Credit cards suck for many reasons other than just convenience of use. Credit card companies are big cartels with hefty fees to retailers, slow and unpredictable turnaround between when a payment is made, and when it gets to retailers bank, and infrastructure that's not well suited for micro payments, or peer to peer payments.
>Credit card companies are big cartels with hefty fees to retailers, slow and unpredictable turnaround between when a payment is made, and when it gets to retailers bank, and infrastructure that's not well suited for micro payments, or peer to peer payments.
The consumer doesn't give two flying fucks about any of this. This is a very important point.
And as a someone selling something by credit card all over the world (stopped counting at 50 countries about 12 years ago) I also don't give two ff's about any of this.
Sure occasionally we get hit with a chargeback ($30 plus the charge amount) and sure we are powerless and they just added some arbitrary $7 month fee. But without this entire system I wouldn't be in business. I also operated a retail business years ago and accepted credit cards. It was a tremendous improvement over having to extend credit to a business owner and then collecting. The fees were well worth the trouble saved.
At least in the US, every major credit card has rules against minimum transactions. Reporting a minimum transaction requirement will cause the CC company to investigate the retailer and possibly punish them.
Many small businesses still do it, of course. What keeps people from reporting them is a mixture of not knowing the regulations and wanting the small business to stay afloat. But regardless, minimum payments actually are put in place by the business.
"Ever had to buy stuff you didn't want to meet a minimum spend on cards?"
True story here. Years ago in a retail business we had a $10 minimum for credit card purchases. A customer came in and bought something for like .50c. So the counter person did the charge for $10 and refunded them $9.50 in cash.
1. I don't have any pressing need to buy a product at such a low price point, and don't see any need to do this in the future.
2. My credit card works wonderfully, and if a retailer pisses me off, I'll phone them and it'll be reversed no questions asked.
3. Again, I (and most other consumers) already have a solution to buying something online that is almost perfect from my perspective. I have three of them in my wallet sitting with me at this very moment (actually, my wallet is a bit of a problem you could look into, especially in the summer).
I don't need paypal. I don't need pretend currency. I don't trust you to get anywhere near my actual bank account. I have several security options with my credit cards that I'm comfortable with.
I personally don't really care that it costs you x amount to take my credit card as a retailer. I've already factored in all your business costs into my evaluation of the price of your product. I also don't care that your employee demanded a raise last week, you need to buy a new computer or that rent is going up. These are your problems.
Again, do you understand that as a consumer, I view my credit cards as almost the ideal product to conduct business on the internet? You're trying to fix a problem that I just don't have by providing me with a solution that I just don't need.
2. 100 keypresses per transaction[1] != 'ideal solution'
There's plenty of room for disruption in this market still. No-one's asking you to become one of those disruptors and we won't be taking away your credit card. You can keep it. Just like all those people who prefer cash to credit cards can keep their cash.
[1] Card number, SSN, expiration date, address, address line 2, City, County, Postcode. Maybe emailaddress, telephone number. Roughly 100 key presses to enter that lot
It depends if we are talking about FB simply providing a service for taking payments similar to google checkout (using existing Cards) or whether you suggest that they try to replace card altogether.
In order to do that FB would be looking at setting up massive infrastructure and essentially having a "banking division" that would get bogged down in regulations and bureaucracy.
my point is, credit cards suck, and there is plenty of space for alternatives. There is a race in peer to peer and micro-payment space, and currently paypal is the leader, but it is far from perfect. I'm not a big fan of FB, but i think this article is on point, and they are well suited to enter this space. Being able to validate identity (thanks to all the information), and having a brand and cash to back it up. As for the new division, infrastructure, and bureaucracy, it would boil down to how well they can execute.
They would most likely still have to deal with the credit card cartel in one way or another. Simply putting a nice payment front end up doesn't make VISA suck any less.
Another advantage of credit cards is the credit part and it would seem a big stretch for FB to get into the lending game.
I think how well they can execute is only one part of the puzzle, since they are going to have to deal with the governments of multiple jurisdictions and big financial institutions and will basically be at their mercy.
http://www.wired.com/magazine/2010/02/ff_futureofmoney/all/1