Comment by rprend
2 months ago
Pix, UPI, etc are nationally silo'd and have little risk of spreading around the world. They took over their respective countries because they were government backed and mandatory.
The US has its own version of this: government backed, 24/7 instant settlement payment rails (called FedNow). It released in 2023 but adoption is slow because it's not mandatory. Banks are especially slow to support "Requests for payments", which might compete with card networks for retail purchases.
It's the banks, not Visa / Mastercard, that make the most off credit card fees. Visa / Mastercard take .1-.2%, the bank takes ~2%.
The other unique bit about the US is we have uniquely strong consumer protection laws and a uniquely large amount of fraud. Irreversible payment rails are a nightmare for consumers who are used to chargebacks being built in to the payment rail, and banks are skeptical of exposing such rails to consumers because most of the time the banks are required to make good when the customer is defrauded.
UPI & RuPay are not mandatory, they are completely optional.
Citizens and travelers in India can pay by cash, card, UPI or NetBanking to make offline or online payments. A new or existing customer or a Bank can randomly get (and can anytime request for a replacement card) to Bank to get the ATM/Debit card as RuPay, Visa or MasterCard card. So RuPay card is optional too.
But nevertheless, the technology stacks behind UPI and RuPay have been built to be so versatile, scalable and robust that they now account for 85%+ debit & payment transactions in the nation! India is rapidly heading towards a cashless economy!
Due to the interoperability, scalability and resilience in the technology stacks for UPI & RuPay, these brilliant solutions are now being sought after by other nations, who are eager to buy and leverage these tech stocks to implement their own branded payments systems that will replace Visa, MasterCard, Amex, etc. in those nations.
e.g., UAE has tied up with NCPI (Indian government organisation that implemented and manages UPI & RuPay) as a tech license deal and UAE has already started its own implementation of RuPay, which it has branded as Jaywan. So the Jaywan Debit cards are alternatives to debit cards from Visa, MasterCard, Amex, etc. in the UAE.
The other unique bit about the US is we have uniquely strong consumer protection laws and a uniquely large amount of fraud.
This has nothing to do with instant payment. Lets say $1000 is lost from your checking account due to fraud then is it covered by visa or mastercard? consumer protection there is different.
With SEPA or UPI it is irreversible but it is the same like you ACH transfer. If you do a mistake then it is irreversible.
Some people here talk about Amex, VISA or mastercard giving free damage insurance on purchase of consumer items like phone etc. That is not consumer protection. That is more like one gets this free insurance for paying yearly fees or maintaining account.
Another reason for fraud is the use of magnetic stripe based card readers.
> The other unique bit about the US is we have uniquely strong consumer protection laws and a uniquely large amount of fraud
I'd certainly dispute the former part. Strong, in a subset of cases. But chargebacks are still, ultimately, a he-said-she-said a lot of the time, and it's very easy to find abuses of it. Not to mention, merchants who blanket ban and revoke access to purchases because of even legitimate chargebacks. There's little recourse for that other than arbitration, generally, if that.