Cofounder of Lopay here - we have the same mission: offer free payments to businesses, but we're working with existing networks to do this.
QR code payments are particularly hard in countries like US and UK as you're trying to change consumer behaviour. I tried doing this in 2014 and again in 2019 - both failed to gain traction (aside from during COVID).
In the UK it's possible to accept card payments for 0% via Lopay, but only if you spend your earnings on our card (essentially, passing the fees onto the merchant/supplier you're paying). We're launching the same proposition in the US soon too.
If you don't use our card, our headline rate is 0.79%.
We're a lean team of just 36, supporting over 40k weekly transacting businesses with £1B+ in card processing. If anyone reading this is interested in this space, we're hiring and on the look out for driven people to join us!
QR codes feel like such a step backwards compared to NFC. The UX with current mobile OSes is not good. And if you require an app, or even worse an active data connection, well, I much prefer a quick double-click of my phone’s side button and then putting it near the payment terminal. And I’m really skeptical about security. NFC is vulnerable to relay attacks and QR codes can be secured by using one-time codes or rolling time-based codes, but showing a bright high contrast “scan this to take my money” image in public feels very wrong.
I also actually _like_ having a physical card that I can use with NFC so that I'm not fecked if my phone dies/breaks or anything. Physical cards to me are a feature.
Yeah, it's not like I carry a stuffed wallet any longer, but I do have a small front pocket wallet with a handful of cards. It's actually easier for me to pay with a card (and increasingly mostly just tap it) than to pull my phone out and do whatever with it.
Yeah, as someone who just took a trip in China where QR payments are the most popular form it was clearly inferior from a UX standpoint from NFC. The most notable was a data connection. Cell service was pretty good overall but there were a few cases where we were struggling to get the payment through. Some merchants also have the ability to scan your code (which seems to be generated offline) but that leads to this confusing UX where you never know if you will scan (and should have the scanner mode ready) or be scanned (and have the QR code open).
And there was always the fear that your phone dies and you can't take the subway or purchase everything. It doesn't happen often but on some long days you really don't really want to be tracking the battery of your phone super closely.
NFC payments can work offline (although this is pretty rare) and can be authorized from a small plastic card that has no battery, no internet connection and is pretty robust including being completely waterproof. Plus 100% of the time I tap my card or phone on the merchant's terminal. No alternate UX option. Plus if you are using your phone for payments (which is a very convenient option) you don't need to open any app beforehand (WeChat is like 3 taps to get to scanner or code) and I found quick NFC reading to be more reliable than scanning a QR code where the lighting conditions and state of the QR code are not always perfect (it was almost always possible to get it to work within a handful of seconds, but often took a bit of fiddling around. NFC is reliably just tap and it works).
I still keep a few large bills in my wallet in case the card networks are down, flag my transactions or whatever else. But having this immutable payment card that is incredibly reliable and easy to use is way better than the phone-based QR systems I have seen.
What I would love to see if we bring phones into the system is a way of approving the transaction (including the amount) on your device. So for example 1. Tap phone 2. Review amount on screen and approve 3. Tap to commit payment. This is more steps but is far safer. That being said the number of times this has been an issue for me is 0, so it is probably better to just rely on the banking system to correct any mistakes rather than add extra steps to the payment flow.
The experience in China is weird. My first reaction was, wow, this is so futuristic, everybody takes payment by code. Then after a while I’m thinking, hold on, this kind of sucks.
China’s implementation could be done a lot better. There’s no fundamental need for multiple incompatible systems like they have. But even improved, it wouldn’t be as good as NFC.
I couldn't get a wallet app to work with GrapheneOS, so for me, QR codes are better, but they feel like they have different use cases. I like QR codes in mail invoices (very common in CH), I'd like NFC in a shop if I could use it.
That was my disclaimer, but I do prefer, regardless of what works on GrapheneOS, having a QR in my invoice letters. You could shine a light on the envelope and likely read it without opening, but having anyone be able to touch their phone to the envelope to see I owe Y$ to X sounds worse. It's also nice in email since there's less to copy over, and my PC doesn't have NFC.
I'd only prefer to have NFC over QR for in-store payment, and I transact way less money per month in-store.
Something weird happens whenever someone tries to disrupt the Visa/Mastercard mob. Even in this post, the founders alluded to being "not well connected enough". Also look at how Plaid's acquisition by Visa was cancelled by the DOJ on antitrust claims but then Plaid dropped its plans to build a pay-by-bank network. Makes no sense when compared to the lawsuits filed and dismissed in 2024 and recently July 2025 claiming that Apple tried to build a payment network but were stopped by Visa/Mastercard.
I appreciate you looking out for my well being, but really there was nothing shady here. We weren’t forced out by a Visa mob or something like that. I actually wish that were the case, because that would mean that we were growing! We just aren’t well connected enough to convince established merchants to switch over to a startup’s payment network, especially since the value to them is dubious.
But it’s not like there was some shadowy Visa conspiracy. We received pre seed investment from institutional investors and built a pay-by-bank network entirely fine without anybody stopping us
> We just aren’t well connected enough to convince established merchants to switch over to a startup’s payment network, especially since the value to them is dubious.
So instead of competing on merit by improving the value offered to merchants, your concern is to become connected enough to have the merchants switch to you in spite of "dubious value"??
The post is really interesting. Sorry it didn't work out for you guys. Thanks for open sourcing the code. The world REALLY needs better/faster alternatives to the big payment processors
What I need is not lower fee cards, but anonymous pre-paid debit cards that do not allow linking purchases to a person and profiling people. Until that appears, I will use cash only.
Super interesting read! I work in payments for context and see tons of different payment methods every day. People tend to find a payment method they like, and really only ever use that one method. It’s very hard to get someone to switch - even if an alternative is better. It’s just so ingrained to swipe that same card, click the same autofill button, etc.
Digital wallets did somehow over come this, and those would be a super challenging but potentially valid approach #4. If Zenobia is in Apple Pay, google pay, link, etc it’s natural and easy for customers, saves money for merchants, and disrupts visa/etc without disrupting anything else (ie making people us QR codes).
Tough problem. You need a Jony Ive on your team to help solve it.
Or do like pix and give everyone $1500, but only if they use Zenobia :)
> Tough problem. You need a Jony Ive on your team to help solve it.
I don't think so. A Jony Ive will not be in a position to solve the actual problem - what use is a non-universal payment mechanism to consumers and to retailers?
I read the linked page and don't see answers to the main adoption problem: how is the purchaser supposed to pay?
1. Purchaser has to download the app? Okay, but purchaser already has a few equivalents on their phone (Pix, etc) - added friction!
2. How does the App get money to make payment? Purchaser has to fund a new account? Okay, but that is more friction!
3. How does merchant accept the payment? Do they need a new payment terminal? Must their payment terminal be updated with new software? Even more friction!
I've worked in the EMV space, even quite recently, and merchants do not want to update and will only do so when forced to. Any new payment system (QR codes, etc) needs around 5 years (maybe more) before it is universally accepted.
The best way, where I am, to rollout a new payment terminal is to pitch it to the banks, who then offer it to the merchants who have accounts with them.
Adding new functionality to EMV terminals is a lot easier these days, since most of the new terminals are Android, and the vendors have app stores for third parties to write software for these terminals (Pax has Maxstore, etc).
Now, maybe I missed it, but I did not see this application on Maxstore, or some of the other stores. I could have missed it, because these stores have literally thousands of payment applications.
The long and short of it is, you came up with a non-universal payment method, and predictably it did not take off.
I'd argue that the problem is that QR codes shouldn't be an 'app' problem, and yes there's a chicken-egg problem with PoS terminals verifying incoming bank payments but that's a separate issue.
If you want to do account-to-account payments you can show the customer the account/routing number, amount & invoice ID - but obviously that's high friction and the customer needs to login to their account and send a payment with lots of manual data entry.
Making yet another app, adding a financial intermediary, requiring you to link your bank account - these aren't solving the friction points.
We already have bank apps, when I scan a QR code in an industry-wide format it should ask me or confirm which bank app to open and pre-fill all the payment information.
So from my perspective, the problem is that FedNow in the US, and Open Banking in the UK - they could have just dictated "Banks must support EPC QR, or EMV QR code scanning and deep-links", and QR code payments would happen very quickly - even with NFC/RFID you can do passive scanning to achieve the same thing.
* Choose Account
* Confirm details
* Press send
That's about as easy as you can get for push payments, with a real industry-wide standard for communicating payment intents via NFC/QR. But both FedNow and UK OpenBanking are structured in a way which requires friction, and onerous regulation, through their clunky APIs - meaning you can't actually solve that problem on your own.
The best players to disrupt Visa Mastercard duopoly would rather be a consortium of payment processors such as Shopify / Stripe / Google Pay / Apple Pay and banks taking in sandwhich Visa and Mastercard (where the money is stored, where the money is spent)
They could probably make decent money with card graphics. I'd probably pay a couple bucks for a Gaben or an R6Siege card. Much more interesting than metal cards.
Well, that's definitely true, and it's also how the MasterCard and Visa monopoly remains dominant. Just look at the extreme backlash of Trump's administration against the Brazilian Central Bank's plans to sell the Pix protocol abroad.
There’s a geopolitical reason for this. Ability to print a world reserve currency and apply sanctions to control capital flow are among the primary tools of American power.
I'm adjacent to it in that we provide some of the infrastructure around identity etc in Brazil, and it seems to be really popular. I think there's a similar system in India.
In the UK you can do payments via Open Banking. I'm not sure how popular it is, but I've used it a few times to send money to Wise to then send over to Australia.
Seems misleading or at the very least incomplete to blame these fees on "the power of the free market" when the visa / mastercard duopoly exists due to regulations making the entry barrier to creating a new card network essentially infinite
I don't think it's due to regulations. It's just a natural monopoly due to network effects. Any new entrant has to convince hundreds of payment processors and retailers to accept their cards before anyone even has them. Regulations are a trivial barrier compared to that.
The problem is not that credit card companies charge large fees. The problem is that they do not allow to pass the fee on the customers. Because of this I don't like European regulation - instead of capping the fees they should just make clauses that not allow merchants to set a card acceptance fees, illegal.
The clause that doesn't allow passing fees on the customer is the only thing that makes market non-free.
I think it would be only fair if people paying with a card were charged more. They get the cash back from the bank anyway.
Also I know that there are super-discounted stores in my country that do not accept cards for this reason.
They absolutely allow you to pass the fee on to the customers... as long as you phrase it as a cash discount from the posted price, instead of a credit card fee on top of the posted price.
I'm super super glad this change was made. It genuinely makes me smile every time I go to a merchant and they raise the price when I pull out my credit card -- it's not always convenient for me to carry cash, but this has helped me trend in this direction.
"merchants are fee-insensitive, while consumers are rewards-sensitive. In other words, consumers pick credit cards (and, indirectly, networks) based on the goodies they receive, and stores will grudgingly tolerate high fees in order to accept credit cards."
US consumers are too conservative in the way they expect payments to work—checks are still in circulation and “swipe & sign” has barely been put to rest (has it?). Any system like this would require adoption by a few diverse and large-scale retail institutions to make it worthwhile for consumers to use. Or else it would be a mere alternative to “PayPal me”…
It is very much a chicken and egg problem. Merchants have no reason to adopt it if there aren't very many customers that use it, and customers have no reason to adopt it unless there are a lot of merchants, or at least some important frequently used merchants that use it.
I think for a new payment system to catch on it needs to either have a significant benefit for both payers and merchants, or be pushed by government policy (for example, require all merchants that meet some criteria to accept the new form of payment).
One way to solve this problem is to have a certain commodity require the new payment method. If AWS for example created a new currency/payment method and made it the sole accepted way to pay for servers it could very quickly catch on as others adopt. Look how “Sign in with Google” became the default.
I’m pretty sure the main reason Apple/Google/Microsoft haven’t done this already is because they would be directly competing with the US government. The idea must get shut down pretty quickly by powerful people.
> The idea must get shut down pretty quickly by powerful people.
There’s no larger conspiracy here. It’s that payments is a commodity now, with shrinking margins and high competition. It’s not worth it for most players to even enter the space, let alone compete tooth and nail for a shrinking share of the pie.
No conspiracy? Is that why the US government also tries to prevent other countries like Brazil from internationalizing their payment systems like Pix?
Apple/Google/Amazon/Microsoft could save billions on credit card processing fees by cutting out Visa/Mastercard -- but instead are pressured to accept "special rates" and warned to stay out of the business.
There's plenty of evidence that Visa and Mastercard tried to prevent Apple from building their own network, including DOJ antitrust complaints in 2024 and a more recent suit in July 2025. The fact that antitrust allegations failed to make it in court despite it being such an obvious antitrust case against the duopoly very much suggests that there is something more going on behind the scenes. This seems like such an easy antitrust case to win, especially when it was used successfully in the Visa vs. Plaid case (another case where a potential competitor was prevented from building an alternative to Visa/Mastercard) - Plaid dropped their plans to build a network after their acquisition was cancelled.
There's no way that I can take such strange goings-ons at face value - Apple only gains by disintermediating Visa and they clearly tried at some point, but something stopped them. What stopped them? Too hard for Apple? They already built the infrastructure for it with Apple Pay and Apple Cash. What stopped them from going all the way? I'm convinced something more powerful stopped them.
Even in the OP article about Zenobia Pay, the founders clearly stated they were not "well connected" enough to make a payment network. This suggests a mob. You shouldn't need to be "well connected" to launch a genuinely better product in a free market.
> It is very much a chicken and egg problem. Merchants have no reason to adopt it if there aren't very many customers that use it, and customers have no reason to adopt it unless there are a lot of merchants, or at least some important frequently used merchants that use it.
I agree that both parties need a reason to adopt a new payment method... But the reason can't be only that there's a lot of merchants/customers that have it ... If there's benefits for enough participants, reach can drive adoption for those who don't care about the benefits, but you've got to have some material benefits to get people started.
It's got to have a good experience, too.
But from this rant, it seems like they were trying to be a middle man for instant bank payments... I don't see the value of that as a purchaser when I can use a debit card. For the merchant, running a debit card takes a small fee, but anything that needs someone to scan a QR code takes a lot of time.
And other countries don't have chickens and eggs? They didn't use to pay for things in the past in those other jurisdictions that have adopted modern payment systems?
US people feel absolutely fossils payment wise. Of course the US has the best marketing / pr but the state of payments is just depressing compared to even 'regulation blocked' eu.
Unless I'm on a touchscreen device, I never want my scrolling to have inertia. So just leave it on the default behaviour. I don't understand why you would put in the effort to make the scrolling feel worse
What the fuck is with the comments here? Guys, it is a postmortem. So you all are complaining about the scrolling and accusing it of being advertising or an announcement?
Frankly, I find this admirable and want to encourage these kinds of things. Guys gave it a shot, failed, and are putting their work out there. They are communicating why they think they failed and what they think would help someone pick up the mantel. What did you all want? Them to just die in quiet and all that code disappear? Hell, their READMEs have more documentation than most of the open source projects out there.
What happened to that hacker mentality? That belief in an open source world, even if as just a pipe dream. To me it looks like they still care about their dream but realized they can't make it happen. They aren't asking for investment and their website says they are inactive, so what makes this advertising? FFS do we have to assume everything is done in bad faith? You don't advertise by giving your competition a leg up. If this gets them investment, who cares, the result is the same. Code and information is out there, you can't take that back. Honestly, I don't care even if the code was garbage (I don't know if it is or isn't), I'll respect anyone that releases their code instead of letting it die with the business. It's just a better outcome, so why are you all complaining?
In Norway there is already a low fee processor called BankAxept. It has made it practical for shops to sell even the cheapest item and accept payment by card without losing money.
Interesting read, I searched if another startup got this market right, it seems truelayer did using open banking for online payment ($700m valuation) https://truelayer.com/
> fees are for fraud prevention and sanctions compliance
Visa and Mastercard’s pre-tax income margins for the quarter ending on 30 June were 62% and 57% respectively [1][2]. That is $10bn a quarter in absent competition.
When you start at the wrong premise, you typically end up in the wrong place.
The premise is that credit cards (visa / Mastercard) is broken. When actually it works really well.
For starters it works everywhere. Online. IRL. In my home country, in foreign lands.
Secondly it costs the consumer nothing. The cost goes to the merchant. If anything the customer gets rewards.
Merchants might pay 3%, (and ultimately yes, that's in the price of goods) but checkout "just works". They're in the "get paid" business, not the "teach customer new system" business. They'll accept new payment options (which the POS) just provides. But they don't drive the market.
Fixing Visa doesn't work because the people that matter don't think it's broken.
> Secondly it costs the consumer nothing. The cost goes to the merchant. If anything the customer gets rewards.
Sellers increase the price by the fee amount, savvy consumers with rewards cards can get back around 80% of that price increase, and regular non-credit-card-with-rewards holding consumers just subsidize the whole thing by paying the extra. It's a tax on people without rewards cards.
It’s worse on business cards. I negotiated a bank contract for our corporate card program earlier this year and we get 3.5% cash back from purchases. It incentivizes us to pay every vendor invoice by card too as ACH / check actually cost us money.
Not sure how prevalent this is now, but a few years back I was seeing a lot of "cash price" advertised for stuff that was lower by whatever the merchant didn't have to pay in fees so sometimes cash may not be subsidizing the credit industry.
Handling cash costs money too. Sometimes more than handling cards. But a proportion of customers who like cash are very strongly convinced they are "subsidising" card payments, and might be attracted by pricing like that, so maybe it still ends up being a net gain.
The card issuers used to prohibit it, not been the case in a while though. They used to prohibit having a minimum transaction amount or charging transaction fees to your customer too. It never stopped small merchants though
There's no longer a blanket ban, but there are still obstacles:
* Mastercard and Visa don't allow debit card surcharges, even if the transaction is run as "credit".
* American Express only allows surcharges if they also apply to all other forms of card payment. This includes debit cards, which interacts problematically with the previous rule; if you want to do a card surcharge while accepting all three card brands and remaining compliant with all their rules, you have to apply it only to Mastercard and Visa and not American Express, even though American Express is the most expensive.
* Several states still don't allow card surcharges, and others don't allow merchants to profit from surcharging (which makes it hard to advertise a uniform surcharge) or have regulations about how prices have to be listed if a surcharge is going to apply.
Rules like these don't make it impossible to do surcharges while remaining compliant, but they make it significantly harder than it'd otherwise be. I think this is the primary reason why most merchants still don't do them. (Well, that and that their competitors don't, but that could explain either equilibrium.)
A cash and debit card discount is the same as a credit card surcharge, I fail to see how this qualifies as “significantly harder”.
Target, one of the largest retailers, offers a 5% discount for debit. Comcast, Tmobile, Verizon, ATT, Lumen, utilities, governments, and insurance companies also routinely charge extra for credit cards (or discounts for debit/cash).
Daycares charge more for credit card, as do doctors’ offices.
At least half the gas stations I see have long had higher credit cards prices.
Not to mention contractors for physical labor.
The change since 15 years ago is stark. If I wasn’t getting a minimum of 3.5% cash back on my purchases, I would use credit cards a lot less.
Are you saying that even when I pay for something in cash or using debit, because of the possibility I'd use my credit-card the merchant had +3% their price?
Almost but not exactly, any rational merchant would estimate how much they pay monthly in credit card fees and find a way to add that back to their revenue. For most practical cases, the business is started already after the existence of credit cards, so when modeling revenue in your business plan this should already be baked in and the prices you come up with already cover it.
So it doesn't mean they increase the price of every product by 3%. One guy might charge more just for coffee, another do some other thing. But any extra cost you put on a seller of anything, the rational seller will make that back in sales somehow.
A rational merchant would know that they are also incurring costs for handling cash, and depending on the size of the business that cost can in fact be higher than the cost of handling cards.
In fact, the low end of cash handling costs for a business will almost always be higher than the card fees alone, but of course there are other costs in managing card payments too, so it's not quite that clear cut.
In particular, that is what happens when costs are imposed industry wide, as with credit card fees.
If the cost is only being paid by one vendor then that vendor can't raise prices or else customers would patronize one that had lower costs and passed on the savings. But if every vendor has to pay 3% then prices are going up 3%, because then the competition has no cost advantage they can pass on and people only stay in business if they're making enough to justify not doing something else. (3% is more than the entire net margin in many industries.)
Cash handling isn't free! You have to pay someone's time to count + reconcile + deposit it, or If you're dealing at any volume, you'll pay an armored car service to collect it. There's inevitably "shrinkage", or else business processes (more time and more overhead) to avoid it.
Cash is king for hiding transactions and avoiding taxes. If that's the situation then I won't say you don't deserve a cut, but for rules-following merchants taking cash isn't any cheaper than paying the credit card fees.
> but for rules-following merchants taking cash isn't any cheaper than paying the credit card fees.
That’s not true at all, particularly for large purchases.
If I go to an electronics and check out with $5000 in electronics, there’s no way that handling cash incurs the same expense to the store as the 3% fee ($150).
Maybe for nickel and dime purchases, but that’s rarely the case.
Even a $50 dinner doesn’t cost the restaurant $1.50 (plus the $0.30 transaction fee) just to handle cash.
Which is why you take both but make the credit card customer eat the fees. Then many customers will save you (i.e. themselves) the money by paying cash and the ones that insist on using a credit card are free to pay what it actually costs.
Average cash handling cost is typically estimated in the range of 4%-15%. You're right that there might be individual differences in what it would cost to handle a single transaction, but a store isn't in a position to pick and choose - they handle an aggregate. If your electronics store only handles large transactions, maybe their percentage would be lower, but that's extremely rare. And even so, handling large cash amounts comes with its own costs around security.
I think that is commonly the reason why some businesses do offer discounts, but note the person above replied to "but for rules-following merchants taking cash isn't any cheaper than paying the credit card fees" which seems to have specifically anticipated exactly that.
Business banking != consumer banking. The bank will charge ~$0.10-$0.50 for that $50 deposit + the wages of the person who goes to the bank to pay it in (minimum $7.25 per hour).
If you take cash it means you have to hold it on site. To be insured you have to demonstrate secure handling for the insurer, which would include security systems and limiting the amount in the safe and register. Which means routine trips to the bank, which also incurs costs.
Like...that could all be true, but the rate merchants tried to ditch ever handling physical money rather suggests the fees were worth it (not to mention all the risk mitigation doesn't cover the increased danger to ones personal safety - walking $5000 to the bank is no fun at all).
As someone with little financial knowledge, I'm curious why that is the case and how those estimates are calculated. I've seen stores offering a discount on cash payments, citing card-related fees as the reason.
I kinda wondered about this forever as well. Then one day I was chilling in my local worker-owned cooperative bakery when the Brinks truck came by to do the bakery's cash pickup. Armed driver. Guard waiting next to the truck holding a long gun. Two guys (presumably armed) going into the business to get the cash and take it out to the truck. That's all pretty expensive!
Smaller family-owned businesses will just take cash to the bank - but it's super common for somebody to eventually surveil them long enough to rob them one day as they're transporting the cash to the bank.
Discount on cash IME is because they're not putting transactions through the till (POS) so they can commit [tax] fraud.
Ran a micro business in UK for 15 years, cash cost as much to deposit as card did - employee time (counting, reconciling, making deposit) and bank charges for cash deposits. It also slowed down transaction time (which was almost all IRL).
Fraud done by shop owners is one reason why they might still offer a discount, but also a lot of the time I simply think stores don't actually realise how much it is costing them.
E.g. they might not include staff time and incidental costs around cash transactions that aren't obvious because they're not linked to the individual transactions, such as reconciliation, time spent transporting the cash, costs of depositing the cash, insurance to cover storage of cash.
Also consider that it takes very little theft to tilt the balance, and even a tiny amount of theft by cashiers not putting through all cash transactions can make a big difference.
Cash can be misplaced. Stolen. Needs to be stored securely. Banks often charge fees for depositing large amounts. Security companies charge fees to transport said amounts. Counterfeit bills. Etc.
And some businesses (that consumers want) just don't exist because they can't be made to fit the card pricing structure. Ex: journalism (subscriptions only)
If I take your money without you noticing it won't affect your immediate behavior, but later on you'll buy less stuff, specially if I keep doing it. If nothing else because you don't have it anymore.
If it's ultimately in the price of goods, then it doesn't cost the consumer nothing, no matter how you spin it. It's just cleverly hidden.
I think it's close to impossible to "fix" Visa without government intervention (e.g. limit fees to a fraction of a percent), but I'm still grateful to anyone who tries.
The incentive for merchants to accept cards for payment is that it'll increase number of sales. And it does. In principle this should even out over all sales.. but cards do make it easier for consumers do purchase stuff, and I'm absolutely sure that I personally spend money way easier with a card than without (not that I spend more than I make, mind). The total number of sales go up.
I haven't used cash in my home country for the last two decades, at least. I mean, CC works even on parking meters when paying half a dollar (equivalent) for a few minutes of parking, and I can use a card in flea markets and even some garage sales.
Oh, I forgot: A lot of shops, restaurants, and other establishments have stopped accepting cash, even if it's illegal to do so (legal tender etc). That's because handling cash costs them MORE than handling credit/debit cards.
In other words: It appears that using cards LOWER the costs for the merchant, not the other way around.
EditAdd: I presume a lot of the cost saving is that paying by card is 100% electronic, just tap the card (add the pin code if it's expensive enough), and the transaction goes directly into the shop's account. With cash it's way more cumbersome. Way, way more.
(Mind, there's no such thing as signing by hand anymore. If there were paperworks involved it would be different. But there aren't any, not in Europe and not in Japan anymore either)
> The incentive for merchants to accept cards for payment is that it'll increase number of sales
this is something that ive thought about a lot, because while it is strictly true in the short run it may not be in the long run. For example, i don't have any debt, but i use a credit card for everything. Why? It's become my default to use it.
I wonder if the same thing will happen with BNPL (Klarna, Afterpay). These are higher fee than credit cards (5-7%) because they bring in new customers. But, like with credit cards, savvy customers are starting to see BNPL as interest free loans (aka free money on the float, even better than credit card rewards), and it's possible that they become the new consumer results. Merchants are left holding the bag of paying 6% processing fees for everyone, even people who can afford it.
One thing to consider: cards solve the issue of employees stealing, which is surprisingly common from what I’ve heard especially in businesses with high workers turnover, such as seasonal bars and restaurants.
"There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise."
Legal tender only applies to debts. When you go to buy a t-shirt at Target or a burger at McDonalds, you don't owe a debt, and they aren't a creditor.
As I wrote elsewhere: You're seeing this from inside the USA. USA is not the world. What's translated as "Legal tender" when wanting to write in English is just the closest term. That doesn't mean that your local definition of legal tender then applies.
Cash, to be specific, must be accepted as payment (with certain limited) exceptions, in my country. And still some places will refuse it. They even accept paying fines now and then because of it.
> The Seventh Circuit Court of Appeals ruled this week that city-levied fines are not debts under the FDCPA... District courts, for what it's worth, uniformly agree that a fine does not stem from a consensual transaction, and thus is not a debt under the FDCPA.
> Legal tender has never been challenged in court to my knowledge
It was challenged and upheld, both as against debts before the the legal tender acts were passed and those after, by the Supreme Court in Knox v. Lee (1871).
(And because government can exempt itself from virtually anything not forbidden by the Constitution. This is why cops can break down your door, but I can't.)
> I think it's close to impossible to "fix" Visa without government intervention (e.g. limit fees to a fraction of a percent), but I'm still grateful to anyone who tries.
I'm interested to see if that works out, and curious what it means for international cards with lots of perks. I imagine, for example, it wouldn't change anything right away for a Chase Sapphire card issued in the US, but if more countries followed suit there would eventually be a tipping point and card benefits would be reduced.
I guess the issuers all have complex models that take these things into account. In any case, I think it's a good move.
You're right that once prices have gone up, they rarely come back down. But if the price is the same, when you pay cash you're effectively subsidizing credit card reward programs, and lining Visa/Mastercard/issuer pockets.
There might not be robust competition between payment systems, but when I go to a store, I've got options to pay:
Cash, credit (discover is dieing, but amex/mc/visa compete a bit), debit (several networks and all US cards have to be on at least two), I've seen PayPal as an option ocassionally, some merchants take Zelle, FedNow could if a good UX comes around (I don't think many merchants want to give out their routing and account numbers, and it's tedious to input them into my banking app anyway). Some vendors take checks and deposit them later, some take checks and process them immediately, etc.
People respond to incentives though. If merchants charge the same regardless of payment method, I'm going to use a rewards card that costs them more. When they add a line item credit charge, I'll consider cash or debit.
I would be very surprised if Discover is dying. The whole point of Capital One buying them--well, a major point--was to have an alternative to MC/Visa on which they can run debit and credit cards, and so they'll be pushing an expansion of the Discover network rails pretty hard, I'd expect.
OP wasn’t defending VISA policies, they were just realistically describing how taking on CC circuits with this premise is a risky approach that tries to fix a problem potential customers don’t have.
What you are saying is in a completely different domain.
Personally I think you’re right, but the only way to solve that is regulating the payment giants as a public utility, not picking a fight against a business model that is a lot of things, but not broken.
I literally said it must be regulated. Depends what you mean by broken: for the business owners it’s not broken. For the users? Sure, but they are not stakeholders in the business. They are stakeholders in the society that an excessively successful business model is affecting negatively, hence: regulation.
Sounds like one place where it's broken is the morality policing. If tech can succeed due to usage in porn, maybe Zenobia can too? Then move to services like onlyfans, then try all the other creators who also have problems with fees (like the revolt when patreon tried to raise them)?
Credit cards are a huge benefit to customers because of purchase protection, chargebacks, and being able to spend money before you earn it that month. The merchants pay the fees because it gets them sales they wouldn't otherwise get.
I can assure you in Australia, this is -clearly- not true, vendors pass the cost on to the consumer. I can probably choose a random store and prove this.
> The cost goes to the merchant.
And who do you think would pay the merchants costs in this case ?
Counterpoint: Loads of merchants refuse to accept American Express because the fees are higher. Some merchants have gone to court for the right to offer lower "cash prices" – something Visa/Mastercard oppose because they want those fees hidden.
Clearly, at least some merchants are price-sensitive and would be interested in a lower-fee alternative to Visa/MC.
> Secondly it costs the consumer nothing. The cost goes to the merchant. If anything the customer gets rewards.
Ultimately customer pays for everything. Credit card companies just prevent merchants from revealing the costs of using credit cards to customers. Which should be illegal.
> Fixing Visa doesn't work because the people that matter don't think it's broken.
People don't know it's broken because regulator doesn't do their job and lets credit companies police merchants.
It isn't - using cards, with fees, is cheaper than cash. I realized that when shops started to refuse cash (even if cash is legal tender and they, by law, _have_ to accept cash). The argument? Cash is too expensive.
> even if cash is legal tender and they, by law, _have_ to accept cash
this is not true as it is not what "legal tender" means. Legal tender is something that the government must accept as payment, not private enterprise.
> Businesses don’t have to accept cash.[0]
> There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services.[1]
That depends on the country. There are many countries (including my own) where any business must accept certain parts of the cash payment system (around here a taxi doesn't have to accept the highest-value bank note, but the rest cannot be refused). And shops, of course. That's why newspapers bother to write articles about it.
Note that legal tender does apply to private entities when it comes to paying debts, at least in the US. Creditors must accept legal tender, or give up claim to the debt.
It’s true that private businesses can set pretty much any payment terms they want for a transaction that hasn’t yet taken place. But the moment you move to a situation where you owe money, they do have to accept cash.
They only use cards because credit cards can allow them to get sales from people who wouldn't have been able to buy the product through debit itself, but they can buy it from credit.., so they are okay with eating 1-2% of costs in the fact that sale might happen and the companies will get 0.5-1% of it to you back as rewards (hopefully) and so there is incentive to buy using credit card for rewards but they might also give incentives of 1-2% if you buy through cash since they aren't eating that 1-2% cost.
And this whole network has now been built in such a way that now even debit costs the same charge just as network fees
Open sourcing this might be a step in good faith and I mean, we have UPI where I live and it has 0 fees and trust me its crazy good. I personally wish that either everybody in the world could use UPI or pixis from brazil.
The argument doesn't hold - if cards were only about getting sales which they otherwise wouldn't get - and the part about "getting sales which they otherwise wouldn't get", is true enough - then there's no reason to refuse cash payments. That's additional sales, right? But the fact is that more and more shops refuse cash payments entirely. "Pay by card or go somewhere else".
I can't comment on this fact of more and more shops refusing for cash payments entirely as I personally have NEVER seen that?
Provide me an article or some proof to this fact for me to comment further as currently we are at an disagreement on this thing which I hope we can turn into meaningful discussion.
Well I appreciate the effort, might need to look a closer look since my country has UPI and its basically free transactions instantly and even then we are constantly warned by our older generation to always carry cash too as there are places that will still not accept UPI or you would need to go to shop, do upi payment, get cash etc. and I kinda agree, I have seen/heard of even many fights happening because UPI wasn't accepted.
and that is when UPI is almost ubiquitous, I can't imagine a shop saying cards only. I think it might be illegal where I live.
_Handling_ cash is expensive. I never thought of that until my SO started working in a shop. To and from the bank, with stacks of coins and notes.. and there's presumably much more than that for larger firms.
In general I rely my statement on what merchants themselves are saying. Newspapers are writing interviews with merchants who (illegally) have stopped accepting cash, even though it's legal tender. "It's too expensive. It reduces our bottom line." That kind of thing. When I look around I see "Cards only" a lot of places.
The USA is not all the world. The US rules don't apply in other countries. Rules differ. In many countries _businesses_ have to accept legal tender. Including in my own. That's why it's such a big deal when businesses actually still refuse cash.
Of course cash is expensive, you have to handle it, count it, transport it. Haven't you ever seen those heavily armoured cash delivery vehicles? I mean just think how inefficient cash obviously is in every aspect of how it works compared to modern tech.
It’s both? Giving up and opening the code up. Most companies should do this. Why throw away all that work and effort if it could be useful to someone else.
While almost every other major economy in the world has developed their own government-mandated low-fee payment network, the United States is a corporate oligarchy. Hurrah for the free market.
Where do you get 5X? European interchange is regulated to .3-.4%, the network fees are the same as the US (.1-.2%) and then the payment service provider takes their fee. Online card processing in the EU costs around 1%.
They make sense on US market but I had a chuckle when they mentioned European brands giving them cold shoulder. This problem is solved in Europe through legislative action.
I totally disagree with “We proposed merchants "split the difference" in fee savings with their customer, giving customers ~1% in at-checkout "cashback". But this is just a worse version of credit card rewards.”
As a shopper, if I know that a SMB is saving 1% or even 2% on merchant fees, I would gladly choose that option, even if I miss out on rewards for that purchase.
The thing is, Visa and MC are doing just fine(tm) on countries where their cut is limited by law to less than 1%. Everything else is just pure profit, no matter who runs it.
I'm calling it-- 5 years and this will be vaporware. We live in a world where you have to 1) compete with VISA, Mastercard and 2) compete with Bitcoin Lightning Network.
You don't have to wait that long, they shut down. "We realized that we were back at square one, and with our product so far ahead of our sales, decided to pivot away from payments entirely."
I would bet more transactions are done in exchange for literal home-grown vegetables this month than over Bitcoin Lightning Network, yet no one claims a payment method needs to compete with bartered vegetables.
I was an early adopter of the Bitcoin Lightning Network. If my memory serves correctly, I made one (real) payment with it. That was almost 10 years ago now, and I haven't even seen the chance to use it since.
Mostly because it is still innovated upon. Async payments (offline receival) and trampoline payments are in the pipeline, allowing true self-custodial wallets on the smartphone.
That aside, I only use lightning with my Bitcoin-friends to settle stuff for fun. I live in a city of 300k people, and there are 3 restaurants that accept Lightning payments. Right now it is in its infancy, but I see Lightning as the only solution to actually enable web micro-payments (which failed as a standard because no credit card can provide .10 to .20 cent payments due to high fees)
Considering they are closing shop, I don't think you need to wait 5 years. Did you even read the article? They say it in the opening of the second paragraph...
This is what product market fit looks like; everyone is trashing various pieces of Zenobia, but it's still getting upvoted because we all want the solution.
it's a super dangerous tarpit, because it has what id call theoretical product market fit: when you describe it to people, they're super excited by it. Everybody says that they want it and they encourage you along the way. But when it comes down to it, nobody wants the solution
Credit card rewards programs are "eh", but for me I'd be worried about being forced into a low-trust system like Europe has. In the states, I don't have to worry, at all, about someone using my credit card for nefarious purposes. Getting any such fraudulent activity purged from my card is as easy as flagging it in my banking app.
This leads to a number of positive outcomes, such as not worrying at all about sketchy or online purchases, and "American style" payment at restaurants (where we just toss our card on the receipt, and eventually it gets picked up, processed, and returned without further interruption).
Living in the UK, I didn't realise rewards were such a big deal in the US. I'm shocked at the resistance though, to me,, its a no brainer to just be charged less in the first place rather than have to keep track of some silly reward system to get back the extra money that they charged me. It's the same reason I prefer Aldi to all the other supermarkets, that make me keep track of some silly reward scheme, plus use my data to sell me more stuff to boot.
Are merchants going to charge different prices depending on your payment method? Or stop taking visa/MasterCard entirely? I don't see either one of those happening.
To duopoly exploiting customers? Europe knocked down transfer fees to 0.2% for debit cards and 0.3% for credit card. All fees for the merchant sum up to something around 1%. So anything on top of that, that Visa customers pay in US is pure exploitation. And US government isn't doing anything so people see alternate solutions for this problem.
Cofounder of Lopay here - we have the same mission: offer free payments to businesses, but we're working with existing networks to do this.
QR code payments are particularly hard in countries like US and UK as you're trying to change consumer behaviour. I tried doing this in 2014 and again in 2019 - both failed to gain traction (aside from during COVID).
In the UK it's possible to accept card payments for 0% via Lopay, but only if you spend your earnings on our card (essentially, passing the fees onto the merchant/supplier you're paying). We're launching the same proposition in the US soon too.
If you don't use our card, our headline rate is 0.79%.
We're a lean team of just 36, supporting over 40k weekly transacting businesses with £1B+ in card processing. If anyone reading this is interested in this space, we're hiring and on the look out for driven people to join us!
QR codes feel like such a step backwards compared to NFC. The UX with current mobile OSes is not good. And if you require an app, or even worse an active data connection, well, I much prefer a quick double-click of my phone’s side button and then putting it near the payment terminal. And I’m really skeptical about security. NFC is vulnerable to relay attacks and QR codes can be secured by using one-time codes or rolling time-based codes, but showing a bright high contrast “scan this to take my money” image in public feels very wrong.
I also actually _like_ having a physical card that I can use with NFC so that I'm not fecked if my phone dies/breaks or anything. Physical cards to me are a feature.
Yeah, it's not like I carry a stuffed wallet any longer, but I do have a small front pocket wallet with a handful of cards. It's actually easier for me to pay with a card (and increasingly mostly just tap it) than to pull my phone out and do whatever with it.
Yeah, as someone who just took a trip in China where QR payments are the most popular form it was clearly inferior from a UX standpoint from NFC. The most notable was a data connection. Cell service was pretty good overall but there were a few cases where we were struggling to get the payment through. Some merchants also have the ability to scan your code (which seems to be generated offline) but that leads to this confusing UX where you never know if you will scan (and should have the scanner mode ready) or be scanned (and have the QR code open).
And there was always the fear that your phone dies and you can't take the subway or purchase everything. It doesn't happen often but on some long days you really don't really want to be tracking the battery of your phone super closely.
NFC payments can work offline (although this is pretty rare) and can be authorized from a small plastic card that has no battery, no internet connection and is pretty robust including being completely waterproof. Plus 100% of the time I tap my card or phone on the merchant's terminal. No alternate UX option. Plus if you are using your phone for payments (which is a very convenient option) you don't need to open any app beforehand (WeChat is like 3 taps to get to scanner or code) and I found quick NFC reading to be more reliable than scanning a QR code where the lighting conditions and state of the QR code are not always perfect (it was almost always possible to get it to work within a handful of seconds, but often took a bit of fiddling around. NFC is reliably just tap and it works).
I still keep a few large bills in my wallet in case the card networks are down, flag my transactions or whatever else. But having this immutable payment card that is incredibly reliable and easy to use is way better than the phone-based QR systems I have seen.
What I would love to see if we bring phones into the system is a way of approving the transaction (including the amount) on your device. So for example 1. Tap phone 2. Review amount on screen and approve 3. Tap to commit payment. This is more steps but is far safer. That being said the number of times this has been an issue for me is 0, so it is probably better to just rely on the banking system to correct any mistakes rather than add extra steps to the payment flow.
The experience in China is weird. My first reaction was, wow, this is so futuristic, everybody takes payment by code. Then after a while I’m thinking, hold on, this kind of sucks.
China’s implementation could be done a lot better. There’s no fundamental need for multiple incompatible systems like they have. But even improved, it wouldn’t be as good as NFC.
I couldn't get a wallet app to work with GrapheneOS, so for me, QR codes are better, but they feel like they have different use cases. I like QR codes in mail invoices (very common in CH), I'd like NFC in a shop if I could use it.
You can also use NFC to just get a link, which is what you're doing with QR anyway.
Im im the same boat. Luckily in ny case a local banking app has their own NFC card Funktion witch works flawlessly.
But no tap to pay would for me have been one of the greatest downsides with graphene os.
This is a policy problem not a technology problem. If QR code solutions mandated the same policy they would have the same limitation.
That was my disclaimer, but I do prefer, regardless of what works on GrapheneOS, having a QR in my invoice letters. You could shine a light on the envelope and likely read it without opening, but having anyone be able to touch their phone to the envelope to see I owe Y$ to X sounds worse. It's also nice in email since there's less to copy over, and my PC doesn't have NFC.
I'd only prefer to have NFC over QR for in-store payment, and I transact way less money per month in-store.
You haven't experienced UPI. Its a breeze. Everything works with everything else.
How does it solve these issues?
Just curious, why is there an extra per transaction charge for tap to pay? Is there more that goes into that?
too bad for you, ever considering expanding in Asia???
in Asia, using QR Code to pay anything in very common in here
Are these live private keys?
https://github.com/zenobia-pay/core/blob/6b79cc494d3f14e4ddf...
These probably were live keys before they shuttered the project, see https://news.ycombinator.com/item?id=44898330
But they're no longer active as mentioned on site
https://zenobiapay.com/blog/open-source-payments
Something weird happens whenever someone tries to disrupt the Visa/Mastercard mob. Even in this post, the founders alluded to being "not well connected enough". Also look at how Plaid's acquisition by Visa was cancelled by the DOJ on antitrust claims but then Plaid dropped its plans to build a pay-by-bank network. Makes no sense when compared to the lawsuits filed and dismissed in 2024 and recently July 2025 claiming that Apple tried to build a payment network but were stopped by Visa/Mastercard.
I appreciate you looking out for my well being, but really there was nothing shady here. We weren’t forced out by a Visa mob or something like that. I actually wish that were the case, because that would mean that we were growing! We just aren’t well connected enough to convince established merchants to switch over to a startup’s payment network, especially since the value to them is dubious.
But it’s not like there was some shadowy Visa conspiracy. We received pre seed investment from institutional investors and built a pay-by-bank network entirely fine without anybody stopping us
> We just aren’t well connected enough to convince established merchants to switch over to a startup’s payment network, especially since the value to them is dubious.
So instead of competing on merit by improving the value offered to merchants, your concern is to become connected enough to have the merchants switch to you in spite of "dubious value"??
If you read the article they do give merchants more value in the form of 2% lower fees. It's just that that's not enough.
The post is really interesting. Sorry it didn't work out for you guys. Thanks for open sourcing the code. The world REALLY needs better/faster alternatives to the big payment processors
What I need is not lower fee cards, but anonymous pre-paid debit cards that do not allow linking purchases to a person and profiling people. Until that appears, I will use cash only.
Thats very hard to pull off due to draconian guidelines imposed by unelected shadow governments.
Super interesting read! I work in payments for context and see tons of different payment methods every day. People tend to find a payment method they like, and really only ever use that one method. It’s very hard to get someone to switch - even if an alternative is better. It’s just so ingrained to swipe that same card, click the same autofill button, etc.
Digital wallets did somehow over come this, and those would be a super challenging but potentially valid approach #4. If Zenobia is in Apple Pay, google pay, link, etc it’s natural and easy for customers, saves money for merchants, and disrupts visa/etc without disrupting anything else (ie making people us QR codes).
Tough problem. You need a Jony Ive on your team to help solve it.
Or do like pix and give everyone $1500, but only if they use Zenobia :)
> Tough problem. You need a Jony Ive on your team to help solve it.
I don't think so. A Jony Ive will not be in a position to solve the actual problem - what use is a non-universal payment mechanism to consumers and to retailers?
I read the linked page and don't see answers to the main adoption problem: how is the purchaser supposed to pay?
1. Purchaser has to download the app? Okay, but purchaser already has a few equivalents on their phone (Pix, etc) - added friction!
2. How does the App get money to make payment? Purchaser has to fund a new account? Okay, but that is more friction!
3. How does merchant accept the payment? Do they need a new payment terminal? Must their payment terminal be updated with new software? Even more friction!
I've worked in the EMV space, even quite recently, and merchants do not want to update and will only do so when forced to. Any new payment system (QR codes, etc) needs around 5 years (maybe more) before it is universally accepted.
The best way, where I am, to rollout a new payment terminal is to pitch it to the banks, who then offer it to the merchants who have accounts with them.
Adding new functionality to EMV terminals is a lot easier these days, since most of the new terminals are Android, and the vendors have app stores for third parties to write software for these terminals (Pax has Maxstore, etc).
Now, maybe I missed it, but I did not see this application on Maxstore, or some of the other stores. I could have missed it, because these stores have literally thousands of payment applications.
The long and short of it is, you came up with a non-universal payment method, and predictably it did not take off.
I'd argue that the problem is that QR codes shouldn't be an 'app' problem, and yes there's a chicken-egg problem with PoS terminals verifying incoming bank payments but that's a separate issue.
If you want to do account-to-account payments you can show the customer the account/routing number, amount & invoice ID - but obviously that's high friction and the customer needs to login to their account and send a payment with lots of manual data entry.
Making yet another app, adding a financial intermediary, requiring you to link your bank account - these aren't solving the friction points.
We already have bank apps, when I scan a QR code in an industry-wide format it should ask me or confirm which bank app to open and pre-fill all the payment information.
So from my perspective, the problem is that FedNow in the US, and Open Banking in the UK - they could have just dictated "Banks must support EPC QR, or EMV QR code scanning and deep-links", and QR code payments would happen very quickly - even with NFC/RFID you can do passive scanning to achieve the same thing.
* Choose Account * Confirm details * Press send
That's about as easy as you can get for push payments, with a real industry-wide standard for communicating payment intents via NFC/QR. But both FedNow and UK OpenBanking are structured in a way which requires friction, and onerous regulation, through their clunky APIs - meaning you can't actually solve that problem on your own.
I think my main point still stands: a Jony Ive type person would not be any help whatsoever.
Yup it’s that simple. That’s how QR code payments work in many countries in Europe.
The best players to disrupt Visa Mastercard duopoly would rather be a consortium of payment processors such as Shopify / Stripe / Google Pay / Apple Pay and banks taking in sandwhich Visa and Mastercard (where the money is stored, where the money is spent)
I'm hoping steam builds their own.
They could probably make decent money with card graphics. I'd probably pay a couple bucks for a Gaben or an R6Siege card. Much more interesting than metal cards.
Pix, UPI, etc have definitively shown that Governments are the best players to disrupt the Visa/Mastercard duopoly.
I agree, and I hope initiatives like the Digital Euro [0] will have success soon.
[0] https://www.ecb.europa.eu/euro/digital_euro/html/index.en.ht...
There might be survivorship bias here. One could also argue that Governments are the best players to get and maintain a monopoly or duopoly (:
Well, that's definitely true, and it's also how the MasterCard and Visa monopoly remains dominant. Just look at the extreme backlash of Trump's administration against the Brazilian Central Bank's plans to sell the Pix protocol abroad.
There’s a geopolitical reason for this. Ability to print a world reserve currency and apply sanctions to control capital flow are among the primary tools of American power.
Yes, I'm aware. The dominance of the dollar and the US financial services corporations is no accident.
This further reinforces that it's a government that's maintaining the Visa/Mastercard duopoly and it will be governments that break it.
Pix seems to be working really well in Brazil.
I'm adjacent to it in that we provide some of the infrastructure around identity etc in Brazil, and it seems to be really popular. I think there's a similar system in India.
In the UK you can do payments via Open Banking. I'm not sure how popular it is, but I've used it a few times to send money to Wise to then send over to Australia.
Seems misleading or at the very least incomplete not to mention that basically only the US has these high credit card interchange fees of 2-3%.
EU & UK cap it at 0.3% (0.2% for debit cards), and the rest of the world are closer to EU than US fees, if I understand correctly.
The power of the free market.
Seems misleading or at the very least incomplete to blame these fees on "the power of the free market" when the visa / mastercard duopoly exists due to regulations making the entry barrier to creating a new card network essentially infinite
Anyone is free to use discover and it works for most merchants in the USA.
American Express leverages the fact that most consumers don’t care what the merchant is charged
I don't think it's due to regulations. It's just a natural monopoly due to network effects. Any new entrant has to convince hundreds of payment processors and retailers to accept their cards before anyone even has them. Regulations are a trivial barrier compared to that.
I think that was parent’s point. That the US does not have as free a market.
> EU & UK cap it
suggests that was not the GP's point.
The problem is not that credit card companies charge large fees. The problem is that they do not allow to pass the fee on the customers. Because of this I don't like European regulation - instead of capping the fees they should just make clauses that not allow merchants to set a card acceptance fees, illegal.
The clause that doesn't allow passing fees on the customer is the only thing that makes market non-free.
I think it would be only fair if people paying with a card were charged more. They get the cash back from the bank anyway.
Also I know that there are super-discounted stores in my country that do not accept cards for this reason.
They absolutely allow you to pass the fee on to the customers... as long as you phrase it as a cash discount from the posted price, instead of a credit card fee on top of the posted price.
In the US it is legal to have card acceptance fees (in most states anyways).
This changed a while back.
I'm super super glad this change was made. It genuinely makes me smile every time I go to a merchant and they raise the price when I pull out my credit card -- it's not always convenient for me to carry cash, but this has helped me trend in this direction.
Rewards drive up transaction fees. https://insight.kellogg.northwestern.edu/article/who-pays-ge...
"merchants are fee-insensitive, while consumers are rewards-sensitive. In other words, consumers pick credit cards (and, indirectly, networks) based on the goodies they receive, and stores will grudgingly tolerate high fees in order to accept credit cards."
If it were really a free market we would have more alternatives.
Yes - entire cost of processing trx including all intermediaries in EU is around 1%. Less if you are huge. Unlikely they were able to beat it.
US consumers are too conservative in the way they expect payments to work—checks are still in circulation and “swipe & sign” has barely been put to rest (has it?). Any system like this would require adoption by a few diverse and large-scale retail institutions to make it worthwhile for consumers to use. Or else it would be a mere alternative to “PayPal me”…
It is very much a chicken and egg problem. Merchants have no reason to adopt it if there aren't very many customers that use it, and customers have no reason to adopt it unless there are a lot of merchants, or at least some important frequently used merchants that use it.
I think for a new payment system to catch on it needs to either have a significant benefit for both payers and merchants, or be pushed by government policy (for example, require all merchants that meet some criteria to accept the new form of payment).
One way to solve this problem is to have a certain commodity require the new payment method. If AWS for example created a new currency/payment method and made it the sole accepted way to pay for servers it could very quickly catch on as others adopt. Look how “Sign in with Google” became the default.
I’m pretty sure the main reason Apple/Google/Microsoft haven’t done this already is because they would be directly competing with the US government. The idea must get shut down pretty quickly by powerful people.
> The idea must get shut down pretty quickly by powerful people.
There’s no larger conspiracy here. It’s that payments is a commodity now, with shrinking margins and high competition. It’s not worth it for most players to even enter the space, let alone compete tooth and nail for a shrinking share of the pie.
No conspiracy? Is that why the US government also tries to prevent other countries like Brazil from internationalizing their payment systems like Pix?
Apple/Google/Amazon/Microsoft could save billions on credit card processing fees by cutting out Visa/Mastercard -- but instead are pressured to accept "special rates" and warned to stay out of the business.
Show me where they’re “warned to stay out of the business”
Surely you must be thinking of mob movies, not the payments space.
There's plenty of evidence that Visa and Mastercard tried to prevent Apple from building their own network, including DOJ antitrust complaints in 2024 and a more recent suit in July 2025. The fact that antitrust allegations failed to make it in court despite it being such an obvious antitrust case against the duopoly very much suggests that there is something more going on behind the scenes. This seems like such an easy antitrust case to win, especially when it was used successfully in the Visa vs. Plaid case (another case where a potential competitor was prevented from building an alternative to Visa/Mastercard) - Plaid dropped their plans to build a network after their acquisition was cancelled.
There's no way that I can take such strange goings-ons at face value - Apple only gains by disintermediating Visa and they clearly tried at some point, but something stopped them. What stopped them? Too hard for Apple? They already built the infrastructure for it with Apple Pay and Apple Cash. What stopped them from going all the way? I'm convinced something more powerful stopped them.
See here: https://www.reuters.com/legal/transactional/apple-visa-maste...
Even in the OP article about Zenobia Pay, the founders clearly stated they were not "well connected" enough to make a payment network. This suggests a mob. You shouldn't need to be "well connected" to launch a genuinely better product in a free market.
> It is very much a chicken and egg problem. Merchants have no reason to adopt it if there aren't very many customers that use it, and customers have no reason to adopt it unless there are a lot of merchants, or at least some important frequently used merchants that use it.
I agree that both parties need a reason to adopt a new payment method... But the reason can't be only that there's a lot of merchants/customers that have it ... If there's benefits for enough participants, reach can drive adoption for those who don't care about the benefits, but you've got to have some material benefits to get people started.
It's got to have a good experience, too.
But from this rant, it seems like they were trying to be a middle man for instant bank payments... I don't see the value of that as a purchaser when I can use a debit card. For the merchant, running a debit card takes a small fee, but anything that needs someone to scan a QR code takes a lot of time.
And other countries don't have chickens and eggs? They didn't use to pay for things in the past in those other jurisdictions that have adopted modern payment systems?
US people feel absolutely fossils payment wise. Of course the US has the best marketing / pr but the state of payments is just depressing compared to even 'regulation blocked' eu.
The modified scrolling on the website is the worst!
Unless I'm on a touchscreen device, I never want my scrolling to have inertia. So just leave it on the default behaviour. I don't understand why you would put in the effort to make the scrolling feel worse
I usually agree with the sentiment but for some reason this implementation is so smooth on my old laptop I like it.
trackpad?
Why do designers do this?
custom scrolling: not even once
Two of the linked GitHub repositories don't have licenses.
This sounds like a post mortem disguised as marketing material.
Zenophobia
What the fuck is with the comments here? Guys, it is a postmortem. So you all are complaining about the scrolling and accusing it of being advertising or an announcement?
Frankly, I find this admirable and want to encourage these kinds of things. Guys gave it a shot, failed, and are putting their work out there. They are communicating why they think they failed and what they think would help someone pick up the mantel. What did you all want? Them to just die in quiet and all that code disappear? Hell, their READMEs have more documentation than most of the open source projects out there.
What happened to that hacker mentality? That belief in an open source world, even if as just a pipe dream. To me it looks like they still care about their dream but realized they can't make it happen. They aren't asking for investment and their website says they are inactive, so what makes this advertising? FFS do we have to assume everything is done in bad faith? You don't advertise by giving your competition a leg up. If this gets them investment, who cares, the result is the same. Code and information is out there, you can't take that back. Honestly, I don't care even if the code was garbage (I don't know if it is or isn't), I'll respect anyone that releases their code instead of letting it die with the business. It's just a better outcome, so why are you all complaining?
In Norway there is already a low fee processor called BankAxept. It has made it practical for shops to sell even the cheapest item and accept payment by card without losing money.
https://en.wikipedia.org/wiki/BankAxept
Interesting read, I searched if another startup got this market right, it seems truelayer did using open banking for online payment ($700m valuation) https://truelayer.com/
Many countries in Europe have pay-by-bank solutions that work really well.
The fees are for fraud prevention and sanctions compliance. That stuff costs real money.
> fees are for fraud prevention and sanctions compliance
Visa and Mastercard’s pre-tax income margins for the quarter ending on 30 June were 62% and 57% respectively [1][2]. That is $10bn a quarter in absent competition.
[1] https://finance.yahoo.com/quote/V/financials/ $6.33 on 10.2bn
[2] https://finance.yahoo.com/quote/MA/financials/ 4.67 on 8.13bn
Maybe. But the 39 billion in profits visa made last year suggests they make a fair bit more than that stuff costs.
ngl i read it as zenophobia pay
When you start at the wrong premise, you typically end up in the wrong place.
The premise is that credit cards (visa / Mastercard) is broken. When actually it works really well.
For starters it works everywhere. Online. IRL. In my home country, in foreign lands.
Secondly it costs the consumer nothing. The cost goes to the merchant. If anything the customer gets rewards.
Merchants might pay 3%, (and ultimately yes, that's in the price of goods) but checkout "just works". They're in the "get paid" business, not the "teach customer new system" business. They'll accept new payment options (which the POS) just provides. But they don't drive the market.
Fixing Visa doesn't work because the people that matter don't think it's broken.
> Secondly it costs the consumer nothing. The cost goes to the merchant. If anything the customer gets rewards.
Sellers increase the price by the fee amount, savvy consumers with rewards cards can get back around 80% of that price increase, and regular non-credit-card-with-rewards holding consumers just subsidize the whole thing by paying the extra. It's a tax on people without rewards cards.
It’s worse on business cards. I negotiated a bank contract for our corporate card program earlier this year and we get 3.5% cash back from purchases. It incentivizes us to pay every vendor invoice by card too as ACH / check actually cost us money.
Not sure how prevalent this is now, but a few years back I was seeing a lot of "cash price" advertised for stuff that was lower by whatever the merchant didn't have to pay in fees so sometimes cash may not be subsidizing the credit industry.
Handling cash costs money too. Sometimes more than handling cards. But a proportion of customers who like cash are very strongly convinced they are "subsidising" card payments, and might be attracted by pricing like that, so maybe it still ends up being a net gain.
In a lot of cases there are regulatory or contractual barriers to doing that.
The card issuers used to prohibit it, not been the case in a while though. They used to prohibit having a minimum transaction amount or charging transaction fees to your customer too. It never stopped small merchants though
In the US, not since 2011 since the Dodd Frank act required payment card networks to allow merchants to offer cash and debit card discounts.
https://www.ftc.gov/business-guidance/resources/new-rules-el...
There's no longer a blanket ban, but there are still obstacles:
* Mastercard and Visa don't allow debit card surcharges, even if the transaction is run as "credit".
* American Express only allows surcharges if they also apply to all other forms of card payment. This includes debit cards, which interacts problematically with the previous rule; if you want to do a card surcharge while accepting all three card brands and remaining compliant with all their rules, you have to apply it only to Mastercard and Visa and not American Express, even though American Express is the most expensive.
* Several states still don't allow card surcharges, and others don't allow merchants to profit from surcharging (which makes it hard to advertise a uniform surcharge) or have regulations about how prices have to be listed if a surcharge is going to apply.
Rules like these don't make it impossible to do surcharges while remaining compliant, but they make it significantly harder than it'd otherwise be. I think this is the primary reason why most merchants still don't do them. (Well, that and that their competitors don't, but that could explain either equilibrium.)
A cash and debit card discount is the same as a credit card surcharge, I fail to see how this qualifies as “significantly harder”.
Target, one of the largest retailers, offers a 5% discount for debit. Comcast, Tmobile, Verizon, ATT, Lumen, utilities, governments, and insurance companies also routinely charge extra for credit cards (or discounts for debit/cash).
Daycares charge more for credit card, as do doctors’ offices.
At least half the gas stations I see have long had higher credit cards prices.
Not to mention contractors for physical labor.
The change since 15 years ago is stark. If I wasn’t getting a minimum of 3.5% cash back on my purchases, I would use credit cards a lot less.
Are you saying that even when I pay for something in cash or using debit, because of the possibility I'd use my credit-card the merchant had +3% their price?
Almost but not exactly, any rational merchant would estimate how much they pay monthly in credit card fees and find a way to add that back to their revenue. For most practical cases, the business is started already after the existence of credit cards, so when modeling revenue in your business plan this should already be baked in and the prices you come up with already cover it.
So it doesn't mean they increase the price of every product by 3%. One guy might charge more just for coffee, another do some other thing. But any extra cost you put on a seller of anything, the rational seller will make that back in sales somehow.
A rational merchant would know that they are also incurring costs for handling cash, and depending on the size of the business that cost can in fact be higher than the cost of handling cards.
In fact, the low end of cash handling costs for a business will almost always be higher than the card fees alone, but of course there are other costs in managing card payments too, so it's not quite that clear cut.
In particular, that is what happens when costs are imposed industry wide, as with credit card fees.
If the cost is only being paid by one vendor then that vendor can't raise prices or else customers would patronize one that had lower costs and passed on the savings. But if every vendor has to pay 3% then prices are going up 3%, because then the competition has no cost advantage they can pass on and people only stay in business if they're making enough to justify not doing something else. (3% is more than the entire net margin in many industries.)
the seller just charges whatever it get can get away with. 3% only has an impact when margins are closer to that percentage
Savvy/corporate sellers are typically concerned with margins so fees do play a role
Cash handling isn't free! You have to pay someone's time to count + reconcile + deposit it, or If you're dealing at any volume, you'll pay an armored car service to collect it. There's inevitably "shrinkage", or else business processes (more time and more overhead) to avoid it.
Cash is king for hiding transactions and avoiding taxes. If that's the situation then I won't say you don't deserve a cut, but for rules-following merchants taking cash isn't any cheaper than paying the credit card fees.
> but for rules-following merchants taking cash isn't any cheaper than paying the credit card fees.
That’s not true at all, particularly for large purchases.
If I go to an electronics and check out with $5000 in electronics, there’s no way that handling cash incurs the same expense to the store as the 3% fee ($150).
Maybe for nickel and dime purchases, but that’s rarely the case.
Even a $50 dinner doesn’t cost the restaurant $1.50 (plus the $0.30 transaction fee) just to handle cash.
You're not factoring in "I won't go somewhere that doesn't take a credit card".
A store that sells $5k electronics is gonna lose a lot of sales if they attempt to save that $150 by only taking cash.
Which is why you take both but make the credit card customer eat the fees. Then many customers will save you (i.e. themselves) the money by paying cash and the ones that insist on using a credit card are free to pay what it actually costs.
Why do I almost never see a cash discount like this in practice? An I shopping in the wrong places? Or does something else prevent it?
In NY, I see it most frequently at gas stations.
Because that’s your subjective experience?
Canada has lots of stores that offer a discount if you pay cash. Many have a minimum purchase amount for credit cards.
Average cash handling cost is typically estimated in the range of 4%-15%. You're right that there might be individual differences in what it would cost to handle a single transaction, but a store isn't in a position to pick and choose - they handle an aggregate. If your electronics store only handles large transactions, maybe their percentage would be lower, but that's extremely rare. And even so, handling large cash amounts comes with its own costs around security.
> Average cash handling cost is typically estimated in the range of 4%-15%
I think the assumption is they declare only a portion of their cash receipts.
I think that is commonly the reason why some businesses do offer discounts, but note the person above replied to "but for rules-following merchants taking cash isn't any cheaper than paying the credit card fees" which seems to have specifically anticipated exactly that.
Business banking != consumer banking. The bank will charge ~$0.10-$0.50 for that $50 deposit + the wages of the person who goes to the bank to pay it in (minimum $7.25 per hour).
Handling cash is obviously cheaper in Germany because merchants discourage customers from using their credit cards every time they can.
This is a huge pile of uncosted assumptions.
If you take cash it means you have to hold it on site. To be insured you have to demonstrate secure handling for the insurer, which would include security systems and limiting the amount in the safe and register. Which means routine trips to the bank, which also incurs costs.
Like...that could all be true, but the rate merchants tried to ditch ever handling physical money rather suggests the fees were worth it (not to mention all the risk mitigation doesn't cover the increased danger to ones personal safety - walking $5000 to the bank is no fun at all).
Handling cash costs more on average at least for smaller businesses than typical card fees.
It's typical to estimate the cost of handling cash anywhere from 4% to as high as 15% depending on takings and size of transactions.
As someone with little financial knowledge, I'm curious why that is the case and how those estimates are calculated. I've seen stores offering a discount on cash payments, citing card-related fees as the reason.
I kinda wondered about this forever as well. Then one day I was chilling in my local worker-owned cooperative bakery when the Brinks truck came by to do the bakery's cash pickup. Armed driver. Guard waiting next to the truck holding a long gun. Two guys (presumably armed) going into the business to get the cash and take it out to the truck. That's all pretty expensive!
Smaller family-owned businesses will just take cash to the bank - but it's super common for somebody to eventually surveil them long enough to rob them one day as they're transporting the cash to the bank.
It's pricey to handle cash!
Discount on cash IME is because they're not putting transactions through the till (POS) so they can commit [tax] fraud.
Ran a micro business in UK for 15 years, cash cost as much to deposit as card did - employee time (counting, reconciling, making deposit) and bank charges for cash deposits. It also slowed down transaction time (which was almost all IRL).
Fraud done by shop owners is one reason why they might still offer a discount, but also a lot of the time I simply think stores don't actually realise how much it is costing them.
E.g. they might not include staff time and incidental costs around cash transactions that aren't obvious because they're not linked to the individual transactions, such as reconciliation, time spent transporting the cash, costs of depositing the cash, insurance to cover storage of cash.
Also consider that it takes very little theft to tilt the balance, and even a tiny amount of theft by cashiers not putting through all cash transactions can make a big difference.
Here in Italy the answer would be that you cannot evade taxes if payments are tracked. I imagine that applies elsewhere too.
Cash can be misplaced. Stolen. Needs to be stored securely. Banks often charge fees for depositing large amounts. Security companies charge fees to transport said amounts. Counterfeit bills. Etc.
And some businesses (that consumers want) just don't exist because they can't be made to fit the card pricing structure. Ex: journalism (subscriptions only)
Still, most consumers don’t care or notice it (we are not most consumers), so this doesn’t refute the original argument.
If I take your money without you noticing it won't affect your immediate behavior, but later on you'll buy less stuff, specially if I keep doing it. If nothing else because you don't have it anymore.
Yep you get it Bruce. Unfortunately I confused being a villain (everybody likes to bash visa) with being bad at their jobs and disrupt-able.
If it's ultimately in the price of goods, then it doesn't cost the consumer nothing, no matter how you spin it. It's just cleverly hidden.
I think it's close to impossible to "fix" Visa without government intervention (e.g. limit fees to a fraction of a percent), but I'm still grateful to anyone who tries.
The incentive for merchants to accept cards for payment is that it'll increase number of sales. And it does. In principle this should even out over all sales.. but cards do make it easier for consumers do purchase stuff, and I'm absolutely sure that I personally spend money way easier with a card than without (not that I spend more than I make, mind). The total number of sales go up.
I haven't used cash in my home country for the last two decades, at least. I mean, CC works even on parking meters when paying half a dollar (equivalent) for a few minutes of parking, and I can use a card in flea markets and even some garage sales.
Oh, I forgot: A lot of shops, restaurants, and other establishments have stopped accepting cash, even if it's illegal to do so (legal tender etc). That's because handling cash costs them MORE than handling credit/debit cards. In other words: It appears that using cards LOWER the costs for the merchant, not the other way around.
EditAdd: I presume a lot of the cost saving is that paying by card is 100% electronic, just tap the card (add the pin code if it's expensive enough), and the transaction goes directly into the shop's account. With cash it's way more cumbersome. Way, way more.
(Mind, there's no such thing as signing by hand anymore. If there were paperworks involved it would be different. But there aren't any, not in Europe and not in Japan anymore either)
> The incentive for merchants to accept cards for payment is that it'll increase number of sales this is something that ive thought about a lot, because while it is strictly true in the short run it may not be in the long run. For example, i don't have any debt, but i use a credit card for everything. Why? It's become my default to use it.
I wonder if the same thing will happen with BNPL (Klarna, Afterpay). These are higher fee than credit cards (5-7%) because they bring in new customers. But, like with credit cards, savvy customers are starting to see BNPL as interest free loans (aka free money on the float, even better than credit card rewards), and it's possible that they become the new consumer results. Merchants are left holding the bag of paying 6% processing fees for everyone, even people who can afford it.
One thing to consider: cards solve the issue of employees stealing, which is surprisingly common from what I’ve heard especially in businesses with high workers turnover, such as seasonal bars and restaurants.
> A lot of shops, restaurants, and other establishments have stopped accepting cash, even if it's illegal to do so (legal tender etc).
No. This is a misunderstanding of legal tender.
https://www.federalreserve.gov/faqs/currency_12772.htm
"There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise."
Legal tender only applies to debts. When you go to buy a t-shirt at Target or a burger at McDonalds, you don't owe a debt, and they aren't a creditor.
As I wrote elsewhere: You're seeing this from inside the USA. USA is not the world. What's translated as "Legal tender" when wanting to write in English is just the closest term. That doesn't mean that your local definition of legal tender then applies. Cash, to be specific, must be accepted as payment (with certain limited) exceptions, in my country. And still some places will refuse it. They even accept paying fines now and then because of it.
> egal tender only applies to debts.
I used to think that was true, but try paying parking fines, etc. with pennies. Legal tender has never been challenged in court to my knowledge
Parking fines aren't debts, and thus, legal tender doesn't apply.
https://www.findlaw.com/legalblogs/seventh-circuit/city-sanc...
> The Seventh Circuit Court of Appeals ruled this week that city-levied fines are not debts under the FDCPA... District courts, for what it's worth, uniformly agree that a fine does not stem from a consensual transaction, and thus is not a debt under the FDCPA.
> Legal tender has never been challenged in court to my knowledge
It was challenged and upheld, both as against debts before the the legal tender acts were passed and those after, by the Supreme Court in Knox v. Lee (1871).
Yet the US government can refuse payments in cash
https://www.federalregister.gov/documents/2017/10/03/2017-21...
Yes. Because a patent filing fee is not a debt.
(And because government can exempt itself from virtually anything not forbidden by the Constitution. This is why cops can break down your door, but I can't.)
In the UK the definition of legal tender includes a limit on the use of small denominations.
> I think it's close to impossible to "fix" Visa without government intervention (e.g. limit fees to a fraction of a percent), but I'm still grateful to anyone who tries.
This is what Australia is looking at currently: https://www.abc.net.au/news/2025-07-15/rba-credit-debit-merc...
I'm interested to see if that works out, and curious what it means for international cards with lots of perks. I imagine, for example, it wouldn't change anything right away for a Chase Sapphire card issued in the US, but if more countries followed suit there would eventually be a tipping point and card benefits would be reduced.
I guess the issuers all have complex models that take these things into account. In any case, I think it's a good move.
The price is the same if you use cash or card. Really, after reward points, card tends to be even cheaper.
Visa/Mastercard/BNPL/Klarna etc. all have negotiated discounts for consumers, paid for by the merchant.
I'm skeptical that merchants would lower prices (stepping away from $x.98, etc) instead of pocketing the higher margins themselves.
You're right that once prices have gone up, they rarely come back down. But if the price is the same, when you pay cash you're effectively subsidizing credit card reward programs, and lining Visa/Mastercard/issuer pockets.
Same can be said about health insurance: private insurance negotiate lower prices than the non-insured due to collective bargaining.
if all customers choose to us cash the merchant could lower price with 3%. If you are the only one paying cash then yes the price will stay the same.
Why would the merchant lower the price by 3% if consumers are willing to pay the current price?
This is like says the tarrifs are paid by the other countries, not the US citizens.
In reality, there is no competition in the payment systems. Free markets mean competition.
There might not be robust competition between payment systems, but when I go to a store, I've got options to pay:
Cash, credit (discover is dieing, but amex/mc/visa compete a bit), debit (several networks and all US cards have to be on at least two), I've seen PayPal as an option ocassionally, some merchants take Zelle, FedNow could if a good UX comes around (I don't think many merchants want to give out their routing and account numbers, and it's tedious to input them into my banking app anyway). Some vendors take checks and deposit them later, some take checks and process them immediately, etc.
People respond to incentives though. If merchants charge the same regardless of payment method, I'm going to use a rewards card that costs them more. When they add a line item credit charge, I'll consider cash or debit.
I would be very surprised if Discover is dying. The whole point of Capital One buying them--well, a major point--was to have an alternative to MC/Visa on which they can run debit and credit cards, and so they'll be pushing an expansion of the Discover network rails pretty hard, I'd expect.
All business costs are either paid for by the VCs or the customer. Even the VCs end up getting paid by the customers in the end.
> For starters it works everywhere. Online. IRL. In my home country, in foreign lands.
Only if Visa/MC agree with the item being sold though.
Be careful to not get hobbies that some religious pressure group hates. Today sex, maybe tomorrow rock climbing or fixing your own motorcycle.
OP wasn’t defending VISA policies, they were just realistically describing how taking on CC circuits with this premise is a risky approach that tries to fix a problem potential customers don’t have. What you are saying is in a completely different domain. Personally I think you’re right, but the only way to solve that is regulating the payment giants as a public utility, not picking a fight against a business model that is a lot of things, but not broken.
A business mode that relies on duopoly is broken and must be regulated.
I literally said it must be regulated. Depends what you mean by broken: for the business owners it’s not broken. For the users? Sure, but they are not stakeholders in the business. They are stakeholders in the society that an excessively successful business model is affecting negatively, hence: regulation.
> For starters it works everywhere. Online. IRL. In my home country, in foreign lands.
Haha, if only that were true. I’d say roughly 20% of my purchases are rejected because of a badly tuned fraud algorithm somewhere.
So a 1980s computer is faster at calculating than a person, so why reduce the cost? Or a car is cheaper to maintain than a horse, why reduce the cost?
Let's flip the script. In reality the averaged transaction _cost_ is probably O(0.1%) or lower. Why are we paying more?
Decision makers and regulators have been bribed in many places.
EU has actually solved this with interchange fees for consumers being 0.3% which to me sound reasonably close to that 0.1%.
Sounds like one place where it's broken is the morality policing. If tech can succeed due to usage in porn, maybe Zenobia can too? Then move to services like onlyfans, then try all the other creators who also have problems with fees (like the revolt when patreon tried to raise them)?
It costs the consumers. Sometimes indirectly and sometimes directly. I would think that this is the primary motivation to come up with a new scheme.
Credit cards are a huge benefit to customers because of purchase protection, chargebacks, and being able to spend money before you earn it that month. The merchants pay the fees because it gets them sales they wouldn't otherwise get.
It might be one motivation, doesn’t mean it’s a good one as per the original comment if consumers don’t care.
> Secondly it costs the consumer nothing.
I can assure you in Australia, this is -clearly- not true, vendors pass the cost on to the consumer. I can probably choose a random store and prove this.
> The cost goes to the merchant.
And who do you think would pay the merchants costs in this case ?
Counterpoint: Loads of merchants refuse to accept American Express because the fees are higher. Some merchants have gone to court for the right to offer lower "cash prices" – something Visa/Mastercard oppose because they want those fees hidden.
Clearly, at least some merchants are price-sensitive and would be interested in a lower-fee alternative to Visa/MC.
It sounds like all merchants in the US have been able to offer lower cash prices for over 10 years now. I rarely see it though.
> Secondly it costs the consumer nothing. The cost goes to the merchant. If anything the customer gets rewards.
Ultimately customer pays for everything. Credit card companies just prevent merchants from revealing the costs of using credit cards to customers. Which should be illegal.
> Fixing Visa doesn't work because the people that matter don't think it's broken.
People don't know it's broken because regulator doesn't do their job and lets credit companies police merchants.
> Secondly it costs the consumer nothing. The cost goes to the merchant. If anything the customer gets rewards.
Just like tariffs, right?
Visa/MC is a +1% income tax on most of the economy.
It isn't - using cards, with fees, is cheaper than cash. I realized that when shops started to refuse cash (even if cash is legal tender and they, by law, _have_ to accept cash). The argument? Cash is too expensive.
> even if cash is legal tender and they, by law, _have_ to accept cash
this is not true as it is not what "legal tender" means. Legal tender is something that the government must accept as payment, not private enterprise.
> Businesses don’t have to accept cash.[0]
> There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services.[1]
[0]: https://www.accc.gov.au/consumers/buying-products-and-servic...
[1] https://www.federalreserve.gov/faqs/currency_12772.htm
That depends on the country. There are many countries (including my own) where any business must accept certain parts of the cash payment system (around here a taxi doesn't have to accept the highest-value bank note, but the rest cannot be refused). And shops, of course. That's why newspapers bother to write articles about it.
They don’t have to accept cash in advance. They do have to accept cash for debts, such as when you have already eaten the meal.
Note that legal tender does apply to private entities when it comes to paying debts, at least in the US. Creditors must accept legal tender, or give up claim to the debt.
It’s true that private businesses can set pretty much any payment terms they want for a transaction that hasn’t yet taken place. But the moment you move to a situation where you owe money, they do have to accept cash.
They have to accept cash, huh?
* Cash Payment Method Will No Longer Be Accepted A Notice by the Patent and Trademark Office on 10/03/2017*
https://www.federalregister.gov/documents/2017/10/03/2017-21...
They only use cards because credit cards can allow them to get sales from people who wouldn't have been able to buy the product through debit itself, but they can buy it from credit.., so they are okay with eating 1-2% of costs in the fact that sale might happen and the companies will get 0.5-1% of it to you back as rewards (hopefully) and so there is incentive to buy using credit card for rewards but they might also give incentives of 1-2% if you buy through cash since they aren't eating that 1-2% cost.
And this whole network has now been built in such a way that now even debit costs the same charge just as network fees
Open sourcing this might be a step in good faith and I mean, we have UPI where I live and it has 0 fees and trust me its crazy good. I personally wish that either everybody in the world could use UPI or pixis from brazil.
The argument doesn't hold - if cards were only about getting sales which they otherwise wouldn't get - and the part about "getting sales which they otherwise wouldn't get", is true enough - then there's no reason to refuse cash payments. That's additional sales, right? But the fact is that more and more shops refuse cash payments entirely. "Pay by card or go somewhere else".
I can't comment on this fact of more and more shops refusing for cash payments entirely as I personally have NEVER seen that?
Provide me an article or some proof to this fact for me to comment further as currently we are at an disagreement on this thing which I hope we can turn into meaningful discussion.
Well.. just a quick search (as I won't be talking a walk and photograph all the "cards only" signs I now see in so many places):
https://www.theguardian.com/money/2025/mar/16/uk-high-street...
https://www.dnb.nl/en/general-news/news-2023/some-retail-sec...
https://www.bbc.com/news/articles/c20gevkx8gyo
https://www.aarp.org/money/personal-finance/no-cash-accepted...
https://educaloi.qc.ca/en/legal-news/do-you-have-the-right-t...
https://www.riksbank.se/en-gb/payments--cash/payments-in-swe...
Well I appreciate the effort, might need to look a closer look since my country has UPI and its basically free transactions instantly and even then we are constantly warned by our older generation to always carry cash too as there are places that will still not accept UPI or you would need to go to shop, do upi payment, get cash etc. and I kinda agree, I have seen/heard of even many fights happening because UPI wasn't accepted.
and that is when UPI is almost ubiquitous, I can't imagine a shop saying cards only. I think it might be illegal where I live.
how is cash too expensive?? huh?
_Handling_ cash is expensive. I never thought of that until my SO started working in a shop. To and from the bank, with stacks of coins and notes.. and there's presumably much more than that for larger firms. In general I rely my statement on what merchants themselves are saying. Newspapers are writing interviews with merchants who (illegally) have stopped accepting cash, even though it's legal tender. "It's too expensive. It reduces our bottom line." That kind of thing. When I look around I see "Cards only" a lot of places.
> Newspapers are writing interviews with merchants who (illegally) have stopped accepting cash, even though it's legal tender.
That's legal. https://www.federalreserve.gov/faqs/currency_12772.htm
Legal tender applies only to debt/creditor relationships.
The USA is not all the world. The US rules don't apply in other countries. Rules differ. In many countries _businesses_ have to accept legal tender. Including in my own. That's why it's such a big deal when businesses actually still refuse cash.
https://en.wikipedia.org/wiki/Legal_tender
> Legal tender is a form of money that courts of law are required to recognize as satisfactory payment in court for any monetary debt.
A country may separately require businesses to accept legal tender, if they feel like it.
https://en.wikipedia.org/wiki/Legal_tender#Status_by_country would appear to indicate this distinction is very common in the developed world.
Of course cash is expensive, you have to handle it, count it, transport it. Haven't you ever seen those heavily armoured cash delivery vehicles? I mean just think how inefficient cash obviously is in every aspect of how it works compared to modern tech.
Time spent totaling it, transporting it to from bank
Having to buy a register / point of sale which can handle it
Hoping you employees don’t pocket a few bills here and there
Hoping you don’t get robbed
That’s an acceptable fee for the consumer protections I receive.
the home page says "ZENOBIA PAY IS NO LONGER ACTIVE"
so this is a farewell post disguised as open source announcement?
It’s both? Giving up and opening the code up. Most companies should do this. Why throw away all that work and effort if it could be useful to someone else.
That scrolling. No way.
While almost every other major economy in the world has developed their own government-mandated low-fee payment network, the United States is a corporate oligarchy. Hurrah for the free market.
> cheaper payments ... Zenobia Pay charges 1%.
5x higher than they would be allowed to charge in the EU.
> accept pay-by-bank
I am reminded of tech bros inventing the bus in 2025
Where do you get 5X? European interchange is regulated to .3-.4%, the network fees are the same as the US (.1-.2%) and then the payment service provider takes their fee. Online card processing in the EU costs around 1%.
They make sense on US market but I had a chuckle when they mentioned European brands giving them cold shoulder. This problem is solved in Europe through legislative action.
Interesting read. I'd suggest next time choosing a name that does not sound close to Xenophobia :) anyway, good luck on your further journey
I totally disagree with “We proposed merchants "split the difference" in fee savings with their customer, giving customers ~1% in at-checkout "cashback". But this is just a worse version of credit card rewards.”
As a shopper, if I know that a SMB is saving 1% or even 2% on merchant fees, I would gladly choose that option, even if I miss out on rewards for that purchase.
The thing is, Visa and MC are doing just fine(tm) on countries where their cut is limited by law to less than 1%. Everything else is just pure profit, no matter who runs it.
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After a laggy scroll led to me being flash-banged and closing the tab, I couldn't agree more.
I'm calling it-- 5 years and this will be vaporware. We live in a world where you have to 1) compete with VISA, Mastercard and 2) compete with Bitcoin Lightning Network.
You don't have to wait that long, they shut down. "We realized that we were back at square one, and with our product so far ahead of our sales, decided to pivot away from payments entirely."
https://zenobiapay.com/blog/open-source-payments
I would bet more transactions are done in exchange for literal home-grown vegetables this month than over Bitcoin Lightning Network, yet no one claims a payment method needs to compete with bartered vegetables.
I was an early adopter of the Bitcoin Lightning Network. If my memory serves correctly, I made one (real) payment with it. That was almost 10 years ago now, and I haven't even seen the chance to use it since.
Mostly because it is still innovated upon. Async payments (offline receival) and trampoline payments are in the pipeline, allowing true self-custodial wallets on the smartphone.
That aside, I only use lightning with my Bitcoin-friends to settle stuff for fun. I live in a city of 300k people, and there are 3 restaurants that accept Lightning payments. Right now it is in its infancy, but I see Lightning as the only solution to actually enable web micro-payments (which failed as a standard because no credit card can provide .10 to .20 cent payments due to high fees)
Considering they are closing shop, I don't think you need to wait 5 years. Did you even read the article? They say it in the opening of the second paragraph...
It helps to get clued into what happened with stablecoin legalization and interest this year. Without this awareness one risks looking very foolish.
This is what product market fit looks like; everyone is trashing various pieces of Zenobia, but it's still getting upvoted because we all want the solution.
it's a super dangerous tarpit, because it has what id call theoretical product market fit: when you describe it to people, they're super excited by it. Everybody says that they want it and they encourage you along the way. But when it comes down to it, nobody wants the solution
Apparently not everyone: https://www.reddit.com/r/CreditCards/comments/1hxiusj/europe...
Credit card rewards programs are "eh", but for me I'd be worried about being forced into a low-trust system like Europe has. In the states, I don't have to worry, at all, about someone using my credit card for nefarious purposes. Getting any such fraudulent activity purged from my card is as easy as flagging it in my banking app.
This leads to a number of positive outcomes, such as not worrying at all about sketchy or online purchases, and "American style" payment at restaurants (where we just toss our card on the receipt, and eventually it gets picked up, processed, and returned without further interruption).
Living in the UK, I didn't realise rewards were such a big deal in the US. I'm shocked at the resistance though, to me,, its a no brainer to just be charged less in the first place rather than have to keep track of some silly reward system to get back the extra money that they charged me. It's the same reason I prefer Aldi to all the other supermarkets, that make me keep track of some silly reward scheme, plus use my data to sell me more stuff to boot.
A solution to what? Serious question, I don't have any issue with the current model. Or are you referring to recent events?
The problem of paying 1-3% of every purchase to credit card companies, causing everything to cost 1-3% more.
Are merchants going to charge different prices depending on your payment method? Or stop taking visa/MasterCard entirely? I don't see either one of those happening.
To duopoly exploiting customers? Europe knocked down transfer fees to 0.2% for debit cards and 0.3% for credit card. All fees for the merchant sum up to something around 1%. So anything on top of that, that Visa customers pay in US is pure exploitation. And US government isn't doing anything so people see alternate solutions for this problem.