The fundamental service of performing payment processing doesn't seem complex, but these services do perform valuable work behind the scenes. I don't think it's worth what we ultimately pay for it, but there are a few parts to this worth considering:

1. I would like payment processors to have the resources and capacity to adapt to threats and maintain highly resilient infrastructure. This is expensive and requires a lot of ongoing investment.

2. If payment processing was turned into a public service, the complexity of international integration and necessary relationships, standards, etc. would become a public service burden. I'm not sure that I trust my provincial or federal government to handle this adeptly.

3. There is a lot to this that we're probably unaware of.

I'm not trying to protect banks in the slightest, but it's a baby and bathwater situation. I'm not confident in my country's ability to create its own payment processing platform that I would trust to be a reliable, sustainable, value-generating system operated by public servants. I don't mean value-generating in the profiteering sense, but in the "this is worth operating on public funds because, ultimately, it is more than worth what tax payers put into it".

I think some things are an awesome fit for public services, but a lot of places are probably not equipped to take this kind of task on safely and competently. My country is more likely capable of regulating these institutions, not replacing them internally.

We tried to make a COVID-tracking app and spent $59.5 million, and it was an abject failure. How much would we spend on a broken payment processing platform?

> I'm not confident in my country's ability to create its own payment processing platform

You live in Canada, which already has better options than the U.S., though the sittuation is getting better in the U.S.

For example, Interac is free for most people and very easy to use.

Debit payments often cost merchants less than 10 cents per tap. The local gelato place only takes debit or cash; if you don't have either, they're happy to accept an Interac payment, and do so more often than you'd think.

Part of the problem is that the incentives are misaligned. People want their points systems. Merchants want customers, but they also want lower transaction fees. Most customers have debit cards that would be much cheaper for merchants, but choose to use their credit cards, because they want the "rewards."

While the 3% or so that a bank charges might seem low, if you look at this from a low-margin business, that 3% may actually be much higher percentage of their net profit.

Regulation concerning rewards systems could go a long way towards shifting the system to be much less costly for businesses.

There's not much hope of real change here; Canadian banks are very profitable, and are a cornerstone of our economy. It's very unlikely that politicians will do anything to risk that.

$59.5 million seems like a drop in the bucket compared to the rent that these middlemen are taking. And was the COVID-tracking app an abject failure because it didn't get public adoption or because the technology wasn't fundamentally sound. Because if it failed because of the former, then simply regulating companies to use it (or even just putting it out there as a cheaper option to outcompete Visa) would solve a lot of those adoption problems.

Countries can build payment networks. It's doable. They already run central banks that facilitate payments, you use them every time you write a check. In Japan, they turned transit cards into a payment network. India and Brazil built smartphone payment apps and they're the most popular form of payment in their respective countries, to the point where USTR is shitting its pants about it.

The underlying issue is not if we can build the network (we can) but getting people to actually use it. For example, if we wanted to repeat the Japanese success of IC cards here, we'd run headfirst into the problem that our public transit networks aren't big enough to be a credible Visa/MC alternative:

- Most public transit systems large enough to issue their own fare cards and readers are also regional monopolies, because there's not enough transit demand to sustain multiple companies with different routes. If I'm in Pittsburgh, all the buses and trolleys are run by PRT. In the Wasatch Front, it's UTA. Those agencies have little interest in becoming banks; they operate the fare cards mainly to keep fare payment easy, and they don't need to coordinate with anyone because everyone already joined into a single large transit agency.

- Metro areas with multiple transit agencies often have political differences that make coordination difficult. For example, in Long Island, NY, Nassau County's NICE bus system had legacy Metrocard fare payment that wasn't upgraded to OMNY until a month or two before Metrocard was completely ripped out and shut down. A rare exception to this would be the San Francisco Bay Area where there is an insane amount of political fragmentation and somehow they all wound up taking Clipper.

- A lot of Americans just never touch trains or buses enough to actually need a transit card.

- A lot of transit agencies are just surrendering to Visa & Mastercard and taking credit cards now anyway, even though transit fares are exactly the kind of microtransaction that is ill-suited for those networks.

Ironically, the best bet for an American-run payment network would actually be to nationalize E-ZPass[0]. In fact, in 2008 Congress passed a bill specifically mandating a unified toll payment system, but nothing came of it because the bill had no actual teeth. The main problem with this idea is that E-ZPass transponders won't fit in your wallet; you'd have to launch a separate form factor for an "E-ZPass Card" and at that point you run into all the same problems I just mentioned with making a unified transit fare system.

[0] E-ZPass is an RFID transponder system for toll payment that is very well-adopted along the east coast.

I mean there are options. It's not like people in Brazil or Europe can't make electronic payments. That said, I do think the US is very prone to public services being made worse and poison-pilled on purpose.

Wallet/Qrcode payments in many countries are roughly free. Visa/MC/Banks charge roughly 3-5% when you account for all fees (ie: Stripe). The security angle is also BS because these costs are hidden from consumers as they are thrown on merchants who will average them out again on consumers.

They are draining/milking the cow. At some point, they had significant value in quick information transmission when the internet and smart phones weren't really a thing. But now the only advantage is chargebacks/refunds which coincidentally, the experience there is being made shittier.

Still, not worth the 3-5% premium. Glad many merchants are starting to charge for credit card use and push back.

> I don't mean value-generating in the profiteering sense, but in the "this is worth operating on public funds because, ultimately, it is more than worth what tax payers put into it".

Very sure the amount those companies make yearly is worth saving.

> We tried to make a COVID-tracking app and spent $59.5 million, and it was an abject failure.

and then we just…kept letting those people stay in charge of spending our money.

and there’s a story of very expensive incompetency like that every quarter at minimum.

On that general note, I think the comparison point to look at for 'state of the art' in the subject would be India's just plain excellent UPI system (https://en.wikipedia.org/wiki/Unified_Payments_Interface) and all its supporting infrastructure. It's seriously great in a way that's hard to understand for people whose only context is being familiar with Western credit card or bank transfer systems. Nigh instant payment reconciliation, free and extremely convenient for individuals, operational costs small enough that it's practical for everyday micro-transactions for the poor (I'm talking on the territory of 5¢ in USD terms) which makes cashless payments extremely practical for even ordinary street merchants.