

Would You Ever Stop Using Credit Cards? - drfroto

We all use credit cards, but they are actually suboptimal:<p>1) They&#x27;re expensive (merchants pay ~3% fees which makes items more expensive for us)
2) They&#x27;re not safe-- anyone can read the numbers off your card and steal it. This also makes credit cards more expensive, bc the banks need to charge more in fees to cover fraudulent transactions
3) They incentivize us to spend money we don&#x27;t have (and then pay fees on that money)
4) They&#x27;re inefficient. Requires 4-5 different parties to pass money around. 
5) Only works in one currency and in one country (without paying massive fees)<p>I&#x27;m working on a project using Ripple that would solve all this, but it would require people getting something that worked more like a debit card instead of their credit cards.<p>Would you use it?<p>Would love to hear feedback.<p>More info here: www.getwayve.com&#x2F;dumb
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dottrap
While your points are valid and I personally don't like the inefficiencies,
the challenge is that credit card companies are good at hiding these details
from consumers.

1) Rules are in place so merchants can't markup products when using a credit
card so the standard displayed price already includes the markup and cash
paying customers are typically not rewarded.

2) An annoyance for customers, but it is mostly the credit card companies on
the hook. The credit card companies know this but calculated the money lost to
fraud is still outweighed by consumer convenience. Also, we are seeing things
like Apple Pay starting to address the credit card number.

3) But there is an advantage to people who do know how to stay within a budget
and not overspend. First, if money is stolen or their is a dispute, then the
credit card issuer is on the hook and they have a strong incentive to resolve
the issue quickly and fairly. When money is taken from your bank account as in
a debit and there is a problem, you may have liquidity problems as you wait
for this to be resolved. Liquidity problems can cause huge problems for
people.

4) Yes, they are inefficient, but banks deal with this (mostly), generally not
consumers (unless you are talking about ACH or wire transfers). (The exception
is 'what credit cards do you accept here' if the answer isn't all of them.)

5) Yes, though since currencies fluctuate, it is kind of a messy problem and
credit cards at least made it convenient.

Bonus) I'll also add that credit cards have both reward incentives and
protection policies, which most people seem to forget about. (I usually have
to remind people that if they used a credit card to purchase a computer and it
broke just out of warranty, they probably have an extra year of extended
warranty through their credit card.) And people seem to go crazy for frequent
flier miles and such rewards, even though it may not be totally cost effective
in the end.

~~~
smt88
> _I 'll also add that credit cards have both reward incentives and protection
> policies_

My most-used card (American Express Blue Cash Preferred) gives me 6% back on
groceries and 3% back on gas. It also has tons of purchase protection and
insurance benefits.

So not only do I not care what merchants have to pay to accept my card, AmEx
is paying me lots of money every year to use their card.

Those are some high hurdles to get over.

~~~
jedmeyers
And those "groceries" might as well be Amazon gift cards purchased in a
grocery store.

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smt88
This is a bad place to do customer research. This is not at all a
representative sample of any large population, and any fintech product needs
to reach massive audiences to be profitable.

First, some issues with your site:

\- Credit card technology _has_ changed since the 70s. All of my cards are now
chip-and-PIN.

\- Proofread your copy. It should take you a split second, which is how long
it took me. "It + is" = "it's", "what + is" = "what's". It's not hard.

\- Nothing is hacker-proof. Don't make that claim. You can say that it's
safer, but you can't responsibly say that it's un-hackable.

> _1) They 're expensive (merchants pay ~3% fees which makes items more
> expensive for us)_

As a user, why would I care about this? Merchants should pay something, since
they get a benefit out of it. I personally don't carry cash and don't buy
things that require me to use it.

> _2) They 're not safe-- anyone can read the numbers off your card and steal
> it. This also makes credit cards more expensive, bc the banks need to charge
> more in fees to cover fraudulent transactions_

Again, the cost here isn't on my end. My cards have been stolen a few times,
and my card issuer solved the problem immediately.

> _3) They incentivize us to spend money we don 't have (and then pay fees on
> that money)_

No, they don't incentivize us to spend money we don't have. They make it
_easier_ to spend money we don't have. And again, not a problem for people who
are able to resist the temptation. I spend almost 100% of my money through my
credit card, and I've never paid any fees (i.e. interest).

> _4) They 're inefficient. Requires 4-5 different parties to pass money
> around._

Again, as a user, don't care.

> _5) Only works in one currency and in one country (without paying massive
> fees)_

If you're visiting a country for a one-off trip, the fees aren't bad. If you
go to that country regularly, it's trivial to get a card for that country. A
lot of international travel is for business, so the user doesn't care about
the fees anyway.

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UnoriginalGuy
> 5) Only works in one currency and in one country (without paying massive
> fees)

There are a lot of cards which charge nothing for foreign transactions. To
name a specific example the Capital One QuickSilver card. If you look around
the market there are several more which offer a variety of other things in
addition to that (depending on your needs and credit).

I've also got a zero foreign transaction CC in the UK from Halifax.

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marssaxman
When you say "credit card" do you mean a card backed by a revolving credit
account, or do you mean a card which uses one of the
Visa/MasterCard/Discover/Amex networks?

Every debit card I've had for years has also been a Visa card. I don't
generally carry a card backed by a credit account for everyday use, but many
of the transactions I make using the card which is backed by my bank account
run through a "credit card" network.

It's not clear from your description which of the downsides you list would
actually apply to this situation.

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faet
> 1) They're expensive (merchants pay ~3% fees which makes items more
> expensive for us)

As a consumer I don't care. I get 3-6% back on purchases so even if you raised
rates or gave a cash discount generally it is still cheaper for me. Also, I
get other benefits such as an extra warranty.

> 2) They're not safe-- anyone can read the numbers off your card and steal
> it. This also makes credit cards more expensive, bc the banks need to charge
> more in fees to cover fraudulent transactions

If someone steals my wallet all my cash is gone. If someone steals or reads my
CC # I am out $0 and a few hours changing billing. With things like applepay I
don't even need to pull out the actual card that much anymore. Apparently,
ripple doesn't support charge backs. This is a non-starter for me.

> 3) They incentivize us to spend money we don't have (and then pay fees on
> that money)

I've had a credit card for 12 years and have never paid a fee. Yes, it makes
it easier TO pay, but I don't buy something I don't have the money to
immediately pay off.

> 4) They're inefficient. Requires 4-5 different parties to pass money around.

As a consumer I don't care.

> 5) Only works in one currency and in one country (without paying massive
> fees)

Mine will work in multiple countries and currencies. The exchange rate is as
good as any other I can get. And once again, if I was to exchange for cash I
can lose the cash.

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seanccox
The whole point of a credit card is to spend money I don't have. The card
helps me avoid liquidity problems. A debit card won't, without additional
preparation on my part... preparation I prefer to avoid, and as such, have
obtained a credit card to help me avoid.

What would make me give that up? A system whereby I can scan my fingerprint
and enter a password. Then, I wouldn't need to carry a card. Right now, that's
the main inconvenience of the credit card, but I appreciate the way it works
and what it does, it's only the form that poses any "problems".

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Spoom
You'd have to pay me more than my cashback credit card is currently paying me.
Doesn't sound like an easy task while remaining profitable.

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auganov
If I could use alipay everywhere I'd probably stop.

