I know other countries have similar systems, but the US being a holdout and having terrible money transfer options despite being a massive market in the tech space maybe (hopefully?) is the reason that hasn't already happened?
I don't feel like I know enough to make any predictions, I'm just hopeful.
FedNow is going to be fine, just like ACH but faster. PayPal sucks in a lot of ways, but there are reasons you would use it over an actual money sending service like Zelle, FedNow or Wise. For what it's worth it's pretty rare that I have been materially adversely affected by the latency of an ACH payment. That's not to say I don't welcome FedNow with open arms, though, I very much do.
What about every time you make a credit card payment (and associated fees)?
PP recently created their own scam^Wstablecoin PYUSD[1]
[1] https://www.paypal.com/us/digital-wallet/manage-money/crypto...
> To a point, I am suspecting Paypal pretends to be the random online stranger that sent me the money and then disputed it
I would highly doubt this.
Most likely, they give money to a random email address using a stolen card, then dispute it and receive that money back, but now it's clean money because it comes from Paypal.
Some customers decides to try to get it for free by paying and then creating a PayPal claim by lying that someone else made the purchases or that it was not delivered. And this usually works, and people tell others, so more people abuse it.
Basically every single time someone tries to commit "friendly fraud" as the card networks calls and it(customer tries to scam seller by lying), there are a handful of transactions from one person. PayPal usually rules 90 % of the cases in favor of the buyer.
However, there can be 20 purchases during just a couple of hours from one person and card, and somehow PayPal is certain that purchase 6 and 10 was legit, while the rest was someone who used the card without permission. That seems probable, right? Even on a account with a flawless record for over 10 years I've had this happen so many times. Usually when this happens I have to spend hours on this and contact PayPal by phone to get the money back. Usually the customer gets the money too, for some absurd reason.
PayPal's fraud system is absolutely garbage, and so is the standard email support. Contacting account managers at least gives you what seems to be a human response.
I too got my PayPal account limited in 2012 as a result of a scammer who abused PayPal disputes.
The solution is super simple: make buyers pay to create PayPal claims and use the money to have real people quickly look over the cases. This is similar to how cases are handled for card networks.
Was the claim legit? Money back, including the claim fee. The merchant has to pay a fee, same way as today.
Was the claim not legit? Basically free money for PayPal, and some should probably be shared with the merchant for helping out with solving the fake claim.
At least in europe the scams on PayPal has mostly shifted from "unauthorized use" to "not delivered" as a result of strong consumer authentication.
Last I checked, Google's survey app inexplicably pays out to PayPal even though they have Google Wallet, and doubly inexplicably will only pay to what it thinks your email address is with no option to change it. So… someone in Brazil has my survey payments.
As in, I thought about it and that's the reason I haven't done it.
I also coincidentally am having a spat with Paypal at the moment, hence my new username.
But they take paypal also, so no bother. Do the transaction on paypal.
This kind of thing happens maybe once every couple of months for me, and is why I keep paypal around.
Edit to add: I think some UK banks are much more trigger-happy than the global average when it comes to flagging transactions as possible fraud. I once had to pay my tax bill (to the UK government) by paypal because the debit card transaction was declined.
For a good year, Barclays would ask me if my monthly Oyster purchase, for the same cost, at the same station, on roughly the same day of the month, was actually me doing it. Natwest, similarly, have blocked my "early September, about £1200, to Apple" payment for 5 years in a row now. It's infuriating.
This actually happened to me yesterday, thing is, the merchant doesn’t use paypal or anything except card, so kind of suck it up :/
Had it happen recently in the US when paying for a hotel room. They immediately froze the card when it was swiped through the machine by hotel staff. Clicked yes in the app, and it went through.
PayPal might give some protection but it also freezes some accounts and keep the money. No other service I have heard of have as bad a reputation.
In France (and I'm going to guess similar rules exist in other EU countries), businesses are required to accept at least 2 different payment options. They choose which 2, for example Apple Store accepts cards or ... cash. Buying a Mac with cash is a funny albeit slightly stressful experience.
It was also the case 10-15 years ago. The usage has became much higher, but it was already all right by then.
Except Germany, for cultural reasons.
Having said that, it can bite you in different way. Paypal keep an association of last email used in a transaction with a card number.
For example, I had paid for a vps hosting using paypal payment (without a patpal account) with one card, using my email address in the billing details. Later one we bought something for my partner with the same card, but using her email address in the billing details.
Subsequent payments notifications for my vps hosting were sent to her email address.
Essentially, the buyer is always right, and so, as a buyer, it is very easy to get your money back in case of a problem. The seller is the one who gets all the fees, and needs to justify himself if there is a dispute. Sellers offer PayPal because even though it is really bad for them, it gets them customers.
In the last year I had multiple cases of people contacting me out of the blue and asking if I could draw a picture of their nephew's favourite dog (it is always a dog, and it is always for their nephew whose birthday is coming soon so there is an implicit sense of urgency).
I never actually pursued this stuff because it was obviously a scam of some kind (I draw mostly nudes, dogs or animals in general amount to less than 1% of my production so far, so someone starting their message with "I just adore your style can you please draw a dog for me..." is obviously either a scammer or blind).
Another clear sign is that they are obviously following a script (my standard answer is something alongside the lines of "Gee, thanks, but I do not really work on commissions, and I don't draw animals anyway" to which they would infallibly answer "Fantastic, would 2500USD be ok for you?" - at this point I just block them).
But I am still a bit confused about what the angle would be for this type of scams: assuming they send me 100$ and then open a claim against me because I did not deliver... at most they would get 100$ back after a few days. There is no actual profit, right? (I am considering one of my drawings basically worthless, I draw on paper, usually a5 or smaller).
Is this a laundering schema? What would they get out of it? (There are also lots of people asking to buy my stuff for NFT, I did not fall for that, either, but some other artist on IG explained to me that usually they ask you to create an account on some third party site... the account requires a fee, and after you have paid for it the NFT guy will just disappear - so in that case the way they get money from you is clear... but I still don't get how it would work in case of a physical item).
Any clues?
Debit cards maybe, but of course, debit card fees were significantly constrained in the US by the interchange caps in the Durbin amendment to Dodd-Frank in 2010. Non-exempt debit interchange (most of it) is capped at $0.22 + 0.05%. [1] In Europe it's been capped at 0.2% since 2015.
This compares to a FedNow transfer cost of $0.045 [2] - although I suspect there are significant bulk discounts here to financial institutions -- and surcharges to retailers. I'd call this "give or take the same" as the price of a non-exempt debit payment, but you may disagree.
I believe ACH clocks in at $0.003 in bulk to financial institutions.
Credit cards are not money transfer products so much as loan products. The actual interchange, the cost of processing cards, is quite low. In Europe it's capped at 0.3%. In the US most of the delta between what merchant acquirers charge and interchange is paid back to customers in the form of points or cash back, which basically just don't exist in the same way in Europe or other capped markets. Customers also like the insurance products, the ability to charge back, better fraud handling and the ability to batch their transactions into a single lump sum.
We pay a premium for these premium services.
[1] https://www.checkout.com/blog/revisiting-the-durbin-amendmen...
[2] https://www.frbservices.org/news/press-releases/012722-fedno...
(Btw, recently I had a guy who seemed legitimate in wanting to buy my stuff... I asked him to send 120USD... to a charity and just send me the paypal receipt.
He stopped answering my messages when I asked him the post address to send the drawing to)
The repo market is another example - and derivatives markets.
The main job of the Fed is be a clearinghouse. They don't really even know how much money is out there, let alone have omnipotent control over the supply. Monetary policy is only possible because of their role as a clearinghouse, but I digress.
Additionally there's the Payment Requests API from W3C which is compatible with Apple Pay and Google Pay.
- Debit card: payment is immediately subtracted from the bank account. "Normal". No charge backs. Accepted almost everywhere. No or nearly no charge per transaction (for the user). Return debit possible (when returning an item)
- Credit card: payments either summed as a loan or monthly charged from the bank account. Charge backs possible. Costs additional money each year, and some transactions may also cost 10 or 15 cents. Not accepted everywhere, mostly in diners or super markets - not in most retail stores. Most people don't have a credit card and/or don't use it regularly.
https://www.theglobaleconomy.com/rankings/people_with_credit...
Not sure if it's still true but it also used to be the case in Canada while I lived there a decade ago or so.
Bank cards today seem to be double more and more as Mastercard/VISA debit cards and I think the amount of people bearing credit cards might decrease in the future. At least that's what has been happening with a few people around me.
So the owner of the credit card should get their money back from their bank (or credit card company? Not sure how that works in the US) which might get their money back from Paypal if they want to bother, but it's probably too difficult for Paypal to get their money back from some bank in a country where they might not even have physical presence.
https://www.theglobaleconomy.com/rankings/people_with_credit...
Technically a CC, feels like a DC. Thats my experience in EU a I worked in Banking in many countries .
The only good way I've found to use the card is through Paypal, ironically. At least this way I can see, down to the minute, what I spent and where, which the bank is unable or unwilling to show me.
A credit card is, well, a credit with rates etc. You may pay a part and the rest runs as a credit. You have a specific contact for that. Also a credit card can be issues without a backing bank account. Our cards always (in practical sense) are backed by an account.
This is not how the cards work in the EU. You have delayed debit but no credit (formally - in practice you spend the money of the bank obviously, but you have to pay in full after 30-45 days).
American Express is a system that is used by companies (for various reasons) and this IS a credit card, but people use it for business related reasons and its delivery is triggered by the company.
Is it common in Spain to use CC, as opposed to Debit Cards (usually delayed payment ones)?
I don't think it's super common to use them day to day as I do. People often use them to split payments for big ticket items. But by using it, I get percentages when buying food and other specific items, so I just run the card and pay it off immediately.