[hahaxdxd123]

The fact that Plaid even exists, and that their core business will probably continue to thrive for another decade makes me almost certain that the US will lose its stranglehold on innovation soon.

In the US, I have to pass through so many rent seekers to move some digits over (Plaid, Stripe, and Visa/MasterCard). Meanwhile Europe has PSD2 now and China AliPay/WeChat Pay. Even India, which in the past 3 months has unfortunately proven dysfunctional has UPI, which is orders of magnitude better than what we have.

When has the US recently passed legislation or standards that fosters innovation? (this is a serious good faith question - there seems to be a lot of govt grants for stuff like basic research, but a whiff of money churns out stuff like repealing net neutrality).

[FractalParadigm]

Hell even here in Canada we have the Interac system, which from what little I know of the US banking system, is consistently 10+ years ahead of the game. I've had "Chip & PIN" on my cards since at least 2008, and distinctly remember getting my first "tap" card in ~2011 or so. I genuinely couldn't tell you the last time I inserted my card into a machine because anything under $100 (>99% of my in-store purchases) can be tapped for, and >99% of businesses support tap (looking at you, Walmart and Pilot/Flying J. Get with the times!). From what I understand tap is still barely on the docket at a lot of the US banks.

The big kicker for me is Interac e-Transfers, where you simply log into your banking and can email (or text) money to anyone in the country - they click the link in the email/SMS they receive, log into their bank account, and choose where the money is deposited. We've had this system in place since at least 2014? Hell I pay my rent and buy weed just by sending e-transfers, they're treated the same as cash and happen instantly. I reminds me of something that happened recently, I stumbled into a conversation with some of my American friends trying to figure out how the one person was going to pay the other >1000 miles apart; it was absolute lunacy listening to them decide between PayPal, Cash App, Venmo, etc., trying to figure out who had the lowest fees for both parties, factoring in the time it takes for the transaction to happen and transferring to/from their bank account if necessary. It's insane to me how the banking system underlying the world's largest economy is so far behind the times.

[digianarchist]

I think you're painting a rosy picture of the Interac system.

It's not instant. Transfers can be delayed for hours in some cases.

It has ridiculously low limits that cannot be raised.

Until recently it had a cumbersome question and answer system with strange character limits for each.

Virtually no businesses use it. You can buy weed (illegally) using it because they can't use credit card processing.

A revamp to the Interac system is in the works which looks similar to the UK faster payments. A frankly much better system.

https://www.theglobeandmail.com/business/article-interac-cho...

[seryoiupfurds]

Interac E-Transfers are great, except that I wish they didn't train people to click a link from their email and type in their bank password. Sure, it redirects to a login page on your own bank's web site, but how does a non-technical user know it's not a phishing lookalike?

Really, the existing autodeposit feature would be perfect if it let you log in to your online banking and confirm pending transactions before autodepositing them. For that matter it would be nice if the email gave me a string I could paste into my online banking to get to the existing confirmation page.

It's all much better than having to link your bank account to some third party or give away your credentials though.

[lstamour]

I suggested to a big bank back in 2011 that they should have an iPhone app that sends a push notification to alert me to debit or point-of-sale transactions so I could approve them as they happened, and they only recently did so. But in their defense, security can be cumbersome and hardware-integrated tokens like Apple Pay are just as good and simpler to explain, assuming we can get rid of legacy plastic at some date in the future.

Similarly, we won't be able to get rid of email but if clicking a link in an email opened an app instead of a webpage, it would be a lot harder for phishing websites to pretend to be my bank. (Assuming I'm expecting a mobile app, of course. A second line of defense is that my password manager might not prompt me to fill in the password because the URL doesn't match. But even that's not foolproof.) Even better would be if Interac E-Transfer itself was an app I could sign up for, then it could send me a push notification and I could skip my inbox entirely for these sort of transactions.

Of course, the only reason I trust apps more than websites is that I went to download them previously, rather than clicking a link that just showed up in my inbox. To that end, Gmail and other email providers have immense power if they created a design which could highlight emails from senders I've seen before as "trusted" and those from unknown senders as unknown.

Things get more gray-area though when the system itself fails: You can request money from anyone using Interac E-Transfers, and that means spammers could hijack a bank account and request money from friends and relatives you've recently sent e-transfers to, for example. Those emails would then appear as "trusted" and there's not much you can do to stop that, it's the cost of making money transfer "easy".

[tialaramex]

Yeah, the technical security in all these systems is a bit half-hearted†. However, in my opinion the key is to legislate that the banks (who built or in some cases purchased said half-hearted system) eat the cost of that. Maybe they're comfortable with say $10Mpa of fraud in the system, if they really can't build a safer one for less than $10M you can see they'd have a point.

The problem comes when banks are able to argue that their half-hearted security means they aren't liable to pay for the consequences. Consumers need protecting against that.

† In the UK we have a lot of 3-D Secure, developed by Arcot. But of course the average consumer has no idea who "Arcot" are, and so no reason why they should distinguish an arcot.com site (legitimate, you're supposed to give them credentials if necessary to authenticate you) versus say badguy.example (a hypothetical phishing fraud). Both of them can show you branded imagery from your bank, both have a padlock, both claim they're keeping you safe. How should an ordinary person know?

[enchiridion]

I was under the impression that chip and pin is more common in the UK and Canada because fraud is more of an issue, so the cost benefit works out in favor of it.

Even now you never have to pin in the US.

[pjerem]

I think it's more common in europe because the first industrial producer of chip card was created in France (Gemplus, now Gemalto). In France, payment cards are "dual network" : any card is either Visa OR Mastercard AND also "CB". "CB" is a payment network managed by the "GIE Carte Bancaire" owned by all french banks.

CB dealt with Gemplus to add chip to all new cards emitted since 1992 so we had them for a long time. I don't know how it spread over europe, but as we had the industrial capacity to provide chip cards to everyone and a free market, I think it was easy to sell that to lots of european banks. CHIP+PIN is a really great deal for banks : it's cheap and the responsibility of all payments made with the PIN is on the card owner and are really hard (or impossible) to dispute.

[stefan_]

In the US, interchange fees are an order of magnitude more than in the EU, where they are capped. So there is a lot more fraud the system can silently swallow before anyone has to consider upsetting customers and vendors with PINs.

[nly]

I thought it was the US that was still considered a hot bed for card fraud.

I've been to stores in the US where they just swipe your magstrip and hand you back the card. No signature, no pin, they don't even look at it, so you can basically clone cards like it's still 1985.

This is consistent with how my UK bank treats any transaction occurring in the US: usually it's an instant card block and a polite phone call from them to check that it was actually me.

[enchiridion]

That just sounds like basic geo-fencing. I'm sure the opposite applies too.

Sounds like the other response about transaction fees is on the right track.

[zwirbl]

In the UK it's mostly likely because of EU regulations. I've never had anything but chip and pin in the EU, got my first card ~2006

[andyjohnson0]

Chip and PIN was rolled-out in the UK in late 2003

[refurb]

Interac e-transfer seem fraught with scams and fraud. There were a few Reddit threads on how to protect transfers from being intercepted.

[smnrchrds]

Walmart added tap during the pandemic, as people did not want to touch the console to enter their pin. It's a welcome change.

[seanhunter]

It boggles my mind how far behind the payments curve the US is. If you go to India or Indonesia you can pay guy cooking street food at the side of the road by scanning a QR code but in New York you still have people paying for sandwiches in Pret a Manger using a cheque.

[stuaxo]

Unbelievable, I can't remember why last saw a cheque in the UK.

[cactus2093]

Don’t believe everything you read online, especially when the parent commenter is clearly not even American based on their spelling. I live in the US and have only used a “check” a couple of times in the past 5 years.

And almost nobody would ever use one at a retail store or restaurant or food truck, if anything they’re only used for sending large sums of money to small businesses who want to avoid the 3% card processing fee. It’s still bad that this fee is so high on our primary payment rails, but it’s not as ridiculous as people in this thread are making it sound.

[seanhunter]

I didn't just read it online- this is based on my experience as a UK citizen who used to live and work in Manhattan a lot up to 2 years ago (think: not permanently but enough in any given year to have to pay Federal and NY state income tax). More than once I saw people do this to buy sandwiches in the financial district and near to Madison square park, and I've even see people pay for groceries by cheque and get cash back the way that that people used to before ATMs existed. I can dimly remember my parents doing this maybe 40 years ago but have certainly never done myself. I was also for some time the unhappy owner of an extremely small number of shares and the company insisted on sending me my dividend (less than $5) every quarter by cheque.

When I opened my US bank account they asked me how many cheques I wanted "to get started". I said none. Like why would I ever use one for anything? I don't use a quill pen either.

[afavour]

It is literally not believable. I live in New York and have absolutely never seen anyone pay for sandwiches by check. Maybe, maybe if they were paying for a catering order of 50 sandwiches. But even then they'd probably be using a corporate credit card.

[vidarh]

I got my first ever checkbook when I moved to the UK in 2000 and marveled at how quaint and old fashioned it seemed - in Norway my parents had them in the 1980s, but they'd been phased out by the time I got my first adult bank account in the 90s.

I still have a UK checkbook, but haven't written a cheque in a decade.

[TaylorAlexander]

I kind of feel like China has already passed us. The US defines "innovation" as patents but in reality innovation is so much more than that. The US feels like its slowly grinding to a halt, and when I see how China is growing, I think we're already behind. I have been shopping for machine tools, and the stuff in China isn't just cheap knock offs anymore. It's good enough for them to use in country to build bullet trains and passenger jets. Of course they do import machinery from elsewhere too, but I just get the sense that they are moving very fast. If they'd passed us on daily innovation, we wouldn't exactly know it. Its hard to quantify.

By the way I blame patents for this. Patents are a legal blockade on third party innovation. But that's how progress is made! Everyone copies everyone. You see something and you make a better version. Patents gum up the works and drive things to a standstill. They don't have this problem in China. Some people think investment won't happen without IP restrictions, but I think it will, just differently. There's no more unicorns and whales, but there's a lot more fish.

[ngc248]

More like implementation inertia, most other countries have leapfrogged from their primitive systems directly to the latest and greatest, while in the US they are still making do with decades old technology.

[latch]

At best, being able to build things that are built elsewhere would indicate parity. Further, for passenger jets, the C919 is far from being 100% domestically built (e.g., the engine comes from an american/french venture).

I'm hopeful we'll see all countries converge onto a similar pace of innovation and progress. Large countries/regions (as a simple proxy for population and access to raw resources) will hopefully reach this parity sooner than later. At that point, I also hope that 1 country/ideology will never be able to pull far ahead of another - short of some fluke breakthrough that can be kept secret.

[TaylorAlexander]

Well to be clear, I am responding specifically to the phrase "makes me almost certain that the US will lose its stranglehold on innovation soon."

Imagine two nations. A wealthy nation that used to innovate but has completely stopped innovation. It could continue to make advanced things using existing infrastructure and people, but could not improve beyond its current state. (This is the extreme, for illustration).

Then imagine a larger poorer nation that is rapidly advancing. Even before the poorer nation has surpassed the other in technological capabilities, it would be producing more total innovation per year. Growing requires lots of innovation. Stagnating... not so much.

So I am suggesting that the rate of innovation could be slowing in the US, and the rate of innovation could be higher in China. Even if absolute output is more advanced in the US, which would be a different metric. But the rate of innovation is important for projecting where each nation will be in the future, and I do believe intellectual property restrictions slow the rate of innovation.

[blueblisters]

I think the problem with forcing financial companies to develop interoperable systems is that the rules governing the standards are often set by the regulator who really don't have any skin in the game.

If you take UPI, for instance, it's a fairly robust standard that has been developed by a non-governmental body that has been ruined by the regulator insisting that banks charge 0 transaction fees even for individuals that do a large number of transactions. This is because the regulator believes even a small fee will hamper adoption. This results in a relatively high failure rate because banks refuse to invest in servers and technologies that can handle the huge volume of transactions.

I am happy that technological standards are largely untouched by the government.

[wmf]

Most of the time government standards are based on "advice" from industry so it ends up as regulatory capture. A case of forcing fees to zero sounds less bad than usual.

[cactus2093]

Payments in the US are more of a minor nuisance than a serious problem. And the rise of companies like stripe, Shopify, plaid, and PayPal before them seem to be doing a fine job filling the gaps. I’m sure eventually we’ll get better low level payment rails, but I don’t think it would actually affect the day to day life of the average American much if at all which is why it hasn’t happened yet.

If anything is going to kill the US it will be something like the collapse of fair elections or the huge ballooning healthcare and education costs, not the payment rails.

[hahaxdxd123]

I feel like this is just a more general trend of US legislators deadlocked so hard that it provides rent seekers the opportunity to step in and entrench themselves. I would argue that healthcare - which you mentioned - is another prime example of this.

If you think about it, the payments system is a 2+% sales tax! Levied by private corporations! I don't even have an alternative since by contract with Visa/MC stores can't provide a lower price for paying cash.

[ac29]

> I don't even have an alternative since by contract with Visa/MC stores can't provide a lower price for paying cash.

This hasnt been true for over a decade. Cash discounts are allowed by the Durbin amendment.

See: https://www.law.cornell.edu/uscode/text/15/1693o-2 (b)(2)(A)

[hahaxdxd123]

Ahh thanks for the correction. This seems like it's still pretty consumer unfriendly though - you still have to advertise the card price in store and then you can take a discount at the register, as opposed to advertising a cash price and then adding a card charge.

There are a lot of small businesses around me that are cash only under $10/15 dollars. Given human psychology around advertised prices (i.e. most people don't think about opportunity cost), I'm not surprised cash discounts aren't common.

[rmesters]

This is a problem that can only be solved by regulated open banking (i.e. regulator enforcing banks/FIs to build APIs following one standard). Until US has regulated open banking, users will be sharing bank credentials in plain text and providers will be screen-scraping bank accounts.

There's lots of good examples of regulated open banking. Europe has PDS2. Australia has Consumer Data Right Act. Several other countries that are now implementing open banking legislation: Brazil, Japan, Saudi Arabia, Mexico, Singapore, Hong Kong, India.

It would be great to see US on that list some day.

[RileyJames]

Australia’s open banking initiative is well captured by the big 4 banks. Good luck getting any access to it.

Having an act, and being able to use it any useful manner are two very different things.

[bradleybuda]

Operation Warp Speed

[tgsovlerkhgsel]

PSD2 seems like a total disaster to me.

From my understanding, banks are required to provide an API. Not a specific one - any API. Which means each bank has a different one and you need yet another rent seeker that aggregates those APIs.

That's on top of requiring specific, often outdated security mechanisms, so now every time I want to pay something with a credit card I have to do extra authentication, >1 GB of my phone's memory is filled just with bank auth apps (again, each bank has their own).

[lmm]

> you need yet another rent seeker that aggregates those APIs.

If anyone can implement such an aggregator, market competition should drive the cost of that close to zero soon enough.

[scrollaway]

And indeed it is. Nordigen's product for example is free; they make money on upselling an optional product on top.

https://nordigen.com/

[tgsovlerkhgsel]

Since the aggregator will process sensitive data, you need a lot of audits etc.

If you'd like to use the API to access your own account using open source software, good luck (unless you find an aggregator that is certified and allows you to access your own account through them).

[cookguyruffles]

> Not a specific one - any API

Defining this is a job for industry bodies and suchlike, as is keeping it current. Lest we forget jokes like the 2020 Brexit agreement containing references to Netscape Navigator 4.0

[tgsovlerkhgsel]

Having a rule that banks need to agree on one and then implement it would be fine. What is not fine is allowing each bank to come up with their own, especially as banks have no interest of making usage of their API easy.

[ngc248]

"Even India, which in the past 3 months has unfortunately proven dysfunctional"

what exactly does this mean? Other countries did not have a corona virus wave?

[lonesword]

Indian here.

> what exactly does this mean?

That our response to the current wave has been tragic.

> Other countries did not have a corona virus wave?

Yes they did. However, we had the opportunity to learn from the tragic things that happened elsewhere and could have done stuff to prevent it/soften the blow but we didn't. The problem is not that we "allowed" another wave to happen, but that we allowed people to die due to a lack of oxygen and ICU beds.

[ngc248]

When did we get unlimited resources, should we stop everything else and put everything into oxygen and beds. These kind of things can only be reacted to not prepare surplus before hand coz for a developing country like India resources are never enough.

[throwkeep]

Crypto innovation is mostly coming from the US, which is in the process of replacing the financial system.