Surprisingly small contract. It's interesting to see that a full government contract for a payment provider is a fraction of a US mid-size company's cloud bill. I am constantly surprised by things like this. Here's another: there are more foreigners in Taiwan (total pop. 25 m) than in China (total pop. 1.4 b).

Payment processing costs are a scam. They're 10x as expensive as they need to be to fund rewards programs and fund the financial system.

EU max credit card transaction fees are 0.3%, in the US they can be up to 4%.

It just doesn't cost 4% of a transaction to handle the exchange of funds. Just wealth transfer to finance people and the upper class who take advantage of credit card perks.

Brazil's central bank operates their instant payment network Pix [1] [2] [3] for ~$10M/year [4]. Its not that these are small contracts, but that large, inefficient, unnecessary contracts have become the norm (I argue). Similar example from India's UPI payment system [5]. The US has FedNow to move instant payments for pennies, but banking and payment system participants in the US ecosystem are avoiding it to continue to private payment system rake [6] (cc networks, Zelle commercial bank network, private wallets, etc).

The evidence is clear you don't need to skim 3% off of an economy to provide instant payment capabilities. The enterprise value of US payment companies is a function of how long they hold onto this volume for, when competition is ramping up. You're just pushing ISO 20022 XML messages around a bus.

[1] https://en.wikipedia.org/wiki/Pix_(payment_system)

[2] https://frontierfintech.substack.com/p/55-send-pix-brazils-i...

[3] https://brazilstockguide.com/behind-the-lines/the-cost-of-pi...

> This makes the American dispute more sophisticated than it may first appear. Pix certainly puts pressure on private payment models, card networks and acquirers. It also reduces friction for consumers, small businesses and person-to-person transfers. But its deeper effect is institutional. It turns the bank deposit into an even more efficient payment instrument — and, by doing so, changes the role of banks in liquidity intermediation.

> There is an irony here. For decades, the United States built the narrative of private financial innovation. Brazil, through a public, interoperable and massively adopted system, produced one of the world’s most efficient payment infrastructures. The study notes how unusual Pix adoption was: more than 150 million users in its first year, use by nine out of ten small businesses, and daily volumes capable of reaching about 1% of annual GDP on a single peak day.

> The reading should not be triumphalist. Pix is a powerful innovation, but it is not cost-free for the financial system. It improves the user experience, reduces transaction costs and increases competition in payments. At the same time, it requires banks to hold more liquidity and may reduce the transformation of deposits into credit. For the United States, Pix appears as a digital-trade issue. For Brazil, it is a question of financial sovereignty. For banks, it is a question of liquidity. Pix began as a button inside an app. It became a piece of financial policy — and now, of geopolitics.

[4] https://news.ycombinator.com/item?id=44753626

[5] https://en.wikipedia.org/wiki/Unified_Payments_Interface

[6] https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...

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Why bring up Taiwan and China? This feels incredibly cherry picked?

If you know Taiwan’s history, and you understand China - there’s no surprise to be..