[ajkjk]

Maybe it's just me, but, I think it's so fucking stupid that it costs money (which goes to private businesses) to spend money in the modern world.

(and no, bitcoin doesn't fix that at all)

I think if we were in an alternate universe where the government managed a free utility for digital payments no one would find it strange for a second.

[spookthesunset]

It has always costed money to to spend money and there are pros and cons to each method. All that stuff isn't free even if it isn't directly measurable most of the time.

Cash costs money too--you have to count it, handle it, deposit it, protect it from theft, verify it's authenticity, make sure you have enough change, spend time counting change, etc. As a consumer, if a merchant fucks you over you have little recourse besides suing. Cash takes no time to clear so you can spend it right after getting it, it is anonymous, it is hard to trace so you can skip on taxes, etc.

Checks can bounce, you have to deposit them, they take time to clear, they take forever to write, they can be fake, etc. However, it is hard for your cashiers to skim off the top, it uses exact amounts so no change to keep, it is a single slip of paper to carry around instead of a pocket of paper currency, as a consumer you can stop payment on a check if the merchant fucks you over, etc...

Credit cards are super quick to use at the register. They don't require any change (unless handing cash back). As a consumer, if a merchant fucks you over you can issue a chargeback. It is easy to track your spending as a consumer because all transactions are recorded electronically. As a merchant you don't have to handle change or cash, your cashiers can't easily skim off the top, etc...

It's all trade offs and I'll bet if you did an NPV on all the different methods taking into consideration all their pros and cons, they'd all wind up "costing" similar amounts.

[FireBeyond]

And in the meantime, banks are making money on investing, lending out funds deposited. And not doing too badly: http://money.cnn.com/2017/03/03/investing/bank-profits-recor...

Major US banks made $171B _profit_ last year. Lets not pretend that they're already bending over backwards to lower costs on transaction processing.

[spookthesunset]

> Lets not pretend that they're already bending over backwards to lower costs on transaction processing.

It's a free market and you as a merchant are free to pick your vendor. In addition, you don't even have to accept credit cards if you want--you can just take cash or check, or even just cash. Of course people entering your store might not buy anything from you because who the hell carries around cash or checks anymore, but no jackbooted thugs will force you at gunpoint to accept credit cards.

The credit card industry is a huge, highly competitive industry with little barriers to entry. Massive market forces are at work squeezing the margins for transaction processing fees to as little as possible.

My bet is that transaction fees are priced at what they are because:

- its cheaper than handling cash or checks

- it results in more revenue, even with the "cash back" discount given to CC users.

- it is more traceable and easier for your bookkeepers to manage

And to be honest, I believe many small business who take cash only do so because they aren't reporting all their income. When it is off the books cash-only, you can pocket the sales tax, underreport income tax, pay your vendors cash under the table, etc. I also believe that if their margins are so thin they can't afford a 2% transaction fee they probably have no business staying in business anyway. Whatever they are doing is more likely than not a value-destroying NPV-negative project to begin with. (see also: just about every business shown on those "save my bar / save my restaurant / save my hotel" TV shows)

[jimmaswell]

>Credit cards are super quick to use at the register.

At least they used to be. Chips ruined that. Now I have to stand there staring at the screen for half a minute waiting to respond to prompts and to pull the card out at the end. For most transactions, cash is probably faster than using a chip.

[maroonblazer]

This used to be the case for me until very recently. I've noticed that the two grocery stores I frequent most are suddenly significantly faster. Like almost instant (less than 2 secs). This is in Seattle. So, it'll probably be that way everywhere eventually.

[Natanael_L]

In Sweden, in most stores, you insert the chip and enter the PIN just after the transaction starts, and then once everything is scanned you just confirm the total price (which is very quick).

[LeonidasXIV]

In Denmark you just use NFC/Contactless. Hardly anyone ever types in PIN numbers and it is also very quick.

When I was visiting Sweden the terminals did not support NFC or I was just doing something wrong.

[Natanael_L]

NFC support is getting more common in Sweden now. Retail stores has been slow with it until now, though.

[russjr08]

This is why I’m a big fan of NFC payments when available. I find it to be pretty much instant, instead of having to wait what feels like 30 seconds for the chip transaction to process.

Though I’m in the US. I hear chip transactions are way faster in other countries where they’ve been using that system for a while.

[jarrettch]

It's even worse when your chip starts to fail, as one of my has started to do very recently. You have to put the card in three times(and wait for it to fail 3 times) before you're allowed to use the swipe function. Took longer than cash.

[jimmaswell]

Recently I tried the chip and it failed, then I tried the swipe and it said to use the chip, then I used the chip and it said I had to use the swipe, and finally the swipe worked. First time I ever had a chip fail, and it's a pretty much brand new card, so it was most likely the machine's fault.

[jjuhl]

I don't see the problem. If waiting a little is such a big deal then you are in too much of a hurry already and/or too stressed out. Relax. Take it easy.

[bbarn]

Where are you, out of curiousity? I find most of the chips are no slower than using a swipe card was before.

[Miredly]

I lived in Spain for a year, and everyone had chips there. My US card always drew eyerolls as they had to find the /old/ machine and dust it off and find someone who remembered how to use it. I was excited that we were getting chips here in the US, but of course they fucked it up and for whatever reason it takes ages for your chip to be read, and there are frequent chip read errors.

[chipotle_coyote]

In the US, it depends entirely on the point-of-sale system. Some are just as fast; some are a lot slower. My guess is that the slow ones are using the same old CPUs that the previous "stripe-only" ones did, which just aren't powerful enough to handle the added cryptography requirements in a reasonable amount of time.

[labster]

Chip cards work super-slow in the US. I often pay in cash because it's so much faster. I take the same chip card to the Netherlands and it works in a few seconds.

[btilly]

I have the same experience in Orange County.

Everyone hates the chip.

[jimmaswell]

The US

[Oletros]

I have been used cards with chips for years and now contactless payments and they are a lot quicker than swipping the card. In less than 5 seconds is done

At least in Spain

[aidenn0]

I assume spain is chip and pin?

In the US it's chip and signature, and you can't sign until after the chip verification (either signing a paper receipt, or with a stylus on the terminal screen).

In addition chips are new and some terminals are painfully slow (30 seconds) to verify. I'm not sure I've ever seen one finish in under 5 seconds, though a few merchants have terminals that come close to that.

[WorldMaker]

The sad fact is the terminals are painfully slow because US banks don't think US customers want or are capable of using PINs.

When you use a PIN you get a nice two factor signature from the card chip: it signs the current timestamp and the PIN you knew, and can do both as quickly as chip's processing capability and the bandwidth between the chip and terminal allows.

US banks came up with a dumb compromise just like most of their websites use Wish-It-Were-Two-Factor auth and secondary "Security Question" passwords, the chip cards in the US are doing their own Wish-It-Were-Two-Factor: sign a timestamp, wait some amount of wall clock time, sign a different timestamp.

Most of the wait in a chip purchase in the US is artificial just to make sure that two timestamps are "sufficiently" different. US banks should just give people PINs and stop this silliness.

[vonmoltke]

> The sad fact is the terminals are painfully slow because US banks don't think US customers want or are capable of using PINs.

Is this conjecture, or do you have actual citations to back this up? Those same banks have been issuing debit cards with PINs for a couple decades.

[kmonsen]

Why can't you though? I feel that is an implementation detail that is leaking out. The machine can do two things at once and only use the signature if the transaction is successful.

[Oletros]

Yes, chip and pin, and for amounts smaller than 20 euro you don't even have to put the pin if you configure the card

[bobalob_wtf]

Chip & signature sounds awful (and pointless!) Why would they not use PIN?

We now have contactless payments for under £30 in the UK, similar to Apple pay but you just place your card on the reader.

[xfkechyk]

that's because of shitty software. chip should get faster: https://paymentweek.com/2017-5-2-wait-no-more-quick-chip-tec...

[nojvek]

Yeah but a >1% fee is ridiculous. We all know visa, Mastercard, PayPal are drowning in cash.

I had high hopes for bitcoin like currency having a flat fee in cents and an optional percentage few for insurance if you do want a charge back and other nice credit card like features.

But bitcoin is riddled with its own charge mania nowadays.

[musage]

> Cash costs money too--you have to count it, handle it, deposit it, protect it from theft, verify it's authenticity, make sure you have enough change, spend time counting change, etc.

Holy God. I might as well say it's all equally free, since when the heat death of the universe is done with, there will be no difference between something having existed or taken place or not.

[Retric]

With the new chip system I swapped to cash for many transactions because it's faster.

[aquadrop]

I use contactless chipped card everywhere and it literally takes less than a second for most payments.

[Retric]

I am not going to use such an insecure payment method.

[aquadrop]

What's insecure about it? Heard of a lot of cases where money were stolen from people banks accounts/cards using scamming, viruses etc (and witnessed one right when it was happening), never heard of problems because of card being contactless. It also lets you not to flash your pin in front of the whole store for many of the payments. I think on the convenience/security scale it's very high.

[Retric]

They limit it to low value transactions specifically because it's not as secure. Feel free to dig into it if you don't trust the industry's assessment.

[overcast]

Apple Pay takes all of about two seconds. No way you are paying with cash faster.

[Retric]

Paying for lunch is pull out cash and go vs. handing card to waiter waiting on them then signing and go.

In that case cash can save ~5 minutes.

[upvotinglurker]

That was true before the introduction of chip cards, though. The waiter's having to carry the card to the staff area of the restaurant, complete the transaction (by swiping), then return the card to you, probably interweaving some of their other duties along the way, took up most of the time. Their having to wait an extra few seconds for the chip reader seems a drop in the bucket.

[Retric]

I noticed this process has gotten noticeably longer after chip cards where required.

Waiters used to take cars and swipe them ASAP presumably to get better tips by being prompt. Now, put this off until they finish a full round and/or put cards in and start doing something else because it's going to take a while.

Granted, this is far from a complete switch, but it was still noticeable.

[overcast]

You don't have to hand anything over with near field stuff. You put it near it, ding, done. Saving you 5 minutes + time it takes for you to exchange cash. If you're dealing with a waiter for lunch, you're already wasting a ton of time.

[Retric]

The trade off on what food I eat is not a waste. Wasting time on slow payment methods when better options exist is.

Near field is also limited by transaction size so it's far from sipe for anything.

[morsch]

I don't think it's stupid that it costs money, but I am surprised fees are still as high as they are. I suspect it's got something to do with how opaque the processing fee is for the customer.

If I understand it right, merchants often aren't allowed to pass on the fees or (much the same thing) give discounts if you chose a cheaper payment option. No wonder there's little competition on the fees, and Visa[1], Mastercard[2] and PayPal[3] are all having record profits.

[1] https://www.cnbc.com/2017/10/25/visa-quarterly-profit-rises-...

[2] https://www.reuters.com/article/us-mastercard-results/master...

[3] https://www.reuters.com/article/us-paypal-hldg-results/paypa...

[jarrettch]

Merchants absolutely can pass on the fees or give "discounts" for cash, at least in the USA. Gas stations are one of the major businesses that practice this.

Anecdotally, I worked at a company store years ago where we would charge customers paying with cards a 2.75% fee, which is what we were paying. And that store was operated by a Fortune 500 company.

Also, virtually every small private business I go to in Los Angeles charges some fee, or has stipulations, for credit card transactions.

[wpietri]

This wasn't originally the case. Passing on the fee was for a long time against most merchant agreements. Which makes sense from the credit card company's point of view: they don't want shoppers to have any reason not to whip out the card.

The big change came in January 2013 after a big court judgment. Adding fees, though, is still illegal in some states: https://www.creditcards.com/credit-card-news/business-surcha...

[jarrettch]

Thanks for that link.

Made me wonder about the stores/restaurants I frequent here that do charge, apparently they're still ok to do so after 2015(link from the comments in your linked post): https://oag.ca.gov/consumers/general/credit-card-surcharges

[mcguire]

Where? I haven't seen any in years, at least in the southeast.

There are more stores not accepting credit cards than charging extra.

[jarrettch]

Maybe I should've mentioned "Los Angeles" higher in my comment, but looking at the sibling comment to yours, apparently there are plenty other states where it is legal to pass on the fees as a surcharge as well. Obviously your situation may vary.

[BillinghamJ]

In London, there's quite a large number of merchants who have now stopped accepting cash - requiring cards/NFC only.

[revelation]

PayPal fees are high because 1) people pay it and 2) fraud.

Credit card "processing fees" however are high because of the stupid rewards programs that Americans are so addicted to because it makes them feel like they are "sticking it to the man" and getting money back, to the point of having dozens of plastic cards in their wallet. Of course with processing fees at >1% of gross value no cashback or airline miles program is ever going to make you come out ahead.

In the EU there are no silly rewards games and fixed processing fees of at most 0.3%.

[kalleboo]

In places like the EU and Australia, credit/debit card interchange fees are capped very low (like 0.3% low).

[syshum]

I would, I in no way want to give that kind of power to government.

I would 100% opposes to a government run digital payment system, the government is too closing integrated to todays electronic systems as it is, I in no way want them to own and directly control it

[wahern]

If you receive your paycheck electronically, the transfer likely occurs over the ACH system, the primary operator of which is the Federal Reserve. The Fed also runs FedWire. The Federal Reserve has actually been at the forefront of electronic payment and settlement systems since their advent.

Though, the Federal Reserve is quasi-public/quasi-private. But for any systemically important transactional system you can be sure that the government is plugged in one way or another. The Clearing House company is the main alternative to the Federal Reserve electronic systems for interbank transfers (they're the "private" ACH operator), and they're heavily regulated, with the Federal Reserve given substantial oversight authorities.

[syshum]

Ok, And.

Just because the current system sucks and needs to be replace, does not mean that replacement should be another Government Run System.

As I stated in my original comment the government is too closly integrated to today's electronic systems as it is

I want the government out, not more ingrained

[nojvek]

I'm still optimistic that we'll have a digital currency solving this problem well in the future. Distributed, auditable, scalable, international transactions at ridiculously low fees.

[otterley]

It costs money because there are significant fixed and incremental costs to handle it: Fixed because of the labor and value of the technology, and incremental because of fraud. Much of the incremental cost is fraud insurance.

[kalleboo]

There are many ways banks could reduce the fraud, but US banks don't need to since nobody is protesting the fees. In Europe however, where interchange fees are regulated to low levels, they have been quick to adopt/mandate features like chip-and-PIN and 3DSecure that lower fraud.

[FireBeyond]

And yet somehow US banks manage to struggle by not even making it to $200B/year profit, having to survive on $170B or so...

[vonmoltke]

Can you name an American consumer financing company that even breaks $100B in revenue?

[kalleboo]

Some places have systems you'd like. For instance Denmark has the "dankort" debit payment network where small merchants only play a flat annual fee and no per-transaction costs whatsoever.

[AdmiralAsshat]

They couldn't even do it with physical mail. You're paying the government every time you send a letter for the cost of that postage stamp. And the postal service in the US is pretty much constantly under-funded.

What makes you think we could do it digitally?

[drewbug]

Like Europe, right?

[mdemare]

Payment costs in the Netherlands (ABNAMRO bank, english): https://www.abnamro.nl/nl/images/Content/022_Zakelijk_nieuwe...

Note that nearly all fees are flat fees.

[betenoire]

You pay to have some handle the transaction details for you. It's a service. You are free to mail dollar bills, though you'll use a service you need to pay for there, too.

[cameldrv]

They do... It's called ACH.

[nojvek]

The only reliable way to do large transactions internationally without percentage based fees are wire transfers.

Even they have a $15 fee and sometimes a $15 receiving fee as well.

Ideally you'd have zero fees for transactions under $5. $5-$X0000 would have a percentage based fee and thereafter a flat fee for large transactions.

[PeterisP]

USA wire transfers have so high fees because banks don't want to offer such payment methods, so they charge extreme markup (their cost is less than 1$, so 15$ is 1400% markup) on that.

In general, real time payments for large amounts can be made for <1$ (both fedwire system for its participants and various EUR systems do that), and consumer payments that can be (a) batched and sent in bulk and (b) get delivered e.g. at the end of day, not in real time, those have a cost of ~$0.01 (perhaps 0.02 in case of small volumes) to the bank.

So, in EU, everyone has access to something that's pretty much equivalent to USA "wire transfer", and it might cost e.g. some 40 cents or can be offered to consumers either "for free" as part of a common services bundle/maintenance fee.

[nojvek]

EU blows my mind at so many levels. Many countries with different cultures and languages working together for common good of citizens.

I have really hopes for the Euro

[thedirt0115]

Then people would game the system. If someone wanted to send $100, they'd send 20 payments of $4.99 and 1 payment of $0.20... at least I would :)