Wow, so many Cassandras and hostile comments here on HN about what seems like a courageous idea to me.
Does anyone here believe that the current system of ACH, checks, Visa, and Mastercard is good?
Anything involving banks and credit cards (in the US at least) is choked with government regulation (steadily worse every year), entrenched players, and big built-in fees. We pay probably 3% more for every single consumer item thanks to credit cards.
What Dwolla is proposing is not impossible -- it's not like a perpetual motion machine. At least they are heading in the right direction: trying to bypass some of the regulation, oligopoly, and fees.
Assuming the status quo in direct payment sucks--we can agree it sucks?--then, why beat down someone who's trying to do something about it? Especially if no one is offering a good alternative.
It's not choked with government regulation - it's not being forced by government to improve. Do you know how EU got from the exact same mess to where it's payment services are now?
What the EU did a number of years ago was to issue a directive (approx. a federal law in US terms) about consumer payment services which essentially said "consumers have the right to have their payments be credited to the beneficiary within 1 business day. If it doesn't happen, consumers have the right to demand compensation from their bank for each such transaction. Banks have a transition period of 5 years to make it happen."
The US ACH systems are slow and expensive because the banking industry benefits them from being that way, and there are currently no powerful incentives to improve.
Comments
Wow, so many Cassandras and hostile comments here on HN about what seems like a courageous idea to me.
Does anyone here believe that the current system of ACH, checks, Visa, and Mastercard is good?
Anything involving banks and credit cards (in the US at least) is choked with government regulation (steadily worse every year), entrenched players, and big built-in fees. We pay probably 3% more for every single consumer item thanks to credit cards.
What Dwolla is proposing is not impossible -- it's not like a perpetual motion machine. At least they are heading in the right direction: trying to bypass some of the regulation, oligopoly, and fees.
Assuming the status quo in direct payment sucks--we can agree it sucks?--then, why beat down someone who's trying to do something about it? Especially if no one is offering a good alternative.
It's not choked with government regulation - it's not being forced by government to improve. Do you know how EU got from the exact same mess to where it's payment services are now?
What the EU did a number of years ago was to issue a directive (approx. a federal law in US terms) about consumer payment services which essentially said "consumers have the right to have their payments be credited to the beneficiary within 1 business day. If it doesn't happen, consumers have the right to demand compensation from their bank for each such transaction. Banks have a transition period of 5 years to make it happen."
The US ACH systems are slow and expensive because the banking industry benefits them from being that way, and there are currently no powerful incentives to improve.
OTOH, overhyping stuff that is unlikely to succeed starves more reasonable approaches.