Apple Pay and the rise of the five-party network(fin.plaid.com) |
Apple Pay and the rise of the five-party network(fin.plaid.com) |
With the iPod and iTunes, and the iPhone and the App Store, Apple created something that didn't exist before, and captured most of the newly created market. Replicating VISA's business model doesn't do the same, but simply adds a couple of features to an otherwise closed system where users will not benefit from competition.
An actual alternative to VISA needs to be open, allowing for competitors to easily enter and compete with existing actors. Such a system is the Stroem protocol on top of Bitcoin, which is a thin clearing protocol designed for competition, constantly forcing issuers to follow along on price or be left behind. This is what merchants want, and what's needed to revolutionize payments.
Why not? The Stroem protocol, combined with Bitcoin payment channels, is completely trustless from the consumer's perspective. The coins are stored on your phone (or whatever device you want to use for it).
Only merchants need to trust issuers, in exactly the same way that merchants need to trust VISA/Mastercard etc. now. The primary difference is that the system is designed for competition between issuers, instead of a centrally-defined issuer (e.g. VISA or Mastercard).
> What if someone steals your bitcoin what do you do?
If someone steals your bitcoins they're gone. But if you don't trust yourself to keep your bitcoins safe, you're free to deposit them with someone you trust. That's the benefit of Bitcoin: if you feel confident guarding a private key you can store them yourself and, if you don't, you can use an external wallet service -- the best of both worlds.
> Or if you purchase something and you don't get it.
If you find a merchant appears suspicious you should use an escrow service. With the Stroem protocol, adding a layer on top that enables chargebacks via an escrow service is really simple, and completely decentralized. Pick any escrow service you like, who all compete on service/features/price -- no need to always use PayPal/VISA.
Again, the advantage is that you're not forced to pay for something you don't need (chargeback insurance) unless you deem it necessary.
Insurance is for health and houses not my $8 lunch or $500 wallet contents.
The web that you mention is a strong counter example. It is dominated by a few giant corporations, and in many places, increasingly subject to government restrictions.
The web isn't successful because of ideological openness and resistance to control by powerful actors. It's successful because it is extraordinarily useful.
Merchants may see a few percentage points of fee reduction as a potential margin increase for themselves, so 'want' whatever cuts their costs.
Consumers on the other hand want an easy solution that they don't need to worry about.
Apple Pay delivers on the consumer end of this.
A competing solution would need to deliver both to stand a chance.
> Bank transfers will be handled separately.
When are bank transfers used and for what? For unloading? If so do you have to unload via bank transfer or can you use a CFT transaction? I can't imagine a case where you want to unload using an ACH or SWIFT transaction. I would image you always want to use a domestic settlement system or T2 if you can.
> Apple Pay Cash’s back-end is powered by a Green Dot-backed Visa prepaid card
Only in the US or globally? I imagine there is a lot of fine print associated with that like the amount of funds you can store. I will get a tax statement even if I live outside the US, right?
What does that mean?
> Everyone is issued a green dog virtual card
I assume that's just a VISA Debit or VPAY with a special BIN range. Is that correct? Does everybody in the world participating in Apple Pay get a US issued VISA Debit card?
> then the entire network works over debit
There is no difference at all between VISA credit and VISA debit apart from interchange and when how the issuer bills the card holder. The whole infrastructure is the same. I assume with "works over debit" you mean is VISA cleared, is that correct? Does that also mean that unloading happens with a CFT transactions? If so what does the following sentence in the article mean "Bank transfers will be handled separately."?
Yeah I discovered much later that's effectively a function of tap-to-pay (which is highly prominent here in Australia, unlike many countries, almost every shop terminal has support and almost all bank cards have it also... chip and pin is also standard, and signatures are never allowed for domestic card even with a swipe)
There's some more info at Recode [2]:
[2] https://www.recode.net/2017/6/5/15741636/apple-pay-p2p-venmo...
Thank you, I missed that point. I guess it's understandable given the environment but still I wish Apple would have gone for something more ambitious like the original Apple Pay.
Only merchants, who want to receive extremely cheap Bitcoin payments -- the fees are set by the market, but a thousandth of a cent is completely reasonable -- can choose to trust one or more issuers. They may redeem/"cash in" the payments they've received at any time; the more often they do this the less the risk but the higher the fees, but they choose their own risk profile. And if the worst comes to the worst, merchants lose a week/month of income (if they choose to redeem every week/month), the issuers dies, and the merchants will probably survive (assuming the lost income is not fatal to their business). So the bad issuers are flushed very quickly, and merchants can adjust their risk/fee ratio as they desire.
^ This is you, saying that people would deposit things if they fall into the same category of "most people" that don't consider the idea of trying their damndest to just be extremely careful with their cash (which, once stolen, is simply gone, and which can even be misplaced) to be a sane choice in comparison to using... a bank.
There's room for both systems for different kinds of transactions with different kinds of merchants.
Bitcoin is ridiculously inefficient compared to what a centralized entity could be and it's already cheaper than wire transfers or even credit card transactions over a certain size.