Quote from: JoelKatz on May 28, 2013, 02:40:16 AM

Quote from: SamS on May 28, 2013, 02:36:44 AM

I understand your point, but I don't think I really understand the fee structure overall. Won't there be fees associated with storing the value, insuring the storage, converting the currency to/from Fiat, etc... These are all things that are baked into that 2% credit card fee or 5% conversion fee (FX yes?). The remittance fee is a scam -- on this we agree.

These are the things they say are baked into that fee to justify it, but the reality is quite different. The reality is that it's lack of competition, extension of credit, and fraud prevention (due to the fact that you give the credentials away fully to make a payment) that accounts for most of the fee. Still, credit cards are probably not the very best disruption target. The higher the cost, the easier to disrupt.

Yes, the remittance business I can see for sure. International wire fees are another area that might be open for review. However, what you make up in transaction fees can be easily lost in the conversion spread so it's not so obvious to me -- especially if your competition is a money center bank moving billions around the globe daily.

I don't see how fraud prevention goes away in this system. It's basically outsourced to the gateways right? Extension of credit is a money spinner for the card companies not a cost center, yes? Lack of competition is likely. Square is certainly beginning to make a miniscule dent and the online wallets that are beginning to appear are likely to take a chunk as well over time.