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In Urban China, Cash Is Rapidly Becoming Obsolete (nytimes.com)
312 points by KKKKkkkk1 99 days ago | hide | past | web | 337 comments | favorite

I think this is a good illustration of the different approach in how China and America approach the consumer economics space. In America, there is a very heavy reliance on "trickle down". We create a "best-in-class", "top-of-the-line" product that only the elite and wealthy can buy into. These people then set the tone of how it will develop in the future. The first mover also tries to do everything in their power to lock you into the ecosystem. Examples of these are iPhones (and the app ecosystem), Tesla, etc.

In China however, they throw away that pride of creating the greatest and shiniest. Instead, they start off with an "inferior" product but use the scale of their population to bring down costs and they try to ensure everyone has access. The top example is smartphones. In the article itself, "Even the buskers were apparently ahead of me. Enterprising musicians playing on the streets of a number of Chinese cities have put up boards with QR codes so that passers-by can simply transfer them tips directly." China starts off with a product that gives every citizen a chance to get in on, not just the wealthy, and they build up their economy from the bottom up, rung by rung.

The way I see it, we have democracy in politics but in products, its authoritarian because its guided by the billionaires and wealthy. In China, they have an authoritarian political system, but democratic economy space because they can actually vote with their wallets.

Android was released a couple years after the iphone and it has defined the low end market. From the USA.

A big reason why QR codes caught on in China is because everything else was really bad. In america, credit cards were 'good enough' compared to what was in china, so QR codes didn't catch on that quickly. Also because it's a wealthier nation, the typical merchant could afford the hardware required for processing cards, but QR codes all you needed was a print off and the mobile phone you already had as a merchant, which made more sense for china at the time.

Then network effects kicked in and QR codes became the standard.

You see similar environment specific things that created this kind of stuff. Like whatsapp took over the world because SMS cost something, while in the USA it was effectively free and good enough, so whatsapp wasn't a good enough thing to switch to.

I'm a Chinese & living China, I shopping almost only with credit cards and cash for privacy consideration.

However, I don't think credit cards in China are as popular as it is in the USA. I could guess most Chinese people don't have any credit card.

Chinese traditional culture encourages saving, not loaning. And taking small loans is exactly how credit cards works. So maybe that's why people here don't like credit card very much.

QR pay (Or mobile pay, OR more specifically, Alipay and Tenpay etc) can acting like a gate way between seller, user and bank. It can pay with the money you already have, no need to loan from the bank. So I think it's a Culture Match.

Beside that, take a wallet (Which is needed for protecting your credit cards from been scratched) everyday is a burden. I could really be happier if I can get rid of it from my EDC (I can't get rid of my phone, so).

I think most people pay their balance off every month in the USA. Credit card doesn't mean borrowing. The big problem with credit cards in China is fraud: banks like ICBC will put the burden of proof on the card holder when a fraud transaction occurs, rather than the merchant as in the west. I really hate ICBC.

Anyways, debit cards work just like QR pay does, just like UnionPay already does. The problem QR codes are solving is the lack of a POS terminal and stream lining the swipe. Many countries have an even better technology in NFC contact (including China, many newer UnionPay POS's include NFC, though the card must have a chip to support it). Then you could just glue your debit card to the back of your phone...(or use NFC in your phone via something like Apple or Android Pay).

> I think most people pay their balance off every month in the USA

You would be surprised to learn that this is far from the truth.


The article you linked to states that 59% of Americans always or usually pay off the full amount each month.

To me, "most" implies "at least 95%". That's because it's used to exclude a possibility: If most programming languages have if statements, then if I hear about your new language I can assume it has if statements without checking further.

To use a simple majority means that you'd have to accept a simple statement like "Most programmers use Javascript"[1], and that's too weak to use for any reasoning.

[1] https://web.archive.org/web/20160317205014/http://stackoverf...

> To me, "most" implies "at least 95%".


No, it can also mean more than half.

I asked a few friends how they use the word, and apparently there are people that use it to mean "nearly all" and people that use it to mean "more than half", and the first group doesn't realize the second group exists.

This paper[1] gives a couple interpretations, none of which are as strict as the one I use. I wonder if I mixed up "conversational implicatures" with a heuristic for logical implication.

In any case, I've apparently been wrong about the meaning of a basic English word my whole life, and I can't find a good cover story to hide the mistake.

[1] http://www.zas.gwz-berlin.de/fileadmin/mitarbeiter/solt/Most...

>This paper[1] gives a couple interpretations

If we're talking grammar, then it is "a couple of interpretations".

Most is more than 50 percent. 'Most all' means almost all which sounds like what you meant :-)

It doesn't matter how American's treat credit cards.

Traditionally China is known as a nation where people save, and debt was not seen favorably at all.

This is a cultural thing, which has likely been wearing out since the 1990s.

Debt has never been seen favorably in almost any culture - even in the US, before the 80s.

I think it was the Reagan administration made credit card debt interest tax-deductible and the cat was out of the bag.

interesting! i had no idea that it used to be deductible (until 1986 apparently). i never really agreed with mortgage interest being deductible, but i at least understand the purported reasoning (eg. home ownership, american dream etc). but credit card interest? wow! that seems like a terrible idea all around.

This is completely unrelated to credit cards, but if you told me that 10 years ago, I would have agreed. Today is much different, I have plenty of friends who are $500k in debt on housing investments.

Of course, China's rapid rise in personal as well as private and public sector debt is evidence of a changing society.

> Today is much different, I have plenty of friends who are $500k in debt on housing investments.

While that is a lot of debt, it is nowhere the same as saying you have $500k of debt on credit cards. Credit cards are unsecured debt; it's debt with little or nothing behind it.

Mortgage debt, though, is a secured debt. In theory, you could sell the houses, maybe for more than you paid for them, and possibly or likely more than you owe on them (that is, you gain the equity). Of course, you could also be upside down, but you still have the property, and you could just sit on it, rent it out, and continue to make payments on it from rent (or whatever) until the market comes back.

> Many countries have an even better technology in NFC contact

NFC isn't "better technology", just different to QR code. NFC also handles 1 payer at a time whereas QR can handle multiple, in parallel depending on the physical display size.

NFC is better than QR codes in many many many ways. You don't have to line up the codes with the phones, paying is much faster, and the "1 payer at a time" limitation is actually the 99.9% use case for payments.

QR requires pointing, but NFC requires proximity; I can't imagine a street musician using NFC.

NFC requires special equipment. QRs can be displayed on screens and printed on paper which makes them incredibly more accessible and far-reaching.

NFC is invisible, which looks better IMO that a block of pixels with the occasional ill-fitting logo in the center. But tbh at the end of the day they are doing the same thing, the big difference being one is using some new sensors and electromagnetic frequencies to do the job, while the other is using visible light and a sensor that is installed on every phone in the world and everyone is familiar with already.

I agree that QR codes killer feature is that they are extremely cheap to deploy, which is why they've caught on in china. But they aren't better than NFC, even if cheaper.

Until recently I'd have agreed with you about much faster, I always found QR codes a bit clunky and slow.

However I think the image recognition processes must be improving as the last couple of times I've used them (for TOTP setup) recognition was very fast, < 2 seconds of the camera app. coming on as I was moving the phone into position.

It really depends on the software, I have the obsqr app (based on a native library) on a 600Mhz android phone from 2010 and I get recognition in probably less than 0.5 seconds after pointing it at the code.

Meanwhile the whatsapp web code reader on the same device and same qr code takes more than 6 seconds of careful aligning, and even on modern devices there are still some hilariously bad code readers (having to manually align the corner squares with an overlay)

+1 for Obsqr, great app. And I use Talalarmo from the same devs as my daily alarm. Love that team's no frills style.

> You don't have to line up the codes with the phones

A good QR reader does not require much lining up, just pointing the phone in the general direction of the code is sufficient, I'm consistently surprised by how fast some QR readers match codes.

That's significantly less work than having to bring your phone right next to a reader.

Every time my friend and I went to costas, I would check out much faster than him with a basic unionpay debit card while he was using alipay and it took time for the baristas to setup their equipment then to do the scan.

How do you verify payment with QR code?

In Scandinavia, usually just by showing the "payment sent" screen to the merchant. The merchant can check their own device for the notification if they want confirmation.

The annoying background video shows it: http://mobilepay.dk/da-dk/Pages/mobilepay.aspx

Seems a bit slower than NFC, but I haven't seen it in action

(and the payment sent screen can be spoofed)

For tips it seems fine

For most situations, spoofing a sent-screen that usually displays the vendor or persons name, is not too easy to do in the heat of the moment, without preparation, so it's not really been a problem yet.

I am not sure if it's true. It would be good if there is some data on this. But when I was living in the US, more than a few of my friends were in debt either via credit card or student loans. It's quite common compared to Chinese students which usually pay in full.

Hmm, I guess you are right:


Strange, I never carry a balance, and I still get all the points common in the credit card system.

That's not strange, the CC processors still get a % from the merchant for each purchase.

The average american has something like 10k in credit card debt.

That actually does not at all address whether most Americans carry credit card debt or not.

True fact. I wonder what the median credit card debt is.

"Average" presumably meaning "mean" here... How much debt does the median American have?

Why credit cards and not debit cards?

With a credit card, you're spending money that you don't have, but with a debit card, you need money in the account it's connected to.

Credit cards have rewards. Often some percentage back from the purchase. I have one that gives me 2% back on everything, which adds up. It makes sense to use it on every purchase and pay off the balance at the end of each month.

I can't pay with credit cards in a lot of places online (I'm from the EU)

Maybe the data doesn't back this, but as a US citizen I find that most of the time when people refer to credit cards they're meaning their Bank card, which often acts as whatever you define it as at the terminal or it has a default status for quick pay options.

There are many people that are happy to just pull out the credit card to buy beyond their means but a lot of the time people are using a card backed directly by their Bank account.

Here in Germany we have a clear distinction between credit- and debit cards. And I guess the culture leans more toward the "saving not loaning" model nickrio describes. So for me it is a conscious decision wether I pay with my bank account or credit.

Unlike China however, adoption of digital, low-barrier payments is extremely low here. I mean, hell, we're mostly buying paper bus tickets, while local public transport is sloooowly starting to roll out RFID tickets & readers.

All I'm saying is, I find the cultural differences and the impact they have on our day to day dealings (which, on the surface, seem to be the same globally) deeply fascinating :)

The Nordic countries also have that distinction, indeed credit cards are often charged 1-3% in fees, while debit cards are usually free.

That hasn't prevented the demise of cash, and MobilePay, Swish etc are popular for personal and commercial transactions.

The RFID card works on all public transport all across Denmark. Sweden has regional systems. I don't know about elsewhere.

The leader for this is London, where any contactless payment card works on public transport.

To illustrate how widespread the use of debit cards is - the Norwegian National Bank rolled out a couple of new bank notes in late May.

Only last week did I actually see one of the new 100kr ($12) bills.

Debet card terminals are everywhere, some churches have even put them next to the collection plate - and it is not uncommon to see street vendors using wireless terminals.

Most Danes use a combined visa/dankort which is a credit card but doesn't usually incur a fee. Also generally we don't have a seperate credit line, it goes directly to your bank account as soon as the transaction is registered (and simply overdraws it if you don't have sufficient funds). A lot of danes also seems somewhat confused about the debit/credit card distinction, because the only difference most people see is whether it allows you to overdraw your account.

The Dankort is actually a debit card, mine at least has the "VISA Debit" logo.

I'd guess most Danes realise credit cards are the ones where you often pay 1-3% extra, which is a difference you don't often see in the USA or the UK — there, it's limited to things like plane tickets.

When I lived to Switzerland, I was pretty surprised my debit card (Maestro) couldn't work on credit card networks (Master Card, heck, the logos looked almost the same!).

I'm surprised Germany is so far behind switzerland though, I mean, even when I lived there 10 years ago I could use my debit card via chip in a kiosk and have my train ticket very quickly.

I don't think standard Beijing city buses take wepay yet. You still hand over paper bills to the conductor or use your beijing transit NFC card.

I think it might be cultural as Germany has suffered massive bank crashes throughout the 20th century people trust

What the parent meant is that you get a paper ticket, even if you pay per card at an automated kiosk.

Online-QR-code-tickets bought per Smartphone are now common too though.

Absolutely understood there is a major cultural difference - in this case, I was more hoping to shed light that with regards to the US, most people aren't aware of the difference most of the time since the difference tends to be more relevant to the vendor rather than the customer. There is a subset of people who use credit cards extensively, but my experience is that most are unaware that there is even a difference most of the time.

As far as payment terminals go, there is no effective difference between credit or debit cards, and in the USA they accept both :)

There are some differences behind the scenes.

A week ago I was in this restaurant and I had almost no cash (as usual where I live in Northern EU); the restaurant terminals were rejecting debit cards from the two biggest banks in the country. After several attempts, I just paid with my credit card (which is configured to pay immediately from the account, not at end of month) and that worked.

That's probably because a credit card can go through with a transaction even if some of the involved parties fails to respond.

I think in the US, that type of card is referred to as a 'check card', and is basically a bank debit card with the additional ability to run it as a credit network (usually Visa) transaction with signature instead of PIN entry. Is that similar to what you have?

I am not sure, they both operate with a chip and pin code. I think it really is just a difference on how the banks settle the transactions between themselves.

I'm not disagreeing with anything you said but I suppose I am more commenting on the difference in attitude and execution.

While services like Android/Watsapp were created in the West and do service the lower end market, they still follow the "leader", isn't seen by the population as "cool/hip/etc." Even with credit cards, there are many merchants here that don't accept them (especially Amex) and Visa because of the prohibitive fees. The attitude in America is, define your market (high end/low end) and then extract the absolute amount of wealth you can, and defend your market share by any means possible.

In contrast, as you saw with the busker in the article, when it is rolled out in China, it is truly (almost) for everyone. They try to use economics of scale to get everyone on board so the entire nation is moving as a collective. Another example is the high speed rail; I recall reading an article that even though wages doubled, the fares didn't budge at all. It just allowed more and more people to take advantage of a good service. In America, you'd bet they try to increase fares as much as possible to extract as much as possible out of the consumer. Obviously there are problems, as with inferior phones, but when everyone is on board, there is an acceleration in innovation and they start solve those problems. Then you see things like people wanting higher end models and companies are forced to innovate. A company like Xiaomi which dominated suddenly drops to 4th place and needs to innovate - that is a sign of a healthy market.

Chinese banks are pretty bad innovation wise, which is why it took tencent and alibaba to run this through. Even unionpay, with lower fees, fails to catch on because the banks kind of suck. Try dealing with a fraud report to Icbc, for example.

A big reason why QR codes caught on in China is because everything else was really bad. In america, credit cards were 'good enough' compared to what was in china, so QR codes didn't catch on that quickly. Also because it's a wealthier nation, the typical merchant could afford the hardware required for processing cards, but QR codes all you needed was a print off and the mobile phone you already had as a merchant, which made more sense for china at the time.

Having lived in China during the time these online payments were launching, I have a different view. China launched a new online banking innovation law a few years ago. I can't find any sources, but I remember the banks complaining that this would give online payment providers an unfair advantage or something like that. The main players today Alibaba (Alipay) and Tencent (WeChat) were attacked by the banks in a big public debate. Today, they're the leaders.

I think it's rather a classic case of disruption. The incumbent banks are afraid of destroying their high credit and debit card fees, so don't invest in alternative products for payment transactions. Meanwhile, political interests don't make it a priority to innovate in the banking arena. Whereas the Chinese government basically said to the banks screw your concerns, we think this is a good idea and want to do this. Hence, when you have payment innovation in the US, it's limited in scope (PayPal and Google Wallet on the Internet only) or has to build on top of existing payment transaction infrastructure (Square and Stripe edit: and Apple Pay).

I bet if not for lack of political will against the banks and other incumbent interests, the US could make a similar banking innovation law and Facebook, startups, and the like would get in on it really fast. There's nothing inherent about QR codes that make them less preferable than tapping credit cards. In fact, I prefer QR codes.

"In america, credit cards were 'good enough' compared to what was in china"

I disagree. CC fraud was unknown to me until I moved to the USA. The security chip was not used for a very long time in the USA and just started to be a thing. First version of chip enabled CCs had no pin. I am not sure about good enough.

The chip doesn't add any additional security to the card compared to what was available previously; US credit card companies have only added it to avoid additional legislation from Congress.

Also, the whole reason Europe had the chip and the US didn't was because phone lines in the US were better than ones in Europe, so it was vastly easier to do a quick authorization check in the US. The phone lines were not "good enough" in Europe, so the chip and pin system was created as a way to authenticate locally.

Actually, the data on the magnetic stripe was in plaintext. The chip has a digitally signed copy of that data. This allows the bank to authenticate the card as valid and eliminates attacks where a fake card is made with stolen data put onto the stripe.

This does nothing for online payments but very effectively curbs fraudulent card present transactions.

It goes beyond that, unless the US implementation is different to the one i am (somewhat) familiar with.

The chip is an active participant in the authentication.

it will receive digital signatures from the bank and the terminal, and if said signatures are found valid, release the payment info stored.

I do know the US implementation is different, but I do not know if it is different in regards to this highly relevant information.

A reverse example in the US is money transfer, in Europe it's extremely easy to send money between bank accounts instantly and for free. But in the US it is more difficult to companies like Venmo popped up.

"Android was released a couple years after the iphone "

This is a really interesting history rewrite, since it was released a year and 3 months later.

It also didn't define the low end of the market, since at that point, the iphone was just getting apps (2 months earlier is when the apple app store was released)!

To be clear you are calling the fact that the iphone was only released 15 months instead of 24 months before the first android a history rewrite?

To be clear, you are converting a vague term like "a few" into a specific amount of time, and converting it to an even more precise measurement (months)?

I live in NYC, and most stores seem to have $5-10 credit card minimums.

America needs to admit that it's no longer the bastion of innovation that it once was (I say this as an American. If anyone doesn't believe me, just take a trip to East Asia). Americans are complacent and fine with not having the cutting edge (not to mention our failing infrastructure).

I wish there was a way to change this attitude, but it feels like most people are too busy working and paying off their student debt. If every American had to fly to Tokyo or Seoul for a week, I think we'd put up less with our failing infrastructure. Or maybe this "Everyone for themselves, it's someone else's problem" greed mindset is too ingrained in our DNA.

As Chinese, I would say, the scale and speed of China getting rid of cash is truly impressive and makes me proud, but, in US, with credit card and Apple/Android Pay, I am pretty much cashless as well. For me, the achievement of mobile payment is social-economical, that is more about how companies could persuade customers to adapt a new way of doing something than inventing some ground-breaking technology.

In case of China, put it into another perspective. Chinese banks have long been state-owned and very ineffective. Credit cards are incredibly difficult to apply, and cumbersome to use after you get it because the banks refuse to pay you back in case of frauds. This is why WechatPay/Alipay could be so successful:

1.There is no existing dominating technologies.

2.It mitigate the fraud problem that it is harder to stole/clone your card.

3.The onboarding process is really easy.

All in all, I think mobile payment takes off in China is pretty logical, while in other countries, like Japan/South Korea, it is not common at all, even though they are close to China culturally and their economies are considered to be more advanced than China's. This is a classic example of second mover advantage, that China could enjoy this great leap forward, only because it is not advanced enough before so doesn't have all the legacy to carry along.

However, I agree with you that US needs to ditch the illusion, that it is still the norm of innovation and others should follow. The world is getting diverse once again after the cold war, more and more innovations will happen elsewhere, like in East Asia or India. Time to let go of that useless ignorance and set down to truly listen and, learn.

> but, in US, with credit card and Apple/Android Pay, I am pretty much cashless as well

The thing is though is that the US has a habit of getting these things decades after they're introduced.

The US has just started EMV rollouts and it's still the only country that depends on signatures. Most of the developed world has had EMV with a PIN for what, 15 years now?

Contactless payments have been widespread in Australia (home) for at least 5 years and by "widespread", I don't mean a few particular retailers support them, I mean everything from the independent coffee or fish and chip shop down the street to every major supermarket chain, cinema, Starbucks and McDonald's.

The US is just barely keeping itself 5-10 years behind the rest of the world.

Why are you "proud" of removing cash going fully digital allows governments to implement negative interest rates ie steal your monney

Because it speaks loud that Chinese technologists are using technology to make everyone's life better.

And none of your comment actually happened.

Actually, negative interest rate policies have been implemented quite a few times in Europe. The Swiss did in the early 70's, Sweden and Denmark both did for a while during the recession, and the ECB did it in 2014 for bank deposits.

So yes, it actually can happen. But it doesn't require digital cash.

Chinese Yuan that stays in your online payment account is usually managed by some cash funds, e.g. Yuebao from Alipay currently manages over $200 billion and it is returning 4.1% pa.

In case you are arguing that the <1% fee should be considered as a part of the overall "interest" rate, well, that small fee does bring you the real convenience.

They can implement negative interest rates with paper money also.

yes but if you hold cash they don't come and take 1% out of your wallet

They don't need to, because they can take the 1% out of your wallet by printing more pieces of paper with dead politicians faces on it.

Inflation affects all kinds of money - including that sitting in a bank account. All forms of electronic payment include rent paid to some company and that's above and beyond currency devaluation.

Not the same one of the Baltic countries has openly speculated about taking money directly from peoples bank accounts.

Ahh yes, that is different, and worth being paranoid about if you live in one of those countries where it's an idea people in power are considering.

Went to the donut shop, got a $1.50 donut with a credit card, no minimums here in LA. This NYC place sounds fairly strange.

I lived in Beijing for 9 years. It changed much since then, but the tech brought out was solving mostly local problems with local solutions. When I started living there, I used to pay for rent by withdrawing 20K or so RMB from the ATM machine (in 100 bills), loading it into a bag, then giving it the landlord. I never did that in the USA before, never had to, it wasn't the problem the USA had. Now I can use Wepay, oh, or I can go to the bank and do a direct funds transfer (as a foreigner, I could never get ebanking setup).

> If every American had to fly to Tokyo or Seoul for a week, I think we'd put up less with our failing infrastructure.

All of these places have their own thing. Don't get confused and think that the problems they are solving are much better than the ones we are. I've had plenty of trouble in Tokyo that I wouldn't experience in the states (dammit, streets should have names!), they are just different.

yeah, and Walgreens will allow you to buy a 40 cent pack of gum with a credit card. They are surely losing money on that transaction. Your donut shop is losing over 30% when they let you buy a single donut for 1.50$ with your card. That's why sane merchants (often independent) will have a minimum. This isn't a NYC specific thing at all.

Where do you get this 30% number?

Typical minimum credit charge is 30 cents plus a percentage of the gross.

These are very high interchange numbers. I think it was bad like that in the past, but not today.

interchange can be pretty high, especially for premium reward cards. what changed recently was interchange on debit cards (which used to be much higher in the US). this is why debit issuers no longer offer any real sort of "points" or cashback on debit. and why debit and cash users essentially subsidize credit card users in the US

The amazing internet infrastructure in Korea caused them to develop many service that relied on Internet Explorer, preventing them to pick up new standard as easily as countries that were later to the party.

That's probably the same kind of stuff here. The US did develop a universal non-cash system decades before other countries and now is stuck with its quirks. Europe started later and is slightly better. China started even later and could just use the fact that even poor people had an internet connected computer with them at all times except in the shower.

The country can still produce innovative things even if the people do not want to adopt them.

Its an attack from both sides, though. Monied established interests systemically manipulate the economy through the state to prevent competition and innovation from gaining traction, while the people are indoctrinated into anti-intellectual and anti-progress ideologies and thus personally resist change.

Both are done for a profit motive, so the real problem is probably the simplest to acknowledge but the hardest to solve - corruption.

Generally (and excluding AmEx), requiring minimum purchases is a violation of the merchant-processor agreement.

That was the case until 2010, but since then the law requires that processors allow merchants to have a minimum purchase requirement of up to $10.

What law is that? State or Federal?

Federal. It was part of Dodd-Frank. That specific part was often referred to as the "Durbin amendment".

The Federal government does not have nexus in individual retail credit card transactions (aside from offenses like civil rights violations, e.g. "we don't sell to your kind!").

The Durbin amendment (see quoted statute in other comment) prevents networks from forcing small merchants to accept small charges, not merchants from imposing minimums on consumers.

State and local laws can still prohibit CC minimums via statute or via licensing.

> requiring minimum purchases is a violation of the merchant-processor agreement

That is exactly the type of agreement that the Durbin amendment prohibits. I don't see any mention of state or local laws prior to now, so that seems like a complete non sequitur to me.

... because it appears that you haven't read the statute (it's quoted in my other comment thread). For credit cards (as opposed to debit), it affects processors only.

> it affects processors only

Yes, exactly like I said. It prevents processors from requiring merchants not to have minimum charges. In other words, it prevents processors from making agreements with merchants where "requiring minimum purchases is a violation of the merchant-processor agreement". It doesn't stop someone else from stopping the merchant from having a minimum charge, but it does stop the type of merchant-processor agreement that you described.

I don't see how you differ from what I wrote.

The start of the thread was the claim that the Durbin amendment made it illegal for merchants to set CC minimums for consumer purchases. That's the false interpretation.

What I originally wrote is easily verifiable and clearly does not say that:

> the law requires that processors allow merchants to have a minimum purchase requirement of up to $10

I give up. You refuse to see the distinction between the processor-merchant relationship and the merchant-consumer relationship.

No, I'm really don't. My original comment is about the processor-merchant relationship. You can tell because it uses the word "processor" and "merchant" and is about what the processor allows the merchant to do.

Even when that was true (which, as a sibling comment notes, it is not anymore), it was common anyway.

The statute says:

"(3) NO RESTRICTIONS ON SETTING TRANSACTION MINIMUMS OR MAXIMUMS.–A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability of any person to set a minimum or maximum dollar value for the acceptance by that person of any form of payment.”

It does not inhibit state or local jurisdictions from banning merchants from setting card minimums in their individual credit card consumer transactions.

South Carolina resident here, no credit card minimums.

I have seen it in North Carolina and Florida. Usually with mom & pop shops.

I don't see it as a class thing but it certainly is a culture thing. When the American's go to build their app, you get something out of silicon valley that is almost built for the programmers. It will use hardware that requires everyone to buy a new phone (like NFC). Things like QR codes would be derided as insecure and exploitable. It will comply with consumer protections.

In China the app will be made chabudao (good enough). It will use QR codes because its fast and its what your coder knows and its whats on everyones phone. Security exploit? Shenme? Consumer protections? How do I say "caveat emptor" in Chinese?

There's something to be said for the Chinese approach. By making something stupid, they've made something smart. Not all innovation requires technical accomplishment.

Edit: after thought. Credit where its due to alipay and wechat. The QR-code works even when my phone is temporarily without a connection. I don't know what goes on in the background, but it def saved me a few times from looking like an idiot with no way to pay for something.

Another point about dumb being smart. Alipay does have a sound based transaction system (like what crinkle tried to do). AFAIK no one ever uses it. The plain old dumb QR code is faster and better understood and is therefore better.

> chabudao

Chabuduo, but again your spelling is chabuduo OK

haha I write Chinese the way same way I speak Chinese: completely wrong.

You can use a credit card without an internet connection as well. The transactions are just stored until a connection is made.

But with that being said I don't think China has the same fraud problems that the United States and to a large extent the West does. You can build insecure apps in China because nobody is trying to steal money from them like they do in the U.S. or something.

IMO China has plenty of fraud problems. The Chinese attitude is just "don't be stupid" and as a corollary "if you were stupid, don't expect anyone else to care".


> In China, they have an authoritarian political system, but democratic economy space because they can actually vote with their wallets.

Except the rampant nepotism and outright corruption that means the same oligarchy controls the future of tech there too?

> In China however, they throw away that pride of creating the greatest and shiniest.

Why is it every time china is discussed, people have to repeat the same trite false things.

China is a developing nation. Developing nations don't create the "greatest and shiniest" things. The US didn't create the greatest and shiniest things when we were developing. Germany didn't create the greatest and shiniest things when they were developing. The same thing with Japan. The same thing with Korea.

There was a time when american goods were considered shoddy and poor quality. There was a time when german goods were considered low-end. Japanese goods were mocked for being low quality. Korean goods the same.

>The way I see it, we have democracy in politics but in products, its authoritarian because its guided by the billionaires and wealthy. In China, they have an authoritarian political system, but democratic economy space because they can actually vote with their wallets.

Right. Because in the US we can't vote with our wallets.

> we have democracy in politics

The last events in the US election system have cast a long shadow of doubt on this statement.

Yeah, anecdotal evidence isn't winning an argument. We got the study out of Princeton in 2014 that showed, with evidence, how US officials do not act in the will of the people[1]. That is what you talk about when you discuss the crumbling of democracy in the US, not trivialities like how the electoral college is intentionally not an institute for popular majorities to always win (and if that would be ones sole cause of doubt... where were they in 2000?). It can't be about how the nomination process in political parties doesn't reflect the will of the people - because of course they don't, the parties are private entities and will nominate whoever their leadership wants. Those things are obvious. If the American people ever wanted to solve them, they would fight for it.

But having concrete evidence that those who you "vote" for consider your desires nil? Very valuable when discussing how undemocratic the US is.

[1]: https://www.cambridge.org/core/journals/perspectives-on-poli...

Really? I voted on something like 24 initiatives in the last election defining how the state of California deals with things like Marijuana and the death penalty. Seemed to work just fine to me.

Presuming your lame post was actually referring to the presidential election, that was never direct democracy to begin with.

So you're trying to advance the argument that democracy is all nice and good to determine minor local issues, but it is not good enough to determine the next president? Seriously?

I read the statement as the US system - both at the state and the federal levels - is working the way it was designed to work. Given its growth - in both population and territory - since its founding, that it is still in existence with the same constitution is no small feat.

>that it is still in existence with the same constitution is no small feat

I would call that a defeat. The US constitution is clearly past its sell-by date.

Wow, one result you don't like leads you to throw the whole thing out?

If you cook a meal you don't like, do you burn down your kitchen?

Are you referring to Trump? I wasn't thinking of him at all, I was thinking about the polarization of society and the two-party system. Trump will pass fairly quickly. He might even shape up himself, although the presidency shouldn't be adult education. The two-party system, congress and the whole shitshow, on the other hand, will stay for a long long time.

The US wasn't meant to be micromanaged from above at the federal level to begin with, so it's not a surprise that expectations of congress to solve the country's problems are not being met.

There are a non-trivial number of people (including me), who are happy when the federal level fails to legislate things that can be legislated perfectly fine at the state level. There is no reason to think that the laws in California should be the same as the laws in Michigan, much in the same way the laws in California shouldn't be the same as the laws in France.

Not necessarily: it proves that its architecture is very scalable, and whoever built it knew what the hell they were doing. Even then, the US Constitution has a mechanism to change itself. It's been used 27 times.

I like thinking about the law as if it was code.

Code that you can't test and debug before running in prod.

And in which you're allowed to not check certain cases. (when writing code, you can omit checking bad input, but you're not morally allowed to do so)

And surveilled by their wallet.

>The way I see it, we have democracy in politics

Are you so sure of that? http://www.businessinsider.com/princeton-and-northwestern-st...

Your point is slightly undermined however in that China didn't build any of this. Their "inferior" product, and even the big current one (WeChat) is all based on technology pioneered by other countries.

While we were putting together the first apps, China was still by an large a poverty-ridden manufacturing-exclusive economy, Hong Kong being the exception. It's only in the last 25 years or so that they've finally opened up and started really growing, and when they did, all of this technology was already more or less proven and available for them to use.

The real test will be the next 50 years or so, when these various systems will need to be upgraded to see if they can keep the same pace and keep everything exactly as, for lack of a better term, shiny. :) So far they've done well, I hope they continue to do so.

It's also worth noting: All that's been accomplished could have been accomplished without the Chinese central planners too; the real problem for America and countries like us is the crony capitalism, not the lack of central planning.

You've basically just restated innovator's dilemma.

The market has already been primed for them to engage in a follower strategy.

Well they do have communist socialist roots.

China has been has been capitalist under the CCP (including the time spent pivoting towards it) longer than it was ever actually communist. Their "roots" in communism aren't that deep.

I think that has more to do with our manufacturing costs. The first run can't be cheap, we just don't have the infra for that sort of thing.

I think this article hit the nail on the head when it pointed out that being ahead of the curve at one time (with Japan and their advanced flip phones in the early 2000s) can make it harder to adopt the next big advance because what you have is already "good enough".

Thus, in the US, I suspect that mobile payments haven't taken off as much because they are only very slightly faster to use than a credit card, as opposed to cash, which is much slower with people counting out amounts and cashiers counting out change. Before Android Pay came out and there was Google Wallet, I tried using Google Wallet but was super disappointed - it failed about 5% of the time, where my credit cards almost never failed. Lately, though, I've started using Android Pay and I've been really impressed. Just one tap with my phone and it's done, and it's very reliable. Still, though, it's really only slightly faster than swiping my credit card, especially for small amounts where a signature isn't required.

Mobile payments haven't taken off in the west because credit cards have worked well enough. In china, lots of small-scale businesses lack POS terminals while Chinese banks put the burden of proof in case of fraud on the card user, rather than the merchant as in the west. Using a credit card in china is an absolute PITA.

Since returning to the states from china, I've been happily surprised that I can just tap my credit card to pay at many terminals. This still pales in comparison to austrailia, where this tap to pay seems to be ubiquitous.

Just wish everyone would hop onboard quicker. We still need a lot of consumer education.

For example, Apple Pay works great at Whole Foods. I use it every time. Other people in line painstakingly pay with credit cards, despite holding an iPhone in their other hand. The new chip cards take longer to process, even, 5 seconds or so.

Chips are unnaturally slow in the states, they are pretty fast in Europe.

So I have to have a apple phone worth several hundred dollars plus the extortionate mobile charges in the USA instead of a free credit card with tap and go I know which one I prefer

I use Android Pay all the time at Whole Foods in the US and it works great. It's faster than a chip card, and it links directly to my existing card.

Well you could use Android if you can't afford an iPhone. There are many different options for mobile payments.

So only £150 fo a moto g then a bargain

> Mobile payments haven't taken off in the west because credit cards have worked well enough

Yeah but no. Come in the UK and you'll see that mobile payments are seeing widespread acceptance. I can go weeks without having to pull my Debit or Credit Card.

Absolutely. This thread seems to be populated with people who think everywhere in "the west" = the USA.

I'm in Ireland and hate carrying change so I use my phone all the time to pay, I only end up going to the ATM ~ once every 2 weeks or so.

Some people working in shops aren't used to paying with phones yet but you just tell them it's the same as contactless card and it works out fine.

Everywhere to me is just china and the USA. I haven't been to the UK in years, but was happy about NFC usage when I tripped to austrailia.

Ever since I've been back to the states from china, I've used the ATM only around four times in the last year. My wallet also feels much more empty given the density of $20 bills over 100 RMB notes.

> Mobile payments haven't taken off in the west because credit cards have worked well enough

USA != the west. Paying by credit card is pretty uncommon in large parts of Europe. Most stores I frequent don't even accept credit cards. But debit cards with pin&chip and now wireless NFC pin&chip is very popular.

I hardly ever use cash, but the only reason I have a credit cards is for some US webshops.

Yeah, it is hard to overstate just how easy it is to use a credit card in the US.

I have only managed to use Android Pay a couple of times and the store that I did that with has removed it since then.

When it works, it is approximately the same level of annoyance as a credit card. When it fails, it is so much worse. I just don't see it taking off here in its current form.

The worst part is how inconsistent indicators of NFC support are. There is only one grocery store near where I live that I know supports nfc, because they put the logo on their credit card readers. Everywhere else I have to pull out plastic because I have no idea what payment systems they support.

Even worse, I think, is the proliferation of mobile app payments. Where you have to download the specific app for the business. (Burger King is IMO the worst offender - you cannot order in their app, but you can pay in it, so rather than support NFC and not wasting 50MB of space on my phone they make me download their proprietary junk and reenter my card info again just to avoid having to swipe the card...)

Mobile payments are much faster and easier than the credit card chip in my experience at places that have both options.

> Yeah, it is hard to overstate just how easy it is to use a credit card in the US.

You have got to be kidding. Handing my card over to someone who disappears off with it? Those bloody awful faux-pens to sign on an LCD? That's your idea of easy to use?

Paying for things in the US feels like the stone ages.

In the context of a restaurant where they take it away, I agree. Also, if they actually require a signature.

But the sweet spot of <$50 transactions that require neither PIN nor signature (admittedly, this depends on the retailer) is really quick and easy. It is certainly much quicker than pulling out my phone and fiddling with the poor feedback in Android Pay.

>Handing my card over to someone who disappears off with it?

Does this bother you? If your system can't handle this scenario then it is flawed.

>Those bloody awful faux-pens to sign on an LCD?

Not required in lots of locations unless it exceeds some value.

>That's your idea of easy to use?

Yes, I put a card in a machine, wait 5-10 seconds, and take it out. Done.

In a sit-down restaurant, the waiter drops off the check towards the end of the meal. I put my card in the holder and he grabs it and returns with a receipt to sign and write a tip amount. Not quite as fast as the waiters who have payment processors they walk around with like in Europe, but close.

> Paying for things in the US feels like the stone ages.

Trust me, living here feels that way too, except everyone is at pains to tell you that it's the greatest in the world. And don't get sick!

I think you're right that this is the dynamic at play here. It is similar to the dynamic by which many regions have leapfrogged landline telephones, skipping the older more infrastructure/capital intensive version of technology.

The developed economies were already mostly "cashless." Very little cash has run though most malls, hospitals, schools or even supermarkets for decades already. "We hqave something good enough" is definitely at play.

That said, we need to keep in mind that financial transactions has been close to an airtight oligopoly for a long while. 2 CC companies have run the show for decades. They have very deep "moats" with spikes and crocodiles. One of the big one is the strict regulation, which heavily favours established incumbents.

It's yet to be seen whether China (+India, etc.) will develop a dynamic market for financial services in their cashless economies, once the dominant services become established and entrenched.

> The developed economies were already mostly "cashless." Very little cash has run though most malls, hospitals, schools or even supermarkets for decades already.

Cash share of payments in Germany and Austria (by volume) were still >80% just a few years ago, see p.38 of https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1685.pdf

Including salaries, rent, mortgage payments...?

That's because they are poor countries as well as its harder for people / insurgents to nick the copper. Mobile is never going to be as good as FTC (Fiber To CAB) in terms of bandwidth

BTW used to work for a company that did telecoms consultancy in Africa and in Angola they preferred microwave for trunk links as it was harder for the rebels to damage.to

> as opposed to cash, which is much slower with people counting out amounts and cashiers counting out change

I can't really let that comment stand. Cash transactions go way faster than credit card transactions in my experience. (They'd go faster still if prices were posted with tax included, but that's a different issue.) Hand over the card, swipe the card, hand back the card, wait for the receipt to print, get a pen, sign the receipt, hand that back VS Hand over the money, count the change, hand that back.

Don't get me wrong, I can imagine how credit card interactions should be able to go faster. But in practice, they don't. If anything, they've gotten worse lately, since the chip cards take a while to do their processing (and then you still need to sign the stupid LCD screen with the terrible stylus).

This is an American perspective, on my case cards are much faster than cash, I just tap the card, and it's done instantly.

The vast majority of places where I have to wait in line to pay (lunch spot near work, CVS, Starbucks, etc.) I don't have to sign because the amount is below the limit (usually $25 or $50). Pretty much the main place I need to sign is at restaurants, and then I usually don't care because I'm sitting down, in conversion, and not in a rush.

It works better in places that have tap to pay (you know, the developed world), you just tap your card on the terminal and it's done, quicker than swiping, quicker than cash even.

I am pretty disappointed at the lack of locations accepting Android Pay. I was hoping to ditch my wallet but can pretty much only use it at the gas station, Subway, and Walgreens.

> Thus, in the US, I suspect that mobile payments haven't taken off as much because they are only very slightly faster to use than a credit card

Mobile payments haven't taken off in the US because the big players are all fighting to the death in the space.

I suspect that the space was equally as fractured until the big players in China simply got the "Party Blessing" and that was the end of the discussion.

"People counting cash"

In some countries (I've seen it in Canada and Sweden) there are machines that deal with the change for you (this is separate from a self-check out machine). They either deal with just the coins or with notes+coins, without any cashier interference

Born in China and moved to U.S. since college. In my observation, there are several reason for the boom in mobile payment in China that makes it hard to replicate.

- Low transaction fee & minimal barrier. For merchants taking WeChat pay, the transaction fee seems to be a flat 0.6%, compared to 2%-3% in the U.S. For the food cart vendors and similar one man shops, they just use the person-to-person payment feature (like Venmo), which has no transaction fee and does not need a merchant account. While Square helped somewhat in the U.S., the transaction fee, for many, is perceived as a rip off.

- Cards are a pain to use. In the U.S. you sign. In EU you use a PIN. In China you do both. Usually, it seems slower than cash! Mobile payment, comparatively, is a breeze. However, it's quite difficult to argue that taking out the phone, unlock it, open the app and show the QR code is easier than using a card in the western world.

There are some deeper historical reasons for these two conditions, which I would not dive into in this comment, but needless to say, it's a much, much more fertile ground for mobile payment to blossom.

> For merchants taking WeChat pay, the transaction fee seems to be a flat 0.6%, compared to 2%-3% in the U.S.

Where the heck is 3% even allowed in the USA?

> However, it's quite difficult to argue that taking out the phone, unlock it, open the app and show the QR code is easier than using a card in the western world.

Tapping the card to the NFC terminal is super easy. You don't even need to take your card out of the wallet if its in front.

What do you mean where the heck is 3 percent even allowed? How do you think banks in the USA are issuing 2 percent cash back credit cards? Who do you think is paying for that?

> Tapping the card to the NFC terminal is super easy. You don't even need to take your card out of the wallet if its in front.

The whole point here is how to entirely get rid of the wallet. your ID, your cards, receipts, parking tickets etc should all be digital. in fact, that is exactly what WeChat/Alipay are offering or battling for.

WeChat based ID card with approval from the Public Security Bureau: https://www.huxiu.com/article/169540.html

I'm more likely to always have a wallet on me than a phone on me. The base notion that a phone is literally essential to daily life but a wallet is not has yet is not a proven assumption.

Many Chinese don't drive, so going wallet free is more feasible.

> should all be digital

I don't know what it means, but reading this all I could think was how there is absolutely no way Penndot is ever going to make Drivers Licenses in PA digital. Ever. They only just let people register to renew online like 2 years ago. You still have to drive to the DMV anyway, you can just sign up to get it renewed in advance for "fast processing".

State institutions resist technology to a pathological degree. At least in regards to ease of constituent use. They all have websites and have facebook groups and such, but they (by law, usually) never use it to improve the experience interacting with them.

Actually this is a terrifying prospect. I can just imagine being arrested because the ID network is down. You people need to watch Black Mirror.

I find the idea that I could be arrested for not having a physical ID at least as terrifying.

You must be a very scared person then.

Not really. I'm quite certain that arresting me for not carrying ID would be illegal in the United States. Note that in some states I might be required to identify myself, but simply stating my full name counts; I don't have to have a physical government-issued ID. Similarly, I am required to carry a driver's license when driving, but forgetting my license at home will at most result in a ticket.

There's just no plausible scenario where I get arrested and taken to jail simply for not having a physical ID with me.

You're quite wrong. It's happened to me.

Cards are not a pain in general, only on payments above the contactless threshold. And if you're buying something expensive, you likely wont mind the extra minute for PIN and/or signature.

To add to this: it's not just low transactions fees for the merchant, it's cheaper payments for the customer as well.

Both Alipay and WeChat have spent billions subsidizing and discounting. Go into a restaurant in Beijing and there's a good chance you could get 10 or 15% off your bill by paying with WeChat.

So given that it's both cheaper for the merchant and cheaper for the customer it's no surprise it has taken off so much.

Well yes and this is because they are paying to build the infrastructure out. In the U.S. that infrastructure already exists so there's no need for subsidies.

But to add to that, I would love to live in a world where I don't have to play the credit card game, but using cash in the U.S. at least is putting you behind. The prices are the same for an item whether you use cash or not, except with even the worst credit card you can get 1% cash back.

I'd love to know the historical reasons

Sure, but this is my personal view, so of course take it with a grain of salt.

Capitalism, and hence consumerism, is a relatively recent thing in China, dating only to the 80s. Therefore, the well-developed mechanism in the Western world that encourages and protects it are still lagging.

One significant aspect of it is consumer protection. Chargebacks are almost unheard of in China. Fraud protection is pretty much nonexistent. The results are twofold. First, security is an utmost concern, which explains the PIN-and-signature requirement in POS. Second, free of the responsibilities, banks can offer a much more attractive interchange rate.

Another aspect is credit is not as developed in China. Of course, culture plays a large part as well, as traditionally Chinese value saving over spending. Therefore, there aren't crazy cash back schemes that American banks offer (credit card points do exist, but nowhere as lucrative), and people don't lose anything by switching to mobile payment, which are basically prepaid cards.

These two situations are of course rapidly changing. Younger generations are much more willing to take credit (and you hear horror stories of young girls using their naked pictures as collateral), and more and more company realize consumer protection can be used as a competitive advantage. But mobile payment took foothold before traditional card did, so looks like they are here to stay.

Very interesting information. I'm quite interested in the spread of western economics over other parts of the world, China, India, African countries too.

I'm not fond of consumerism at all, but the way each country structure and culture absorb it is interesting.

> the transaction fee, for many, is perceived as a rip off

Only if you're a merchant. Most of the 2-3% fee is transferred to consumers via reward programs. It's important to understand that merchants and consumers face different incentives and that US card networks have aligned themselves with consumers.

The merchant is charging more to cover the fees. THEN the user often gets 1% or less back in rewards that are both less flexible and less useful than more cash in your pocket.

> The merchant is charging more to cover the fees.

This is what everyone assumes, but it turns out it's false. We are fortunate to have some experimental evidence on this. In 2003 Australia slashed interchange fees through regulation. Prices did not decline.

"...retailers saved more than $400 million (Australian) annually in fee revenue after interchange rates there were cut, but there was no evidence that they passed any of the savings on to consumers. Instead, consumers saw higher card fees, a reduction in loyalty benefits, and the introduction of surcharges of up to 3% on credit card transactions, the report found."[1]

[1] http://www.digitaltransactions.net/news/story/Report_-Austra...

1% or more is a better phrase. Add to that, if the merchant is charging higher fees then you would have to get everybody to collectively stop using credit cards at the same time, or otherwise every time you use cash you're paying extra on your purchase.

In EU you have a pin and you also have to sign the receipt. In supermarkets, cards (debit or credit) queue up the checkout line.

Cash is way faster, hands down. I bothered to compare the difference once, since cards here are not the norm. We're talking between 5-10 seconds (cash register) vs 30-45 seconds, most of which are dead times (waiting for confirmation).

In the EU (at least here in Germany), if you have entered your PIN, you don't need to sign the receipt. If the PIN is not required during payment, then you need to sign.

Edit (replying to child): This applies when paying with credit card and EC/girocard. I don't know what you mean by ATM circuit.

You have to note: are you paying with the ATM circuit or with the credit card?

The ATM circuit often doesn't require an additional signature (although in some countries like IT it's still required)

Some Perspective and Experience While i was in China.

I couldn't set up my WePay in time, so like the Author, I had to use Cash. And from my experience between a Tier 2 City and Tier 1 City like Shanghai, it is actually those Tier 2-3 City refuse to accept cash. They thought Cash were cumbersome. And Shanghai may be more welcoming cash / Credit Cards for variety of reasons ( Likely privacy ).

I tried to buy breakfast for $2, ~20 cents in USD, i didn't have WePay so I paid in cash. The Shop owner said she didn't have any changes and decide to give me the meal for free.

Over the 15 days, I kept thinking about QR code as Tech. Trust me, it is crap. I dont believe there is that much time difference holding up the queue as noted in the article. You have to Open up WeChat, and let each other scan, input your payment by youself, show them you have paid. To me this is very backwards. Octopus in Hong Kong, Scuria in Japan, Oyster Card in London Transport, Offline Mobile Payment from Master Card and Visa, All these are 10x better in UX. The merchants input my bill, I beep. That is it.

Then suddenly one day it clicked, and I knew why QR Code succeed. With NFC or any other Wireless payment, you need something, a electronics, a beacon or what ever for sellers to work. With QR Code, They "Print" a QR Code and laminated it. And you can photocopy as many pieces as you want. The barrier of entry for QR Code is so low every one could use it. At the expense of consumer UX.

And then weeks after I visited China, Apple announced in WWDC, iOS 11 will come with Auto opening QR Code in Camera mode. That, may have just made the friction of using QR Code much more bearable for me. And it is likely both tech will exist side by side in the long future. I cant see QR Code as it is used today ever getting replaced by the more expensive NFC solution, and NFC will likely stay in transport and other areas.

"With QR Code, They "Print" a QR Code and laminated it."

Can someone give me an example of what a merchant would encode into the QR Code that would then allow them to receive money ?

Is it a URL ?

It's a URL, but just one used to open an app with some data. E.g.: http://iosdevelopertips.com/cocoa/launching-your-own-applica...

And the merchant doesn't know this. Their setup process is typically: Open up WeChat, login, click the plus in the top right corner, pick Money, click receive money...

And of course paying and receiving is much easier once everything is setup.

This is correct.

1. Customer scans QR

2. POS operator hits given this is a realtime hit and noone else is hitting this QR at this time.

3. Customer received bill, hits OK. Confirmation sent to both reatailer and customer at the same time. Customer often shows retailer this has been successful. Receipt printed and handed to customer.

4. Customer walks away happy.

The transaction from 1-4 takes less than 2 seconds. Very efficient.

The stumbling of a new customer to get their phone out, activate pay, question if any special offers are in offer however drags this out to a vastly greater amount of time than using cash.

However, the tech UX is sound.

Edit: Live in China. Wish people could use cash as queues are much longer when the 'human factor' is added in/ Perhaps this will fade, but it has already been a few years and sees no fading as retailers add discounts, coupons, to the payment, which leads customers to click around their phone rather than being prepared in advance with discount coupons and cash.

One thing I forgot to mention, Receipt! For whatever reason Apple Pay or Visa / Master still hasn't figure this out. WePay you get Receipt All in one. And this purchasing Data should live inside my phone, not in the cloud. and the data could be used as personal Financial management. Realistically Apple should be the one doing this, but pretty much like All of their services, they are half hearted and they dont give a damn.

P.S - I wonder if QR Code can be made in Circle shape rather then Rectangular.

"It's a URL, but just one used to open an app with some data. E.g.: http://iosdevelopertips.com/cocoa/launching-your-own-applica...

OK, but presumably a very long URL with a lot of hasing/coding in the URL that not only describes the transaction but secures it, correct ?

QR Codes are an open-standard - they are not something that wechat made up - so could you use some other mechanism to transmit that URL ? Could I email the very same URL and expect it to work ?

I had the most surreal experience in the Shenzhen airport the other day. I was out of cash, with only my credit cards and Android pay. There was no place in the entire airport that I could pay with Visa or Mastercard - the first time I felt truly helpless in China. Uber didn't work either. I was forced to set up WeChat pay, which works absolutely everywhere.

Where I see the cashless innovation failing deliver is where there is a state-owned enterprise providing a service. I was in Shenzhen on the weekend and had to use cash to pay for a one-time use token to catch the subway. Lining up to pay took a good 20 minutes by itself.

The Shenzhen subway seems like an exact copy of Hong Kong's MTR, which uses the excellent and ubiquitous Octopus system. The MTR is its own entity and allowed to play favourites (or enable monopolistic behaviour).

I've used the metro in NYC and Washington DC this week, and will do in LA tomorrow. Strangely I couldn't just wave my phone or credit card at the barrier like I do in (state-run) London - had to actually buy something to get on board. It's almost as archaic as the (private run) busses in the UK.

NYC Subway & DC metro are state run...

Actually neither London Underground nor MTA are technically state run.

Not everywhere takes WeChat pay. AliPay is slightly more common. Businesses prefer AliPay for their lower interchange fees. Though I'd estimate 80-90% of places in cities take one or the other.

It is Shenzhen, where Tencent's HQ locates, I would say WeChat pay is more common there.

I'm guessing this has come about because VISA and Mastercard are US companies, where as WeChat is Chinese owned?

No, this is very strange actually. At least Starbucks would take credit cards, and you should be able to find an ATM that takes your USA-based ATM card. Never had this problem before.

I did feel screwed when I arrived in he Netherlands thinking my unionpay card to work, just to find out it was one of the countries besides India where it didn't. Thankfully, I could find some place that took credit cards...but I was freaking out as I didn't have much convertible cash as backup.

Germany also doesn't really take credit cards.

Well, didn't.

The EU limited fees for credit cards to 0.125% recently, and while EC (now bought by MasterCard and called Maestro for SEPA) is still cheaper, credit cards start being affordable for merchants. But almost none support it yet.

And Google still hasn't launched Android Pay, despite every ALDI having NFC. I'd prefer if there was a local NFC payment option actually.

Germany's aversion to credit cards is somewhat cultural, isn't it? Datenschutz, Datensicherheit, etc.

Well, it’s a few things.

Germany already had a well-working giro system by the time credit cards were invented – almost instant, free transfers between bank accounts were common.

Then, credit cards were obscenely expensive (and still are in some cases, many credit cards cost a hundred euros or more per year for the owner, and taking credit cards often costs 6-7% of sale price + 60€/month for the merchant, and merchants can’t ask credit card users to pay more, so merchants would go bankrupt if they’d do that).

And this is because credit cards in the US are only free and have bonuses because they’re basically a tax on the less educated, with high fees and interest. Germany, which traditionally has a culture where having debt means being guilty (literally, that’s the same word), obviously is far more cautious, so far less profitable.

And then the EC cards happened, which introduced the EMV chip, were safer, faster, and had far lower fees, so they were supported everywhere.

And then there’s privacy.

And the fact that the US – especially MasterCard, VISA and PayPal – love stealing customers money in legal transactions inside of Germany just because it violates US law (which, fyi, does not apply in Germany, although the US pretends it does), as [1] and [2] show.

All in all, credit cards are a horribly insecure implementation of a ridiculous system that only works when it can scam enough people, interferes with local law, and doesn’t fit the strict privacy morals of Germany.

[1] https://cphpost.dk/news/international/us-snubs-out-legal-cig...

[2] https://www.reddit.com/r/technology/comments/ka26b/paypal_bl...

Yes this supposedly "consumer friendly" change lost me about £20 a month in cashback but the retailers will just pocket the difference and not pass it on to the end consumer

I very much doubt that, considering how fierce the competition between retailers is, often fighting over single cents.

Even if that were true (I could write a book about how wrong this is), this isn't something retailers can compete on. If I get 2 extra cents, why would I give it back to the consumer, if my competitor could just do the same (and now both my competitor and I have lost those 2 cents)?

You should take a look at ALDI and LIDL’s retail strategy.

They’ve been in an eternal race for lower prices since they started competing.

Yes, I read that article too. I already told you why it doesn't apply.

Which article?

Also, it literally applies here – since the fees for credit cards were reduced, ALDI and LIDL introduced payment with credit card (which wasn’t possible before at all at them). Same with REWE and coop.

How can you say it doesn’t apply if it literally happened.

That's not at all what you were talking about earlier. If you can't understand the difference, it's not worth explaining anything to you.

Don't take this the wrong way but in the real world when regulation like this happens its not the end consumer that benefits.

The EU reduces your transaction costs by 2% for all retailers there's no way they will pass this on to the consumer eg my morning Starbucks did not get cheaper

China has Unionpay. Because merchants don't often have terminals, and because paying with phones is more convenient, people just link their card to WeChat/Alipay and pay with the apps

Everyone in Australia just uses paypass/paywave contactless payment with their credit cards. I rarely carry any signifiant amount of crash for that reason. It's essentially the same as using your phone except you use your credit card and doesn't require a PIN or anything for <$100. Once I have a transaction over $100 I can tap and enter my pin, or use chip and PIN, or if everything fails occasionally I need to swipe and PIN. Most critically, signature is no longer allowed.

Without having used WeChat's approach with QR code scanning, it doesn't seem that different for the end user in practice. Either way, you're scanning an object you carry against some target environment and a merchant is processing the transaction for you. It's even closer once you use eg: Apple Pay with your CCs loaded into the Apple system - you're tapping your phone rather than scanning via the camera.

I'm guessing that the CC infrastructure simply wasn't there and pushing out EFTPOS units was a far higher barrier to entry than simply running an app on your newly acquired cheap chinese smartphone. As such, the CC merchants missed the boat whereas the big phone app companies got in on the ground floor. On the flipside, many Western countries had all the EFTPOS terminals already, so contactless just became the next iteration on that.

I don't really necessarily agree with the problem of the country building their commerce systems around Tencent, etc. as 'private companies' since most of the west hinges on Visa, Mastercard and to a lesser extent Amex. They're all private companies too. Maybe the government will step in and standardise the QR code system eventually to reduce the risk. I don't really see it playing out much differently to how the West did with CC contactless.

"Without having used WeChat's approach with QR code scanning, it doesn't seem that different for the end user in practice."

The difference is that anyone can accept WeChat payments, no matter how small their transaction volume.

I haven't been to Australia since 2002, so am a little out of touch. Are there small businesses like fruit stands? Do they take paypass/paywave?

What about buskers?

That's a very valid point. Not everyone can become a payment recipient with this with the same barrier to entry. In that sense, it's definitely less flexible and I guess that's where FB and co. have tried to make inroads with cash transfer. I know Commonwealth Bank made an in-house system for doing instant and easy transfers from an app like that.

Regarding your question, anyone who previously took a CC via an EFTPOS terminal would now take paypass/paywave. It's not ubquituous amongst the standard sunday market/food truck retailers, but it's not uncommon. I went to a French food and wine festival a couple of weeks ago and the majority of them used EFTPOS, but they also not infrequently do the market circuit.

Essentially, anywhere that previously had EFTPOS now naturally has contactless, and as the critical mass of people who don't carry cash grows, more smaller retailers are pressured into getting EFTPOS. The terminals are handheld, battery powered and connected to the mobile network now so you don't even need electricity. Granted, I don't see a time when buskers end up get EFTPOS terminals.

> Everyone in Australia just uses paypass/paywave contactless payment with their credit cards

It's the same in Canada.

Whenever I go to the US I feel like I'm going backwards in time.

Let me share a few real life use cases for you -

when I go to pubs/restaurants with friends in Shanghai, one of us would be using AliPay to pay for the whole bill, then he/she would be using AliPay's "AA Pay" feature to show the QR code to get money from everyone. I guess your paywave card won't help you on that.

shared bike is extremely popular these days, it costs you $10c for a one hour ride. paywave card is useless for such innovative products - the amount of each transaction is too small, plus you don't want to see a card reader on each bike as there are 10 million such bikes now.

EFTPOS style devices were popular in China, the quarterly statement from Chinese central bank shows that around 6 billion debit cards and half billion credit cards were issued in total.


A major difference is that you can pay any other person with Alipay. If a friend buys you lunch, you pay them back by scanning a QR code on their phone.

or devices

there are currently 10 million ofo/mobike shared bikes, 700k were added to Beijing in a single month (May 2017). there is simply no way you can attach a card reader to every single one of them.

I'm still puzzled about why lost cards aren't more of an issue with paywave. Does the bank always refund the losses? If so, what's to stop you spending money for a week and then claiming to the bank that none of the transactions were yours?

Both of these problems occur with regular cards too (liability shift & chargeback). Generally the bank will pay for transactions if your card is stolen. They also have checks in place to reduce the scalability of fake chargebacks by customers (friendly fraud) - though its difficult to eliminate completely.

I'd assume the fee for receiving funds through WeChat QR is significantly lower than the transaction fee for paypass in Australia, which might explain why so many stores have a minimum for card.

Fees for PayPass/PayWave on debit cards in Australia is 7.5¢.

Though, in general, if you accept debit cards in Australia you need to accept that network's credit cards too. My Visa Platinum is going to be more than 7.5c for most transactions, I imagine.

Take the credit card swipe versus chip example. The chip is an improvement over the really old swipe tech in theory. In the US, using the chip is a terrible experience because it takes a lot longer for the process to complete. Why? Because merchant processors have no interest in putting the chips on a fast network because they can get higher fees on the swipe and conversely the stores are charged higher fees for enabling the chip. There you go. There's the moral question and the profit question all in a real example that didn't improve the experience for the end user.

The faster the lines are moving - the more transactions per day can a store process, thus more fees for processor. I don't see a logical reason for processors to artificially slow down payment process just for a tiny fee difference, no? plus they theoretically get less chargebacks and fraud activity with chips.

Except the cost of slow transactions is not eaten by the payment processor. The store just has to add more checkout lanes or clerks. The payment processor also never gets blamed - if the process is slow, the customer just blames the store.

> the cost of slow transactions is not eaten by payment processor.

> if the process is slow the customer just blames the store.

If the customer does not like long lines and slow transactions in a store - they will leave, and the processor will see less revenue from fewer transactions because of that

There are only 2 card payment networks of worth and most cutomers have cards from both. They don't care.

The chip is a security measure. My understand is that it is slow because the chip is doing a computation and it is not very fast.

Living in China for the past two years - Important thing to remember - in China and in most of South-East Asia the tech boom came at a later stage when smartphones were already prominent. Android + Chinese manufacturing made it possible to produce cheap smart phones. The result is that these countries have completely skipped the laptop phase and went straight to smartphones, most of the population doesn't even know what a laptop is. What the west calls eCommerce (amazon, Ebay etc) is called mCommerce in Asia (Taobao app, JD.com App etc). Asian consumers find it easier and more natural to shop using smartphones rather than laptops like Western consumers.

Oh and yes, When I leave the house I don't even take my wallet, everything is paid using wechat.

I've been in China as a tourist for three weeks two years ago. I paid everything with cash. Easy.

What would I do now if I have to pay with WeChat and I obviously don't have a Chinese bank account? Tourists don't have time to waste in banks and unless bank accounts are created and activated on the fly it would be pointless to open one. Maybe open an account in advance from home? Is that possible? Or WeChat and Alipay start operating with accounts in multiple countries.

You don't actually need to have a bank account in order to use Wechat payment. Someone can just send you money over wechat and it would still work, just a 1000rmb/month limitation. If you're a tourist it should be fine.

Cash is still accepted.

I used Kuai Didi without the payment option easily enough, just hail a taxi with the app, pay the meter with cash, simple easy done.

Many merchants take credit cards, ATM machines are pretty ubiquitous now. By no means do you need Wepay to survive.

I have been living in Shanghai for few years now. Alipay and Wechat are really a big thing. It is far from the vision of mobile payment people have in Europe for example, where it is more of solution for small payments.

People are using Alipay and Wechat pay for everything, being online shopping, restaurants, supermarkets, train tickets, electricity, water, even some tax declaration. So it is not just a replacement to cash and bank cards, it is starting to go beyond that.

I go for months without having any cash or bank cards on me. Unfortunately everything falls apart when my phone runs out of battery.

Or phone stolen.

Or wallet stolen (arguing for the other side).

At least if your phone is stolen you still have your money safe, if you cash is stolen - it's a different story

Is this faster than PayWave?

Ever since I could tap to pay with my card in AU, I have been going months without using cash. I usually still have money, but never use it. I've gone almost 2 months with literally 0 dollars in my wallet.

Contactless payment systems are prevalent in Australia. And even before tap to pay we were able to insert cards, enter a PIN and pay. What has happened in China is that they payment systems have been baked into the apps where, in Australia, this occurs at the terminal (EFTPOS as an example) which is app agnostic and tied directly back to the bank gatewys.

Its like Paywave, but requires a charged smartphone battery. Sounds annoying to me.

And for those rare places that only do cash, it's not uncommon for the person in line to turn around and ask a stranger for cash and they'll pay that person in a WeChat transfer. Done in seconds. Happened to me and observed it myself a couple of times.

With digital wallets, there's zero need for credit cards and their predatory interest rates.

China is just absolutely crushing it. The Amazon Self Serve store that's still in testing in USA? Tao Bao pushed their version and it went live last week.

> With digital wallets, there's zero need for credit cards and their predatory interest rates.

How is there zero need? If don't need to borrow money longer than 30 days, you pay zero interest. If you do need a bit longer to pay, you have that option.

Since banks aren't charities, the fact that those 30 day loans are "free" just means you're paying for them even if you don't use them.

By using a digital wallet, you personally don't save any money over a credit card.

Can confirm, in most supermarket, paying take literally one second. You pull out your phone and show your Alipay/WeChat QR code, the cashier scans it and 1 second later it's done.

People paying in cash is a small minority

Speeding up lines, they also can have more clients for less cashiers

In France, most people pay with a bank card, the rest with cash. The process is longer and less user friendly

Yeah but you do have to wait for the kid in front of you to finish chatting to his friends before switching to the payment part of wechat

You’d have to wait even if they paid with cash, no?

No - they can use one hand to chat whilst getting cash out of a pocket with the other.

Does your QR code change from one transaction to next?

Yes. Also if you keep it open for some time, the code will change automaticly

Only for debit transaction, credit can be printed

Take out card, put on NFC reader, get out. One problem is the 20€ limit though.

Last time I was in France, there is not that many NFC terminals yet. Also both of my french cards don't support it

Also 20€ limit is fairly deal breaker, doing groceries will often be above that. Even a 2 person MacDonalds is probably something like 22€

Meanwhile even vending machines can scan your QR code in China

Adoption has not been the fastest that is true. There are shops that start also supporting QR codes through Lydia, however the process is nowhere near convenient as NFC as you have to unlock your phone, launch the Lydia app, unlock it, then type the amount and that is when you finally get to the QR code. I suppose Android phones in China have the payment somehow integrated into the lock screen ?

Edit: just wanted to add that many vending machines also do support NFC payments.

NFC payments quickly spread all over France in the past 12 months. It's nearly everywhere now, with no minimal payment amount.


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