The concept of a physical card is obsolete. That North Americans and western Europeans for a good part still use them is just stickiness of the infrastructure, and habits.
Developing countries have mostly leapfrogged to total contactless payments.
In South Aast Asia, you typically scan a QR code and approve a payment from your own phone. Far less fraud as a result. Nobody is able to touch your card, you don't have one.
Europe likely identified they better make the jump.
I can assure you that south east asians also still have cards, despite not making most of their payments with it. Not all ATMs support withdrawing with just a QR code from all banks, for one.
There are benefits to non-QR based payment systems, such as not wanting to pull out your phone, open an app, scan a QR and approve to make a payment that takes me 2 seconds with regular contactless payments.
Physical cards are also a nice fallback to have in cases of running out of battery, theft, etc.
I don't really understand why this is better than tap and pay with a card. Why would I want a single point of failure for both my communications and my ability to make payments?
We have progressively absorbed single function items into a mobile computer.
Watch, notepad, calendar, phone, flashlight, camera, dictionary, encyclopedia, etc.
The issue with declaring single function items as obsolete is that it removes redundancy and really sets us all up for an increasingly more critical single point of failure in our pocket.
Contactless is the convenience provided to get us into some wall garden. Apple pay. Google pay. Samsung pay.
These are not open or interchangeable standard, they aren't interested in that. They want our valuable transactional data, and location when those are made.
QR codes are a standard. It allows any bank to issue funds. It's a wire transfer. Transfer are a standard. Any bank can adopt it. Typically a bank adopts it..it doesn't require a specific device or partnership for merchant, nor the payer.
It also offers the ability to transfer funds remotely. In that sense it is more so contact "less" than the proximity handshake that contactless payments do, which is somewhat proprietary.
You can save a QR code, make a payment later. QR codes also are more intuitive because they represent an identity. An electronic device that can be swapped, tempered with, is unhelpful to help figure out a fraud or who we are actually paying until the handshake happens.
More importantly they don't incur a hidden fee for either the payer or merchant. Because it's a transfer. Not a transfer disguised as card payment.
A QR code scan keep the payer in control. Merchant presents an amount to pay, payer initiates the transactions, approves, and gets a confirmation. Can use bank A, or Y, or even a bank in another country, so long as it supports QR scan and a fast wire so that the merchant can be assured the transfer is well received.
Yeah, but... QR codes are annoying. I live in Thailand and I have to scan them every day. Pretty much every time, I wish it was as seamless as Apple Pay.
PayPal and Stripe are the payment processors who are taxing the card usage and acting as escrow. The technology part of transactions is with Visa and MasterCard. Who will do that part for free if they are not to be involved? What would be the benefit of separating escrow and processing, and how would it realistically be done?
I concede that's a drawback pushing us more dependent to owning and carrying a smart phone at all times. But I would say payments just piggy backs on a societal change that already makes it very challenging to opt for a brick phone or nothing.
Also to say, cash remains. That's more radical and effective as a fall back than a card which one can lose. When abroad I remember the anxiety of losing my wallet when abroad.
With a phone, it's actually less problematic to walk into a shop, get the cheapest android in there and set up all my banking on it. Half a day of a holiday wasted, that's an acceptable inconvenience given the risk. Losing a card, not really.
There is no such societal change except this pressure itself. A plastic card is affordable, accessible, private, and easy to use for just about everyone. Smartphone not.
> Also to say, cash remains. That's more radical
?!
> and effective as a fall back than a card which one can lose.
Cash loss is a thing, actually. Plus cash is more attractive for theft.
Wero is just one of many systems available that allow individuals to make transfers easily and almost instantly.
There is also Bizum in Iberia and Blik in Poland.
These instant phone-to-phone transfers are very popular, especially among young people who rarely use cash.
Wero itself was launched by large banking networks because they had no solution to compete with neo-banks such as Lydia, which was a pioneer in this type of service.
France has its own payment network, Carte Bleue, which dates back to when the very first smart cards were introduced, but it is not European.
The real problem is therefore not a lack of projects, banks or services, but a lack of interoperability, too many players and geographical fragmentation.
Europe is not fast, but it has worked wonders with SEPA transfers. It needs to put in place a clear timetable imposing the interoperability of these services. The absence of plastic cards is absolutely not a problem, just look at WeChat, Alipay, etc.
I think the misunderstanding is that when I say “credit card,” I do not mean a physical card. I have not used a physical card in years. In the US, when people hear Mastercard or Visa, they usually associate that with a credit card (virtual or physical), meaning the money is not taken directly from your bank account. You pay the balance later, which gives you credit and strong dispute protections.
Debit or ATM cards are different. They pull money directly from your account and can exist independently of Visa and Mastercard. For example, some credit unions still issue ATM only debit cards that are not part of the Visa or Mastercard networks.
> In the US, when people hear Mastercard or Visa, they usually associate that with a credit card (virtual or physical), meaning the money is not taken directly from your bank account. You pay the balance later, which gives you credit and strong dispute protections.
Europeans use these dispute protections much less, so Visa/Mastercard are mostly seen as expensive pass-throughs.
And I thing the misunderstanding here is that Europeans don't really use credit cards: we use the term "credit card" when we should use "debit card", but that's language for you. Literally, you have to go out of your way to get an actual credit card instead of the ubiquitous debit card everybody has.
And in Europe, when people hear Mastercard or Visa, they just associate the name with refused payments at points of sale depending on the luck they had with the merchant, or the foreign country, etc.
I do agree that in this case, picking MC/VISA is not really important. When I changed banks a few years ago, it so happened that I switched from a Visa to a Mastercard. Nothing changed save for the logo on the card.
Well, yes, we pay "cash" in the sense we pay direct debit. So literally the same as you, we tap the card. Except we don't have to keep track of the credit balance at the end of the month: money's taken directly from the account. The bank app shows you have enough? You're set.
As to how, in the financial term: we europeans don't really have the credit culture the US has. Having a credit is something very last resort, especially for "trivial" stuff (e.g. christmas shopping, to keep your example). Most europeans will have one or two credits tops: real estate loan, and sometimes car loan. Companies (mostly US) start offering payments spread over multiple months, but it does not really have a high penetration (at least in France), being in small useless debts is something we avoid like the plague.
And how do we have enough money in the bank? We just shop after payday, not after. Or, for most people, we keep a somewhat constant amount in the daily account. It's just another way of managing your own money.
I've paid numerous time using the swiss counterpart, Twint, in small shops. For some like the farm I used to buy vegetables to it was their only supported payment besides cash because they deemed the card systems too expensive.
The same way chinese tourists can already pay with alipay in many retatail outlets in europe, you can already pay with such european systems on Aliexpress. More are probably comming.
I believe its similar to PayNow Singapore, UPI India, PromptPay Thailand etc where you register your phone number with your bank app, you can send money to those mobile who are on the same network using your bank app, or use your bank's app to scan a QR when making payment to a vendor. The QR code is actually the vendor's number. There are now cross border link, for example I can send money to someone in India using just his mobile number on UPI.
It's for online payments only. You click on the wero button on a website/app, if on mobile takes you to your banking app (on desktop, you scan a QR code), you do MFA on your banking app and confirm, and the payment is done.
Wero are not in the business of issuing cards, though obviously they could get into that business - just like UnionPay did in China. I suspect there would be a lot of inertia there, as card payment fees are capped in Europe anyway.
But cards are offline from the perspective of the consumer. Sometimes even on the merchant side of things. Not that it is an important distinction nowadays--but I have definitely tried to pay with a merchant's own app-based payment solution that refused to load due to a bad cellular connection. I haven't looked into how Wero will handle this.
Most payment terminal nowadays use 4g network and it is not uncommon to see shop/restaurants employees in some areas trying to desperately get a signal by moving the terminal close to the door or window.
They need much much less data than your phone. They could process several transactions with less data it would take for your phone to load the HTML of the payment page, let alone the Javascript or the bank's logo.
Also, such terminals often use multi-carrier data plans that can use the best carrier available, while your own phone is stuck with one of the options (of course, you always have the worst one).
Wero bought Payconiq which allow to pay at the physical terminal with a QR code to scan with your phone. So, they can cover the physical payment without having to issue cards.
Neither are visa/MC for the most part. Mostly debit. ;) this isn’t really about the card anyway but the network behind it.
This is likely to be similar to the existing European payment systems just wider in scope. There are a bunch already it’s just fragmented and country specific. Sepa wero ideal girocard crates bancaires
I have always wondered what kind of shenanigans Mastercard or Visa did to convince so many banks to use their networks for debit cards.
When did banks actually make that switch?
It must be relatively recent, because I remember not that long ago my credit union ATM card was not part of Mastercard. Now I have a new one and it suddenly has a Mastercard logo.
Visa/MC cozied up to major national banks in different countries (not just in the EU) and offered them a sweet deal the banks could not resist: ditch the national payment network in favour of our own cards and we will give a slice of each transaction fee. The transaction fees are tiered, with one part of it going to the payment network (Visa/MC) and the bank (card issuer) keeping the other part. For cross-border transactions, there is also (of course) the exchange rate that comes into play, and this is where each bank buffs its transaction profit margin up even further (as each bank sets its own exchange rate rather than using the interbank exchange rate), so…
… banks saw big, no, BIG $$$ and lost their minds. The transition was rather swift: between the very late 2000's and approximately 2015 (give or take a few years), the transition had been complete. Credit cards became a massively profitable and booming business for the banks, with all sorts of loyalty programmes and bonuses (at consumers’ expense, of course, as the banks also jacked up interest rates on revolving credits). Note that all of this took place before national governments stepped in to regulate the transaction fees.
This coincided with the growing allergy of Western governments to owning any critical infrastructure (including payment networks) and the rising trend of outsourcing as much as possible to the private sector. As it is easy to imagine, it did not take long for the national banks already being in bed with Visa/MC to convince their respective national governments to stop investments in maintenance and enhancement of domestic payment networks and delegate the payment processing to the cartel: «they can do it better than you do».
… all of which has led us to where we are right now. Technically, national payments are still alive, but they are more in the contained mode of operation and not in active use or development.
> Venmo isn't needed, because bank transfers are free and "real time" as in <60s.
This depends highly on what countries and banks are involved.
If I (as a Swede) want to send money to my german friend, I have to use Revolut or Wise since going through my bank is an enormous hassle and involves higher fees.
