There are a few (very few) that does not have an annual fee though.

You don't pay annual fees for your credit cards?

[greenyoda]

In the U.S., it's easy to get a credit card that has no fees. (There are some cards, like the ones associated with airline frequent flyer points, that still have annual fees.)

In fact, some credit cards will pay you a rebate on your purchases. One card I have gives me back 1% of everything I spend (the credit card company charges the merchant 2-3%, so they still come out ahead). Since I pay off my balance every month and thus pay no interest, using my credit card actually saves me money over paying in cash.

[bdcravens]

"easy" in the sense that you need an adequate FICO score. (as your credit habits obviously have rewarded you with, kudos)

[MichaelGG]

US cards don't seem to have fees except "premium" ones that toss in a concierge service. Banks seem willing to give them to anyone that opens an account. Only fees I've known people to pay were for Amex ($99 to $5000 a year.)

Plus US banks give out VISA debit cards, making it a non-issue (well, security/chargebacks might be). Dunno about EU, but in Canada, this doesn't seem easy. I opened a business account, then asked for a VISA debit card and both the service person and manager appeared to be confused as to what that'd be. They insisted I could pay things using Interac (Canadian card network), with no concept this wouldn't work for online use. They kept thinking I wanted a credit card. Bizarre.

Maybe there's some huge cost to making MasterCard or VISA connected debit cards?

[__david__]

I haven't seen an annual fee on a credit card in the US for years. Also, every debit card I've had for the past 20 years acts as if it were a credit card. So any place that takes a credit card can get paid directly from my bank account without dealing with real "credit" at all.

[greenyoda]

"Also, every debit card I've had for the past 20 years acts as if it were a credit card."

Except that debit cards in the U.S. are not covered by the same consumer protection laws as credit cards[1], so it's harder to do stuff like disputing charges. It's also possible for an erroneous charge on a debit card to wipe out your bank account. For that reason, I specifically ask my bank to give me a card that does not work as a debit card, only as an ATM card.

[1] E.g., the 'Fair Credit Billing Act', a federal law that protects credit card transactions, doesn't apply.

[__david__]

I meant that it acts as if it were a credit card from the payment processing point of view.

I address the same problem by having multiple bank accounts that have small balances and auto-depositing my monthly budget for different things into them. If any one gets compromised (and the bank is unwilling to fix it), it doesn't take out my whole bank account. Plus it provides a nice "money into envelopes" style of budgeting that's very easy to understand.

If your card only works at the ATM, then how do you buy expensive things (something that costs more than the daily ATM withdrawal limit)?

[the_mitsuhiko]

> Except that debit cards in the U.S. are not covered by the same consumer protection laws as credit cards

Neither is bitcoin, so pretty sure that's irrelevant for this discussion.

[dlp211]

There are a ton of cards that have fees, mostly American Express, but Chase and others too. The fees usually unlock certain benefits, eg: Amex Blue Everday will pay 3% cash back at grocery stores, or for $75/yr, they will pay 6% cash back. The Amex Gold Premier is $190/yr but offer $100/yr back in baggage fees and constantly run $25-100 off deals at Enterprise, Newegg, general travel expenses.

So whether these cards are worth it depends a lot on how you use your card, but, they can pay for themselves very easily.

[jkyle]

> You don't pay annual fees for your credit cards?

Nope. Actually, they pay me at a rate of 1-5% cash back on all purchases made on the card.

[kuschku]

Pay 60€ a year for the amazon prime credit card, which amazon already subsidizes?

Or pay more like 200€ a year for one with better protections for your money, which I’d get for free with EC?

[JakobJeremias]

You can always get a free credit card if you want. I got one for my Apple Developer Account. Many german banks provide a credit card bundled with the bank account and there are also free prepaid credit cards.

[kuschku]

Nope, I checked.

All of those require you to have taken at least one loan or credit in your life, or to have an income.

I’m a student, and I was raised to never ever go into debt – I never had a single cent of debt to any institution, the maximum I ever had to a single person were cent volumes.

I tried, seriously.

Even the "free" prepaid cards cost money (usually several euro) to recharge.

[JakobJeremias]

I use the Number26 Master Card and it is completly free.

[kuschku]

Nope.

> Aufladungen sind der Höhe nach nur innerhalb der vereinbarten Grenzen zulässig. Für die Aufladung der Karte wird ein Ladeentgelt gemäß Preisverzeichnis verrechnet.

https://www.wirecardbank.de/fileadmin/user_upload/wirecardba...

> Monatlicher Freibetrag: 100€ Danach: 1,5% auf Mehrbetrag

As far as I can see, that’s the only limit.

But, also, if you do not have money on the card, your contract is automatically cancelled, and they’ll refuse to reopen one with you.

> Das Kreditinstitut kann die erforderliche Zustimmung versagen, wobei insbesondere die Nichtzahlung des Aufladungsbetrages gem. Ziffer 5 ein Versagungsgrund ist.

https://www.wirecardbank.de/fileadmin/user_upload/wirecardba...

But indeed, it’s a very ideal card, for a German bank. I’ll bookmark it.

[JakobJeremias]

Der Freibetrag gilt nur bei Bareinzahlungen an z.B. einer Supermarktkasse, wenn das Geld von einem anderen Konto überwiesen wird fallen keine Gebühren an. Siehe auch hier: https://number26.de/wp-content/uploads/2015/01/number26-prei...

[wodenokoto]

How do you wire money internationally for free? Last time I wired money to a bank account outside of Europe I paid ~10€ for just a single transfer

[kuschku]

Well, I know that I can transfer within Europe and to some asian banks for free.

[CyberDildonics]

Unless

- you run a low margin business and don't want 3% of everything you make to go to Visa

- or you don't want to eat the cost of credit card fraud

- or you live in a country that makes business banking more difficult

- or you can't have the possibility of fraud or charge backs (like selling precious metals, higher end jewelry etc)

- or you don't want to be gouged by credit card processors for a legal business like porn or marijuana...

[bdcravens]

Pretty sure none of these apply to Microsoft, which are the kinds of companies the Bitcoin community gets excited about when they adopt.

[bunderbunder]

Eef, I hadn't seen that yet. That's really quite a thing.

I'm pretty sure that for most legitimate businesses, signup is something they want and wish everyone could do. It helps them track and maintain customer relationships, which is becoming an increasingly essential activity in the age of loyalty cards.

A bank account is similarly desirable. It takes a large part of the task of safeguarding your funds out of the hands of an amateur (i.e., oneself) and into the hands of a specialist with strong fiduciary responsibilities.

[SixSigma]

I don't need a bank account to buy bread

[meddlepal]

Yes you do. Where is your employer putting the money they pay you or are you paid in cash and just stuffing it into your mattress?

[__david__]

A large percent of Americans get paid via check and then use a check cashing store to convert to cash, and then use that to pay for bread. You do not need a bank account in that scenario.

[mrsuprawsm]

This is a pretty bizarre and unique situation amongst Western nations.

[1123581321]

It's actually not. The US and the UK have the same percentage of adults using financial services (91%.) France, Germany, Spain, Luxembourg, etc. have a higher percentage; others have lower such as Norway and Portugal (and Switzerland!.) The average for the US and Europe is 92%. http://mckinseyonsociety.com/downloads/reports/Economic-Deve...

[mrsuprawsm]

In the UK we're phasing out cheques within 2 years. They're incredibly uncommon and used by pretty much nobody.

The majority of, if not all, government benefits are paid directly to a bank account.

It is essentially impossible to live as a functioning adult without a bank account in 2016 in the UK.

[caminante]

Not sure where you live, but how easy is it to cash checks at banks with whom you don't have an account? Apparently, check cashing outlets (CCO) handle substantial volume in the US and business is booming:

  "Cashing a paycheck at a [check cashing outlet] gives customers access to their
  money the same day. [Alternatively,] Banks limit access to $200 or so and can 
  hold the money for up to five days. Further, low-income and low-balance customers
  get frustrated with a bank’s fees eating away at what little is in their 
  accounts or sending their balances more into the red with low-balance and/or 
  overdraft fees" [1]

[1]http://dollarsandsense.org/archives/2015/0115barr-figart.htm...

[mrsuprawsm]

I'm originally from the UK, and the idea of using a cheque for anything at all is hilariously outdated.

I've never written a cheque in my life. We're phasing them out by 2018, apparently. http://news.bbc.co.uk/2/hi/business/8414341.stm

I think I've only ever received cheques twice, both times were gifts at birthdays from grandparents (80+ years old).

[ghaff]

About 8% of US households don't have a bank account. [1] The number seems to be slightly lower in the UK. I believe in some Western European countries it's required to receive government payments so the unbaked rate is lower in those cases.

But the US isn't especially unique.

[1] https://www.fdic.gov/householdsurvey/