At least with card networks, there are layers of liability if solvency issues occur. There’s merchant protections from the acquiring bank and if for some reason the acquiring bank fails there is the guarantee of the card network.
On the issuing side there are chargebacks. I hate chargebacks as much as the next startup bro but consumer protections are a necessary aspect of a functioning payment rail. There are reasons we don’t use ACH for everything.
I think hand waving the pesky settlement details is absurd. The settlement process is the payment rail.
If you do want those protections you end up back with a custodial wallet, which brings us back to a centralized model.
I’m not arguing crypto doesn’t have its place in the universe, I am arguing it’s a very bad payments product.
Maybe we don’t need an alternative when Visa handles everything, but it might be nice to not pay a 3% markup on everything. Alternatively, we could try to be more like India and Brazil, which each built instant bank to bank transfer setups you can use at the grocery store, without the risks that come with losing debit/credit cards. Convenient without poor people with no rewards cards subsidizing everyone else to cover Visa’s take.
Well the reason that works is because in grocery stores you have a concept of card present so the liability shifts to the issuing bank... so there are no chargebacks. Concepts like card present and card not present demand a centralized authority and really can't exist in a decentralized payment rail, unless you're going to somehow invent decentralized pos hardware for merchants. Once you enter the world of atoms, you have re-introduced centralized trust into your payment rail though.
> Convenient without poor people with no rewards cards subsidizing everyone else to cover Visa’s take.
I fully agree. This is a crappy part of ccs and the best remedy is to disallow rewards programs for credit products. This isn't a fault of the card networks its a fault of issuing banks (and the airlines). Every crypto company in 2021 was offering 8% APY, you think those guys would have been better about this than Amex?
> Maybe we don’t need an alternative when Visa handles everything, but it might be nice to not pay a 3% markup on everything.
I'm actually not bothered by a take from the banks and networks involved. They are underwriting risk and affording insurances to me and the merchant. I guess my main argument is that it's good to have centralized insurance in money transfer facilitation. 3% is high and a failure of Dodd Frank. The Durbin Amendment should have reigned in cc fees and not just focused on debit interchange.
> Alternatively, we could try to be more like India and Brazil, which each built instant bank to bank transfer setups you can use at the grocery store, without the risks that come with losing debit/credit cards.
I don't disagree. As you pointed out it really comes down to the crappy reward programs from the issuing banks that make merchants and poor people suffer.
I don't mind crypto as an idea. I don't have a horse in the crypto race either. What I mind is the notion that it is somehow a viable payment rail. I'm sorry, it's been 20 years and crypto's best use case for payments has been buying acid on the internet because it was the only payment option.
I think one of the most interesting business stories in the world is about the guy who invented the Visa network, Dee Hock. It truly is a story of decentralization at its finest. John Coogan did a great video on him a couple of years ago I highly recommend: https://www.youtube.com/watch?v=RNbi2cUZt1o.
