[_nedR]

Ha. I am a 25-year old Indian founder of a startup in a semi-ramen phase. I have no credit-card - Its hard to get a credit card in India without a consistent income (and you need to show your previous year's tax receipts to prove it). No CC means no access to Amazon AWS or any of its international services. Indian debit cards are useless because the Reserve Bank of India has made it compulsory for all banks to use 3-D secure to authenticate debit card transactions online. So no Google Play, iTunes, Paypal, Steam, Alibaba or pretty much every other international website.

The losses from this would easily be in the tens of millions and possibly in the hundreds of millions. We are lucky (Our company account has a credit card) but this is the biggest roadblock facing every young hacker/freeelancer/startup founder, especially those starting at the college level- You can't even open a Google play developer account. On the other side, there are millions of Indians who are blocked at the last mile while trying to purchase apps, ebooks, music on the Play store or iTunes (Microsoft Store seems to work but i cannot confirm this) with no explanation given other than a cryptic "Transaction rejected by bank" . If you are an app developer wondering why so few purchases come from India - this is the biggest reason why.

It is quite baffling why the likes of Google or Apple can't get off their butts and implement 3d secure (which is becoming widespread everywhere but the U.S.). People are begging Google and Apple to take their money and being rudely turned away.

[kristofferR]

Thanks, that was a great example of how the current financial system is only beneficial for the most developed countries. The fact that you actually have it pretty easy compared to the majority of the world, despite the big problems with your situation, says a lot about how bad the current system is.

Credit/debit cards work in a fundamentally flawed way from a security perspective, you essentially give everyone your "money password" each time you pay for something and have to trust them to not abuse it. Because of that a large number of expensive middlemen, checks and barriers are needed inside the system to ensure that the trust is not abused.

One of the easiest and most obvious ways to prevent abuse of a system is to limit access to that system to only trusted actors. And one of the quickest ways of identifying trusted actors is unfortunately discrimination based on things like prosperity and nationality. That's one of the reasons why so many people are prevented from using bank cards, letting them access the system is considered too high of a risk. I guess that's why the Reserve Bank of India require 3-D Secure for debit cards - as a way to mitigate some risk of abuse.

The reason why so many stores don't implement 3-D Secure is actually pretty logical. The extra step in the order process 3-D Secure adds results in a decrease of completed transactions of up to 30%. The only reason why 3D Secure was created in the first place is because the system it was built on top of is so damn insecure.

Bitcoin will help solve this issue, since it removes the need for trust completely. When paying for something with Bitcoin you don't have that fear that the person/company you send money to will grab more money from your card than you allowed, and he/she/they doesn't have to fear that you won't pay.

Because of this Bitcoin may end up creating a much freer financial world open to anyone, no matter their nationality or prosperity.

[striking]

From the Wikipedia article: "One disadvantage for merchants is that they have to purchase MPI to connect to the Visa or MasterCard Directory Server. This is expensive (setup fee, monthly fee and per-transaction fee)" and "Supporting 3-D Secure is complicated and, at times, creates transaction failures. Perhaps the biggest disadvantage for merchants is that many users view the additional authentication step as a nuisance or obstacle, which results in a substantial increase in transaction abandonment and lost revenue."

[_nedR]

We are talking about Google and Apple here. They should be able to afford it. They don't have to enforce 3-D secure on everybody.. they only have to deploy it on Debit cards from India. Also they don't have to implement it themselves. Many smaller merchants use 3rd party payment gateways.

>>results in a substantial increase in transaction abandonment and lost revenue.

Right now 100% of all debit card transactions in India are abandoned due to lack of 3-D Secure. Almost all Indians who have a bank account have a debit card. A very small minority have acccess to Credit cards.

I think the biggest reason for merchants like Google and Apple to avoid 3-D secure is that they cannot pull money from your account without your permission. Each individual transaction has to be authenticated.