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The Almighty Buck News

Visa To Offer Person-To-Person Payments 187

Posted by Soulskill
from the time-for-paypal-to-invest-in-some-accountability dept.
angry tapir writes "Visa has announced it is planning a new service that will let US customers send money directly to one another, presenting new competition to PayPal. Visa already lets people send money to Visa accounts in many other countries, but this will be the first time it will offer the service in the US."
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Visa To Offer Person-To-Person Payments

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  • Credit card fees (Score:5, Insightful)

    by Compaqt (1758360) on Friday March 18, 2011 @11:48AM (#35530834) Homepage

    You'd think with the enormous increase in processing power [wikipedia.org] experienced over the past 4 decades, the amount of money required for operating the credit card networks would have plummeted.

    So why are credit card fees still anywhere from 2% on up (borne by sellers)?

    And is it (much) more expensive to send $100 vs. $10?

    • I would guess the reduction in cost is made up for by the increase in salaries and fraud..

    • Re: (Score:3, Insightful)

      by viablos (2018696)
      Nothing in the business is based solely on costs. Of course they will keep taking 2% if they can. What comes to person-to-person payments, credit card phishers must love this as it cuts the middle-man. No need to buy items and resell them, just transfer money directly.
    • by Tridus (79566) on Friday March 18, 2011 @11:53AM (#35530934) Homepage

      Because there's no particular reason for them to lower the fee?

      VISA's not in the business of saying "well gee we have too much money today, lets cut the fees!"

      • Re:Credit card fees (Score:4, Interesting)

        by Compaqt (1758360) on Friday March 18, 2011 @11:58AM (#35531056) Homepage

        Well, I guess we're seeing market failure.

        Basically, an oligopoly between Visa and Mastercard.

        • by Sky Cry (872584)
          It's because the card is issued to the customer, while the the cost of transaction is paid by the merchant. The customer has no benefit in moving from one credit card company to another. So the credit card companies have no benefit in decreasing the fees either.
          • this could very well change with person to person transfers.... unless the fees are free or very small people who frequently make transfers would likely switch to whichever company has the lowest rate. At very least if Visa is smart they'll undercut PayPal.
            • by delinear (991444)
              Areed - it's at the point where fees become transparent to the customer that people will begin shopping around. Currently, in the UK at least, the merchant usually swallows the fee (and probably distributes it across all payment methods so they can have a single price point). It's rare to see a fee advertised for using credit over debit cards (and when there is a fee it's usually flat across all credit cards), but for something like regular eBay purchases, a minor % difference could be enough to motivate pe
          • by ShadyG (197269) <bgraymusic&gmail,com> on Friday March 18, 2011 @03:03PM (#35534492) Homepage
            In this case, any "market failure" is very much the fault of government interference. The core problem is that merchants are not allowed to pass this fee on to the customers explicitly, charging an extra 2% for VISA purchases over what they would for cash. If they were allowed to do this, another company could undercut and would get business.
        • Re: (Score:3, Insightful)

          by kvothe (2013374)
          Sort of like the oligopoly in the realm of American cell phone service? Or land line internet service? Or in the gasoline market? One could argue that the American market has failed many times over, due to a few large corporations dominating the relevant market, and doing everything in their power to maximize their profits at the expense of everyone else. I wish I knew what could be done to change the situation, but it seems like so many factors went into creating the situation that we find ourselves in t
          • by Compaqt (1758360)

            Yeah, from the perspective of many corporations, lack of oligopoly is market failure.

    • Re:Credit card fees (Score:5, Informative)

      by eln (21727) on Friday March 18, 2011 @11:58AM (#35531060) Homepage
      Every time you buy something with your credit card, Visa sends that payment to the retailer in cash. It does this by carefully placing each individual dollar bill on a velvet pillow, and having it lovingly hand-carried to its destination by a Visa representative, who is dressed in a tuxedo and wearing white gloves.

      So yes, it does get more expensive the more money you send, and Visa is practically running a charity by only charging 2%.
      • by Compaqt (1758360)

        I take it you share my frustration. Somebody mod this up.

        (Oh, and before posting a rant about CC fees, I guess I should have remembered that the electrons for higher dollar amounts weigh more, hence it costs more money to ship them through the tubes of the Internet [wikipedia.org].)

        • by ArsonSmith (13997)

          Perhaps someday you will learn about supply and demand, and how the price of a good or service is only very loosely tied to the cost to create/perform that good or service.

          If you don't like the fees, don't pay for the service.

      • Re:Credit card fees (Score:5, Interesting)

        by Maximum Prophet (716608) on Friday March 18, 2011 @12:34PM (#35531658)
        I like the joke, but as the amount of the transfer goes up, so does the risk. (The risk the money won't be repaid, or the risk the transaction is fraudulent) So, yes, it does cost more to send more money. Does it cost exactly what they charge? Not at all, they can charge what they can get away with.
        • by compro01 (777531)

          the risk the transaction is fraudulent.

          Hahahahaha.

          The credit card company has 0 risk in that regard. They simply yank the money back from the merchant and leave them without the money or the product. I used to work for a company that made POS systems and we had several customers driven out of business by that bullshit and the credit card company's disinterest in taking security and fraud seriously.

          • by cdrguru (88047)

            Any merchant that does a significant amount of credit card sales needs insurance. Anyone will tell you that - even the police.

            If the company didn't make that clear to someone setting up a POS system they did the guy a serious disservice.

            Credit card fraud is just a fact of life like rain. Sometimes you get wet and as a merchant you need to have your umbrella.

        • by tukang (1209392)
          The risk of not getting repaid is held by the banks and not Visa. This is why Visa held up relatively well during the financial crisis while bank stocks were tanking.
        • by neoform (551705)

          The bank issuing the card is the only one liable for the money, VISA/Mastercard don't pay a dime if the money is charged in a fraudulent way.

    • by milkmage (795746)

      convenience.
      no matter who issues your visa, they're all on the same "network" so you can use it anywhere - visa is that network.

    • Visa offer a service. They have to make money, from for example, off debit cards.

      2%, still cheaper than handling physical money.

    • by poetmatt (793785)

      Why? Because Visa wants hilarious profit margins and how many competitors are going to exist?

      Square is about the only one I can think of that is mainstream.

    • That's because there is no such thing as Net Neutrality for credit cards.
      The old way of thinking was imposed and Greed was satisfied.

    • by rtaylor (70602)

      So why are credit card fees still anywhere from 2% on up (borne by sellers)?

      Isn't most of that basically insurance? The percentage varies with the risk of the merchant (online shops are higher, grocery stores can get lower rates). My card has bit hit with fraud a couple of times over the last decade. Both times I called Visa and they made the charges disappear.

      While they probably didn't eat most of those fees (chargebacks or whatever back to the merchant) they probably did have a fair amount of overhead for

      • by peragrin (659227)

        Well that and it is 2% for Visa, but for American Express it is 3-4%. However American Express also doesn't normally collect interest on the monthly payments(yes there are exceptions).

        Visa and Mastercard really make their money on the fact that so many people have continuos rolling debt every month that builds interest.

      • Retailers are liable for fraudulent transactions, not the credit card companies. The credit card company simply tells the retailer the offer was made in bad faith and the money is taken back. I've worked for several online retailers and a bank error is never in your favor, even if it's not your fault.
    • Re:Credit card fees (Score:5, Informative)

      by justin12345 (846440) on Friday March 18, 2011 @12:27PM (#35531550)
      Just try using Western Union. Then come back and whine about a 2% transaction fee.

      It's especially hilarious because WU will actually ask you if you are sending money to make a purchase, because that is not allowed. You have to make up a story that you are sending money to your old roommate, for bills you never paid (even though you are actually buying some Japanese cell phone that turns into a small dog with laser eyes).
    • by Rockoon (1252108)

      So why are credit card fees still anywhere from 2% on up (borne by sellers)?

      You aren't factoring in the real costs of the service which is when the credit card companies don't get paid what is owed to them, where they end up selling the debt at a large discount to a collection agency.

      Nearly 1.3 million bankruptcies were closed in 2009 alone, with only ~40,000 of them being by businesses. You can imagine that these weren't by people that owed an average of only $100. Its more like an average of $10,000+. Billion of dollars don't get paid back to credit card companies each year.

      • by Compaqt (1758360)

        This is actually a good point, and different from the fraudulent card use issue.

        On the other hand, it should only apply to payments on credit, and not debit cards.

      • AFAIK, interest is supposed to cover that, and not all Visa cards are credit cards. Mine is debit for instance, I would never put my small purchases like a coffee on credit, that just seems insane. (I also have a Mastercard credit card, used only in exceptional circumstances)
        The only reason for that 2% is to earn the banks billions and billions in profit..

        • by cdrguru (88047)

          Banks are starting to change but until recently no bank offered any security on debit cards. If your number gets copied at the coffee shop (very likely), you would then be liable for 100% of the charges until your account ran dry.

          Some banks are now offering protection against debit card fraud. But still, it may take days before the money gets back into your account. Weeks sometimes I am sure. If you have so much in your checking account that you can handle that, great.

          I wouldn't use a debit card for any

          • I guess it depends on local laws, but at least here in Sweden, the bank is required to pay back fraudulent transfers and the burden of proof is on the bank. I lost my debit card once (my fault, I accidentally left the card on a bar counter after a few beers) and someone did steal it and apparently had a good time at a few bars before the money ran out. I got all of the money back after filing a police report and filing a report with the bank.
            I keep most of my money (what little I have, I'm a student) out of

      • by mxs (42717)

        You aren't factoring in the real costs of the service which is when the credit card companies don't get paid what is owed to them, where they end up selling the debt at a large discount to a collection agency.

        Nearly 1.3 million bankruptcies were closed in 2009 alone, with only ~40,000 of them being by businesses. You can imagine that these weren't by people that owed an average of only $100. Its more like an average of $10,000+. Billion of dollars don't get paid back to credit card companies each year.

        God forbid they don't extend credit to people unlikely to be able to repay it. That would be, like, like selling mortgages to people who can't afford them. That is what America is founded on !

        Certainly there will be unforeseeable bankruptcies. The vast majority of them is foreseeable, however.

    • One, because the can be, but two, because it costs lots and lots of money to move that much money around. Every time you swipe a Visa they're LENDING money to be paid back. They have to keep the money on hand to pay all that, which in turn means borrowing money themselves.
    • You'd think with the enormous increase in processing power [wikipedia.org] experienced over the past 4 decades, the amount of money required for operating the credit card networks would have plummeted. So why are credit card fees still anywhere from 2% on up (borne by sellers)?

      That increase of processing power is accompanied by increased use of credit and debit cards. Also there may be some requirements of locality, that a transaction processor must be inside some jurisdiction. Quality of service may also dictate locality. So its not clear that they can use consolidation and other techniques to reduce their costs.

      And is it (much) more expensive to send $100 vs. $10?

      Think of other credit card benefits like automatic extension of your warranty. I had a TV go bad 13 months into a 12 month warranty. The manufacturer's warranty did not

  • Look for the government and lesser snoops to dive on this like a duck on june bug.
    • What about it? How is this any different to using PayPal?

    • You might want to take a look at the financial data that banks and similar institutions are already required to divulge...
      • by Dr_Ken (1163339)
        Oh I know. That's why I prefer my PTP transactions to be me handing over (or accepting) banknotes. Unfortunately this is hard to do if you're in Michigan and you want give your pal in Ontario $12 USDs. Not a big deal really but who wants the "imperial entanglements" that go with converting USDs to CDs and paying the conversion fees, showing ID (which will be recorded), and etc.? And of course if what you're buying or selling is pr0n or something else you'd rather not disclose (or be able to be discovered) w
        • by mxs (42717)

          Oh I know. That's why I prefer my PTP transactions to be me handing over (or accepting) banknotes. Unfortunately this is hard to do if you're in Michigan and you want give your pal in Ontario $12 USDs. Not a big deal really but who wants the "imperial entanglements" that go with converting USDs to CDs and paying the conversion fees, showing ID (which will be recorded), and etc.? And of course if what you're buying or selling is pr0n or something else you'd rather not disclose (or be able to be discovered) what's the alternative? Not PayPal that's for sure.

          This is by design. The effective untraceability of cash has long been a "problem" for police states such as the US and most European countries. They will make sure no other form of monetary transfer developed from hereon our will ever have that same design flaw. All you need is a boogeyman (for most people, money laundering mafiosi type stories will be sufficient, for the rest use terrorists and child molesters) and suddenly you get access to a vast database of who exchanges money with whom for what when an

    • ...like a duck on june bug.

      Do ducks dive on june bugs a lot?

  • Something that makes absolute sense, business and personal.
    I like VISA better now...but will this be also for canada?

    • by Carewolf (581105)

      I was more surprised this wasn't available before in the US. Now I can better understand why anybody would ever use PayPal. I never understood what they offered that wasn't already available for free with any major bank.

      Just how many things that the rest of the world takes for granted is unavailable in US?

      • In the US, Paper checks are free and transferring money electronically costs us money.
        • by Carewolf (581105)

          But why? Paper checks cost the banks money to process and the banks can't wait to get rid of them (and cut down on personal...). Well, couldn't wait to get rid of them of them, they are practically non-existing and only used when doing business with US partners.

          • by mxs (42717)

            But why? Paper checks cost the banks money to process and the banks can't wait to get rid of them (and cut down on personal...). Well, couldn't wait to get rid of them of them, they are practically non-existing and only used when doing business with US partners.

            Greed. Sure they don't want to support paper checks anymore. But they want to offer "new" services for less money even less. Banks operate on the principle that nickle and diming their customers is the best foot forward, and any services offered for "free" are just to get them in the door or offer a competitive advantage they'd rather do away with were it not for the pesky morons a decade or two ago who thought free cheque processing should be something to compete on.

          • But why? Paper checks cost the banks money to process and the banks can't wait to get rid of them (and cut down on personal...). Well, couldn't wait to get rid of them of them, they are practically non-existing and only used when doing business with US partners.

            Legacy. Inertia.

            People here expect checks to be free, so they are. Even though they cost the bank much more money to deal with.

            To give you an idea of how ridiculous it is, one of my banks, Bank of America, gives me free Cashier's Checks (i.e. certified funds). These cost the bank a ton of money because an actual teller has to issue them (and a manager has to approve it if the amount is large enough). On the other hand, they charge $3 for ACH transfers (electronic) and $25 for wire transfers, neither of whic

      • I was more surprised this wasn't available before in the US. Now I can better understand why anybody would ever use PayPal. I never understood what they offered that wasn't already available for free with any major bank.

        Just how many things that the rest of the world takes for granted is unavailable in US?

        This is one of the areas where the US is woefully behind. Stay tuned, though. There are some services popping up that will fill this need (popmoney, etc.)

        My bank (State Farm Bank) actually offers a person-to-person payments service that is free, but it's pretty rare still.

  • PayPal advantage? (Score:5, Insightful)

    by fahrbot-bot (874524) on Friday March 18, 2011 @11:56AM (#35531016)
    From TFA:

    As the leader in global online payments for the last twelve years, PayPal has unmatched advantages that we believe put us ahead of the competition...

    For example. Since we're not regulated like a bank or real credit merchant, we can do things like freeze or disable your account simply because we feel like it or someone complained about you, or whatever. Don't worry though, customer support will explain everything and get you sorted out in a jiffy.

    • Re: (Score:3, Interesting)

      paypal stole $200 that was in my account paid by players of my online market simulation game... the game included narcotics, so paypal assumed the drugs in the simulation were real. not real enough to contact authorities, just real enough to steal my money.

      paypal will answer for their transgressions.

    • Paypal is a bank. A European bank.

      • Re:PayPal advantage? (Score:4, Informative)

        by fahrbot-bot (874524) on Friday March 18, 2011 @12:23PM (#35531490)

        Paypal is a bank. A European bank.

        Well... perhaps in Luxembourg. From PayPal Bank Status [wikipedia.org]:

        Peter Thiel, the founder of PayPal, has stated that PayPal is not a bank because it does not engage in fractional-reserve banking.

        In the United States, PayPal is licensed as a money transmitter on a state-by-state basis.[47] PayPal is not classified as a bank in the United States ...

        Commencing 2 July 2007, ... PayPal moved its European operations from the UK to Luxembourg. As a Luxembourg entity, it is since regulated as a bank by the Commission de Surveillance du Secteur Financier (CSSF) and provides PayPal service throughout the European Union.

        So *that* clears things up. :-)

    • People who keep any significant balance in their PayPal account are idiots anyway. It's certainly not necessary to pay with PayPal. When your balance get to over 100$, have them cut you a check. If you are conducting enough biz that you have a ton of money in your PayPal account, you're a moron for many reasons if you leave it sitting there.

      PayPal's "bad behavior" is a non-issue if you manage your account with even a grain of intelligence.
    • by TheSpoom (715771)

      To be fair, my very long-time account (since 2001) was once frozen, and I only had to call once and be on the phone for about two minutes to get it unfrozen. That said, I probably do trust Visa a smidge more than PayPal.

    • by tlhIngan (30335)

      I don't see how Visa will fix things up, either.

      Credit card processors are pretty slimey, so much so that even Paypal looks good. It's just like cellphone carriers - they're all pretty horrible, adding competition just results in the new guy ending up as bad as the incumbents.

      Honestly, it won't be long until we start hearing of the same things that Paypal does, except it's being done vy Visa instead. The only thing possibly keeping sellers honest is that payers get the seller's Visa number.

  • by Just_Say_Duhhh (1318603) on Friday March 18, 2011 @11:57AM (#35531034)

    Paypal mapped it out years ago. The fact that Visa (and AmEx, Discover, etc) haven't been all over this idea by now makes me wonder if they're even paying attention.

    I, for one, welcome competition amongst our financial overlords

    • by Anrego (830717) *

      Probably too high up there on their tower of money.

      Seriously.. it must get to a point where you make such obscene profit that it's not even worth your time to look into making more.

    • When you're bringing down double digit growth due to practices with dubious moral and legal standings, a couple extra percent on transaction fees in a niche market doesn't look so great. Especially when you were probably in the loop at some point anyway. Now that people are actually being more careful about their credit and Congress is making noises about investigating their questionable practices, they feel the need to start diversifying.
  • by Anonymous Coward

    Is the postal system so corrupt in your country that simply sending CASH to someone is dangerous? In 50+ years of sending and receiving gobs of cash in birthday cards and christmas cards, I've never had any problems.... and we're talking thousands of dollars here...

    • by robot256 (1635039)
      I see why you posted Anonymous Coward, otherwise you might end up with hoards of vagrants opening all your mail before you get home in the evening. Some of us prefer to avoid that worry altogether.
    • by subanark (937286)
      Its not the post office, its the people at both ends.

      1. Although it is a federal offense, it is often easy to steal people's mail and thus the money simply by taking mail out of the mail box on either end.
      2. Cash isn't traceable, you can't go to court and claim you payed your bills in cash unless you did it in person and got a receipt.
      3. Cash needs to be processed manually, if you send cash to a business, someone has to open the mail, count the bills, store the bills, and make a note that the payment was re
    • That may be fin for birthday gifts, but it obviously doesn't work for payments; systems like Visa or Paypal provide you with a proof of payment.

  • Seems to me like this will be an open invitation for hackers since you send and receive the funds by putting your full credit card number into their website. Who wants to give someone else their CC number so they can give you money?
    • by lgw (121541)

      That would be a startling bad way to implement this. Any CC number should only ever be entered into Visa's website, much like any Paypal authorization is done at Paypal's web site. Of couse, everyhting is vulnerable to phishing.

  • by Squiff (1658137) on Friday March 18, 2011 @01:33PM (#35532908)
    The elephant in the room here is the Hawala system (http://en.wikipedia.org/wiki/Hawala) quicker, far cheaper, no accounts getting suspended- as reflects it's origins as a money transfer system designed to work in a hostile environment without regulatory authorities. And it does work, has worked for centuries. The only brake is the media scare stories on 'Islamic terrorist banking'...
  • ...is like working for Mussolini instead of Hitler (GODWIN TIME!)

  • by timbo234 (833667) on Friday March 18, 2011 @03:10PM (#35534582) Journal

    In every country I've lived in (Australia, the UK, Germany) bank transfers are completely free and easy to do over online banking. If I book holidays with my friends and we don't settle who owes what to who in cash during the trip we can simply transfer the difference over to them once back home.

    In Germany it's particularly pervasive - you pay for everything with bank transfers, it's even the preferred method to pay on ebay (preferred by users not paypal/ebay obviously).

    • In every country I've lived in (Australia, the UK, Germany) bank transfers are completely free and easy to do over online banking. If I book holidays with my friends and we don't settle who owes what to who in cash during the trip we can simply transfer the difference over to them once back home.

      I know it's hard to believe, but we don't really have that here in the US. Some banks offer a similar service, but it's difficult to use. It sucks, but it's how it is right now.

      There are some services popping up that are going to get us pretty close to where we should be (popmoney, this visa thingy from the article, etc.) But these are really in their infancy. Paper checks (yes, paper checks) are still king over here. Drives me nuts, but it's true.

  • I'm pretty sure I transferred money via on-line banking to my sister five years ago. WTF is wrong with VISA?!? A little slow to the party?

    Everything I read about markets, "Banksters", the financial sector, and all their regulators just reminds me of that "Scream!" painting that was so easily stolen a few years ago. It's like they think they're in a safe, cocooned environment where nothing can affect them. Meanwhile crackers hammer on their doors, taking down one of them after another, ...

    How the hell do

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