Credit card payment systems were incredible. They are no longer novel, nor compelling, with inexpensive competing systems available. You can extend credit instantly to someone with a deposit account like you would with a credit card (with the "overdraft" being the issued credit, lots of ways to skin the UX around this). You can also offer purchase insurance on a per purchase basis, while still enabling immediate settlement. Buy Now Pay Later (BNPL) is an example of extending credit immediately without needing value to ride CC rails. I am in no way saying that there is no use case for credit card rails whatsoever, but that the economy, businesses, and consumers need not rely on them exclusively. There are cheaper options available now, speaking from a speed perspective.
> Interchange fees — the swipe fees paid by merchants when customers pay by credit card — reached $100 billion in 2022, per Matt Schulz of Lending Tree. That's more than $800 per household.
> In a world where goods cost the same regardless of how they're paid for, it's entirely rational for consumers to pay with credit cards and then collect their kickbacks.
> There's no particular reason why this kind of financial intermediation should be a $100 billion industry, rife with inefficiencies.
> "The shift to instant payments is inevitable," writes TD Cowen analyst Jaret Seiberg in a research note, "though it will take time."
(work at a fintech payments-adjacent, thoughts and opinions are my own)
Great comment! However, I don't see any competing systems that offer built in fraud protection being widely used anywhere. Bank transfer are instant now, yes. For daily purchases they can easily replace CCs, like paying for your groceries.
You mention BNPL, but those systems AFAIK are much worse for the merchants, with very high fees. I'm not sure I understood the insurance per purchase part, but if the vendor is going to scam you, he for sure is going to scam you on the insurance as well. Who sells this insurance and how?
> There's no particular reason why this kind of financial intermediation should be a $100 billion industry, rife with inefficiencies.
What are the inefficiencies really? As a customer, paying by card deducts the money from my bank account instantly. As a merchant, card sales are paid into my bank account the next day.
> You can extend credit instantly to someone with a deposit account like you would with a credit card (with the "overdraft" being the issued credit, lots of ways to skin the UX around this).
I apologize, but I didn't understand this part. How will the merchant instantly open an account for a customer? How would this be as fast, secure and convenient as swiping a card?
https://www.axios.com/2023/07/22/fednow-instant-payments-cre...
> Interchange fees — the swipe fees paid by merchants when customers pay by credit card — reached $100 billion in 2022, per Matt Schulz of Lending Tree. That's more than $800 per household.
> In a world where goods cost the same regardless of how they're paid for, it's entirely rational for consumers to pay with credit cards and then collect their kickbacks.
> There's no particular reason why this kind of financial intermediation should be a $100 billion industry, rife with inefficiencies.
> "The shift to instant payments is inevitable," writes TD Cowen analyst Jaret Seiberg in a research note, "though it will take time."
(work at a fintech payments-adjacent, thoughts and opinions are my own)