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28 year old's startup wants to completely kill credit cards

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  1. Nov 16, 2011 #1

    rhody

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    http://articles.businessinsider.com/2011-11-11/tech/30381380_1_credit-card-interchange-fees-paypal" [Broken]

    This has to be too good to be true, and if not, I am sure the major credit card institutions are sharpening their swords against this startup.

    Rhody...
     
    Last edited by a moderator: May 5, 2017
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  3. Nov 16, 2011 #2

    Ryan_m_b

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    As I understand it there doesn't seem to be an advantage to the consumer. If an item costs X it doesn't matter to me if I pay by cash, card or Dwolla because either way I spend X. For the business I'm buying from it does matter because rather than giving a percentage of X they give a small, standard fee.

    It's an interesting idea, I'm not sure if it will take off. I can't see the average person bothering to change unless many places start to offer taking Dwolla and perhaps not even then.
     
  4. Nov 16, 2011 #3

    Evo

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    This is only of benefit to the business owner.
     
  5. Nov 16, 2011 #4
    Dwolla is nice, they have some interesting applications (pay with your phone), but it's not revolutionary. There are plenty of PayPal alternatives now.
     
  6. Nov 16, 2011 #5

    Monique

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    I have been paying for years directly from my bank account with a service called iDEAL (developed by Mollie), fast secure and easy. So what's so innovative in Dwolla.
     
  7. Nov 16, 2011 #6
    https://www.youtube.com/watch?v=W89wEc59g9U

    https://www.youtube.com/watch?v=bDggiDaIA0I
     
  8. Nov 16, 2011 #7

    dlgoff

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    OMG. I just made a PayPal transaction. Hope that's okay. :wink:
     
    Last edited by a moderator: May 5, 2017
  9. Nov 16, 2011 #8

    Evo

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    Don't get it. I pay cash, check, debit card, or credit card. I can pay with check by phone, I have directly transferred cash to friends from my bank account.

    Just this morning I was reading about how these pay gimicks are causing people to spend more money.

    http://finance.yahoo.com/news/amazon-prime-made-me-a-shopping-machine.html
     
  10. Nov 16, 2011 #9

    Monique

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    In 1996 a system was introduced that consumers could load a chip on their bank card with virtual money and pay by showing the card. It was a really big flop, now all these "new" technologies are popping up that you can pay with your phone. My debit card works just fine, apparently I am getting old..
     
  11. Nov 16, 2011 #10

    Evo

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    or wiser :wink:
     
  12. Nov 16, 2011 #11

    rhody

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    I can personally attest that a large bank to bank transfer of funds (real estate transaction), took two business days, and to add insult to injury they charged me $27.50 for the priviledge of doing so.

    I was not a happy camper with the situation, although I realize for transactions over 10K the transaction is be reported to the Gov't, IRS, Homeland security, etc... for security and tax reasons. Even with the requirement, I find it hard to believe it took two business days to complete the transaction, and that I was charged a relatively nominal fee ($27.50) to boot.

    When you say that it costs nothing to the consumer, that is not true. Merchant's figure in the cost or transacting business using credit and debit cards and add that to the price that the consumer pays, he doesn't SEE the hidden cost. A flat 25 cents per business transaction is good for all involved, except of course the credit card companies. That is my humble opinion, of course.

    Rhody...
     
  13. Nov 16, 2011 #12

    AlephZero

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    Scott Adams (Dilbert cartoonist) defined an optimist as "a pessimist with no work experience".

    Let's update that to "somebody who thinks reducing card transaction costs will reduce prices, rather than boost trader's profits"...
     
  14. Nov 16, 2011 #13
    I don't see any problems with "boosting trader's profits" It's not likely that this idea will catch on, they rarely do, and as mentioned above, there have been countless paypal alternatives. Paypal was not really innovative anyway, it was just piggybacked into mainstream by ebay.

    I would think that at the very least, this credit card payment alternative would cause credit companies to think about renegotiating their rates for merchant transactions. Whether or not the consumer will see the price drop is irrelevant.

    But that's just my opinion, and it could be largely wrong.
     
  15. Nov 16, 2011 #14

    turbo

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    I have exactly one credit card, and it is paid off in full every month. Decades ago, I had three (Visa, MC, and Amex) because I traveled a lot and not all vendors would take them. For a time, when I had business in Boston, I had to use my smaller-limit CCs to entertain customers because many members of the local restaurant association boycotted Amex due to their very high transaction fees. They were charging about double the percentage as Visa and MC.

    Anyway, one credit card and checks from the credit union and the bank that has my money-market account are quite sufficient. No new tech needed. I don't want to pay my bills with my cell-phone. I have never once sent a text message, either. Yes, living fossils exist!
     
  16. Nov 16, 2011 #15

    rhody

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    QC, Aleph,

    You make good points. Consider this, unless a business keeps track of what percentage their products are bought and with what form of payment, PayPal, Credit, Debit, etc... they cannot predict what the "real" cost of the item actually is, and to adjust for their profit margin accordingly. In a tight economy, any little advantage to giving the "consumer a break" should most likely help sales of whatever product or service are being offered. The law of supply and demand usually wins in the end, does it not ?

    Rhody...
     
  17. Nov 16, 2011 #16

    AlephZero

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    I don't know how the law affects this in a general online trading situation, but the UK Driver & Vehicle Licencing Agency has an up-front attitude to it. If you want to renew your car tax online, you can pay £x by debit card, or £x + a transaction fee by credit card. There's nothing wrong with giving the customer the choice.

    Of course you don't know how "accurate" the transaction fee is, but you can't complain about the general principle of having a choice.
     
  18. Nov 16, 2011 #17

    rhody

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    Here is example of when I pay a bill using a check versus credit card. When I pay my quarterly property taxes, I pay by check, why, you ask ? Because our town adds a $ 2.50 surcharge to the bill if you pay by debit or credit card, presumably to help cover the cost they incur when they process the transaction for the town. There is no way it costs $ 2.50 to frank a transfer of funds. Just goes to show common sense does not always prevail. I wonder how many people would pay on time if they could use debit or credit cards without a fee imposed ? I for one would.

    Rhody...
     
  19. Nov 16, 2011 #18

    DaveC426913

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    The advantage seems pretty obvious to me.

    If the business doesn't have to pay out that money to the credit card co, they can take some in profit and pass some of it back to the consumer by being able to offer more competitive prices.

    Anytime a middle man is cut out of a transaction, ultimately both parties will benefit.
     
  20. Nov 16, 2011 #19

    Ryan_m_b

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    Dave whilst I see that this is the theory I see no reason why it is necessary in practice.
     
  21. Nov 16, 2011 #20

    DaveC426913

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    Businesses being able to offer more competitive prices while simultaneously increasing their own profit margins? I know, crazy, right?
     
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