Visa and mastercard innovated in an era where payment settlement was notoriously difficult and expensive but they've used their monopolies to entrench themselves in (by negotiating deals with merchants and bribing consumers with points) while the rest of the world moves on towards "layer 2" payment systems that are much cheaper and efficient.
Anyone can pay to anyone instantly free of Charge. Only limit is it's limited to ~ $1000 payment. The QR code can also be dynamically created by POS terminals containing the total bill amount as well, so upon scanning the amount is auto populated in the payment app, you just have to enter the security pin.
And since it's a Govt. Project, its not limited to just one app, there are lots and lots of apps working on the same system. There is even a VISA/Mastercard credit alternative : RuPay that works within the system.
I know that the banks are trying to build a payment solution on top of this technology but it's not really getting traction.
I am wondering if there is a way to bootstrap something bottom-up by offering something to merchants that has a clear value prop.
I guess Tencent are making their profit from the interest they earn on the money that was transferred into them that just stays in people's Wechat wallets in effectively a parallel currency.
> If the card processing cost is 4 percent of the sale price, the fee amounts to $6. That $6 is not 4 percent of the profit; it is 12 percent of the merchant’s margin.
Sure, but merchants are raising prices overall together with all their competitors, or charging more when using a card. Credit cards aren't taking away 12% of merchants' profits that they'd keep otherwise.
Also, credit card fees are not 4%, they're 1.5-3.5% with an average of around 2.3%.
> The merchant may pay little or nothing per transaction, the funds usually arrive immediately and no physical terminal is required.
But what's missing here is fraud protection. It's more like debit cards than credit cards, and debit card transactions are much cheaper in the US too (more like 0.7%).
Now that it's increasingly common for local merchants to implement a credit card surcharge (so non-CC users don't have to pay more), and a large percentage of credit card fees come straight back to the user as rewards (e.g. a 2% cash reward), it's not really clear that payment fees matter all that much in the end. See:
Fed Data Shows Economics of Interchange: 86% of Fees Fund Rewards Programs: https://www.pymnts.com/news/loyalty-and-rewards-news/2025/fe...
We're still orders of magnitude smaller than Visa and Mastercard, but I do believe products like ours (and competition is red hot here, theres so much good choice!) will be good for consumers.
Money should be like a message: free and instant
We're open source btw, happy to show off codebase and review PRs
All of them are happy to receive cash or interac (Canadian debit infrastructure) or even e-transfers in some cases (Canadian venmo). But they'll say an extra $1-2 charge if you want to pay by credit card.
Maybe I'm just remembering badly, but I don't remember encountering this twenty years ago; back then the rules were clear that you either didn't accept credit payments, or you did and it was the same price as cash.
How did Venmo and Cash app get any traction? After all, we already had PayPal. There was already a way to transfer money to your friends.
How did Robinhood get any traction? We already had Etrade and other online brokers.
The merchant's system displays this code, you open your online banking app, scan the code, select "SEPA INST" (here's the usability catch!) to make the payment instantaneous, and confirm. Within 10 seconds, the money is transferred to the merchant's account. Either the merchant's bank or a third-party Open Banking API immediately informs the merchant's system (e.g. by push notification or webhook), and a receipt is issued.
Everything is already here, but since this system would be virtually free to use, nobody really has an incentive to push it. It costs money to educate the public, and there is no money to be made. Instead, everyone gets paid handsomely by the card mafia.
The QR is a URI with the ID, amount and maybe other stuff. It's a client-side implementation.
RuPay sure "works within the system" but is pretty much useless for international payments/subscriptions. Not really a VISA/MasterCard replacement.
Revolut works similarly. You don’t pay any fees on transfers to other Revolut accounts, but you do for other bank accounts.
And they’re much lower than that in the UK and EU. Even the smallest UK retailers can pay as low as 1.6% or 0.8% + £0.02. The big guys who are running billions of £ are paying 0.5% or less.
(These apply to in-person transactions, accepting cards on the internet typically costs more).
The only way which has worked for me was actually using g2a with their crypto provider to get a 10$ gift card of rewarble and activate it.
Does your app allow something like this? can I convert any crypto to payment provider which can be accepted from the other side or am I reading it wrong because you do mention PIX, if it can work with PIX, does it work with VISA/Mastercard cards too?
Now, would it be nice to not overpay at the first place. Technically we could re-implement the whole thing (instant payout, fraud detection, etc.) like Brazil or India did. It would bring more than $100B back to the US consumers every year, that could be spent elsewhere.
That depends on the market. Suppose you're selling something which has a substitute available for the same price, so the customer will buy whichever one costs less by any amount, but the substitute is in a different market where the payment is in the form of a bank transfer or it's a tax deduction etc., or the substitute is paid for in time rather than money.
Then none of the sellers accepting credit cards can raise the price because otherwise the buyer would go to the substitute.
And all markets are like that to some extent. For some the seller can't raise the price by a cent without losing 100% of their sales. For others, raising the price would "only" cost them 5% of their sales... but that's still 5% of their sales gone, and all the same fixed costs to cover. And, of course, in the cases where the price goes up, now it's the customer eating the fees, which is fairly nefarious when it's being subtly hidden from them.
> Also, credit card fees are not 4%, they're 1.5-3.5% with an average of around 2.3%.
Stripe is 2.9% + $0.30. For a $10 transaction, that's 5.9%. For a $3 transaction it's 12.9% -- of revenue, not profit.
> But what's missing here is fraud protection.
"Fraud protection" is is independent of the fees. You're making the case for that yourself -- if 86% of the fees go to rewards programs then they could be reduced by 86% without affecting "fraud protection", and the rewards programs are a wretched thicket of dark patterns and unpaid interest scams taking advantage of people who are bad at math or too short on time to configure them efficiently, on top of a tax on lower income people who don't qualify for them.
It's also not clear why "fraud protection" should cost anything. The bank has no meaningful way to investigate a low dollar amount he-said she-said and the high dollar amount ones should be going to the actual court system, so why should they have anything more than a set of rules (e.g. which transactions are eligible, how long you have to file a dispute) under which you can make a request to have them flip the bits back in their computer for free?
Merchant agreements didn't allow surcharges until 2022: https://www.cbc.ca/news/credit-card-surcharge-faq-1.6610356
A sensible business owner increases the base price a little to offset card fees instead of bothering customers with these details and losing sales.
My memory is in accordance with yours
Processing a Mastercard card is "$0.13 + "Interchange+" + 0.60%" where the "Interchange+" would be 0.30% for EU. So more like €0.10 + 0.90% so for €10.00 product, it would be €1 of fee (1.00%). Much less than here in US, but still not negligible for small businesses that run on thin margins (and 20% VAT).
Does it? I'd be surprised if it does in the UK at least, as all banks do free transfers to every other bank in the UK via Faster Payments. I thought it was the same in the EU?
- you can send money to companies and individuals alike. It's easier to trick people into fake shop payments, a card payment provider requires at least a bit it verification/registration
- it's really hard to dispute/call back sepa payments. The card companies often step in there afaik
What many people in Germany want is a payment system that is as anonymous and is as hard to control by some untrusted entitity (both government and banks are very distrusted) as possible and what cash offers. That's basically cash.
Not without reason, in Germany there exists the well-known phrase "Bargeld ist gelebte Freiheit" ("cash is lived freedom").
It also included a number of other valuable consumer protections, such as forcing card issuers to provide clear advance notice of interest-rate increases.
The financial-system reforms were some of the Obama administration's most valuable.
You can't dispute or call back SEPA INST payments. But you can't dispute cash payments either. This is just fine for most day-to-day transactions, I don't need insurance when I buy groceries or pay the taxi driver.
Credit-card issuers in the USA are a textbook example of a consumer- and retailer-harming monopoly.
Any other payment method will not give customers any benefits over those methods. Unless banks are willing to take responsibility for fraud like with card purchases.
One of the small advantages of riding in the front seat of a Cuenca taxi, apart from the superior view of traffic misdemeanors and roadside drama, is that the dashboard functions as an unexpectedly reliable indicator of financial evolution. Permits,
guardian saints, and, increasingly, a tidy arrangement of QR payment stickers: Deuna, JEP, Jardín Azuayo.
I asked a driver recently what commission he paid on these electronic payments, expecting a familiar complaint about percentages nibbling away at his fares. He replied that the service was free. No charge.
“Free,” being one of those words that benefits from cautious handling, did not mean that no cost existed anywhere in the system, but rather that nothing obvious was being deducted from his end of the transaction as far as he could see. From the driver’s perspective, and that of many small merchants in Cuenca, the arrangement works well enough to feel costless.
This contrasts rather sharply with the card-dominated economies of the United States and Canada, and these days also the UK, where Visa, Mastercard, and sometimes American Express form the invisible scaffolding of everyday spending. Tap a card, tap a phone, walk away. The experience is undeniably convenient, reassuringly fast, and backed by formidable fraud protections. Yet convenience, like most luxuries, carries a price that is often poorly understood.
Visa and Mastercard remain marvels of global financial engineering, but they are no longer cheap marvels. The steady upward drift of processing costs has become a topic of increasing conversation among merchants who must either absorb the expense or pass it along in ways customers eventually notice.
When merchants complain about “four percent,” customers sometimes imagine this as a minor administrative nuisance absorbed somewhere in the vast machinery of commerce. The mathematics tell a more interesting story.
Consider a simplified example. A merchant purchases an item for $100 and sells it for $150. The gross profit is $50. If the card processing cost is 4 percent of the sale price, the fee amounts to $6. That $6 is not 4 percent of the profit; it is 12 percent of the merchant’s margin. The calculation becomes even less forgiving once sales tax enters the picture. In Ecuador, where 15 percent IVA is included in the price, card fees are applied to the full amount, meaning the merchant pays processing charges not only on their own revenue but also on the portion destined for the tax authorities, thus creating a kind of tax on a tax that is paid by the merchant. In the United Kingdom and other VAT-based economies, where rates may reach 20 percent, the same arithmetic applies, (although the same would apply at a lower level to state sales taxes in the US.)
Margins, particularly in retail and hospitality, are rarely as generous as customers might suppose. A café, a small restaurant, a taxi driver, or a neighbourhood shop may already be juggling rent, wages, utilities, taxes, spoilage, and the perpetual uncertainty of demand on rainy days. Under such conditions, a few percentage points extracted from each transaction cease to be trivial and begin to resemble a tax on survival.
From the consumer’s viewpoint, card payments feel almost magical. There is no visible deduction labelled “interchange,” no helpful annotation explaining that part of the purchase price has been diverted through issuing banks, acquiring banks, processors, and global card networks whose logos convey stability but whose economics are designed, quite reasonably, to generate profits at your expense. This is made even handier for the consumer if they have ApplePay or GooglePay which are really overlays to credit and debit cards.
In Ecuador, by contrast, many digital payments bypass that elaborate international system of tolls or trolls, depending on your point of view. Systems such as Deuna operate largely as account-to-account transfers, typically initiated by scanning a QR code and confirmed within a mobile banking application.
Systems such as Deuna are really an elegant shortcut built upon a familiar foundation. Anyone who has used online banking knows that sending money to another customer at the same bank can be done with relative ease, provided one is prepared to wrestle with account numbers, CI card numbers, emails, and the occasional typo. Deuna reduces this ceremony to a scan of a QR code and a tap of approval, sparing both parties the small anxieties of manual data entry as long as the payer can make sure to avoid paying $350 for an almuerzo instead of $3.50c.
The merchant may pay little or nothing per transaction, the funds usually arrive immediately and no physical terminal is required. A printed receipt is replaced by a glowing screen and, occasionally, a quick photograph on a cell phone taken by staff as a modest audit trail or a way of counting the day’s takings.
The procedures vary. In some establishments, staff simply inspect the confirmation screen presented by the customer, relying on familiarity and experience. In others, they wait for the reassuring chime of a payment notification. To visitors accustomed to rigid card-terminal rituals, this flexibility can appear faintly improvised, yet it reflects rational adaptation to local realities: smaller transaction values, sensitivity to fees, and the practical need to keep service flowing during the almuerzo rush.
What makes these QR-based systems economically intriguing is their structural simplicity. When payer and payee share the same bank, the transaction does not require money to traverse a web of intermediaries and currency exchange rates. The bank merely updates its own records, subtracting from one account and adding to another. A card payment, by comparison, usually engages a considerably more elaborate ecosystem of issuers, acquirers, processors, and network operators, a structure that delivers extraordinary convenience and protection while also explaining why the associated fees are rarely negligible.
Even a customer loyal to a single bank benefits from this arrangement. Local merchants easily maintain multiple accounts across different institutions, enabling them to accept a range of QR payment systems. What appears to be a simple sticker display is, in reality, a sophisticated interoperability strategy conducted at street level.
Brazil offers perhaps the most dramatic illustration of where this model can lead. The Pix system, introduced by the Brazilian central bank, allows instant, low-cost transfers between individuals and businesses using QR codes, phone numbers, or simple identifiers. Adoption has been astonishing. Street vendors, supermarkets, professionals, and taxi drivers accept Pix as casually as cash once was. Card usage did not vanish altogether, but it was forced to compete with a system that is much faster for settlement and frequently cheaper for merchants.
The implications are not merely technical. Payment systems shape pricing, margins, consumer behaviour, and ultimately the distribution of profit across the economy. When fees rise, merchants adjust. Prices creep upward, minimum card spends appear, discounts for cash re-emerge, or profitability narrows to the point where resilience suffers.
None of this renders Visa or Mastercard villainous. They provide extraordinary global interoperability, sophisticated fraud management, and consumer protections that few domestic systems can fully replicate. Their services are valuable, but discomfort arises when the cost of that value becomes large enough to be felt by those operating closest to the margin: small merchants, independent operators, and service providers whose businesses are built on modest sums repeated many times a day.
And so the Cuenca taxi driver’s dashboard, adorned with QR stickers rather than a humming card terminal, becomes a small but telling symbol of an alternative equilibrium — one in which payment remains digital yet some of the toll booths are bypassed, the hardware is just a phone, and the transaction itself recorded and anchored in a shared acknowledgement that the numbers on a screen have aligned as intended. And the passenger, as long as they have a live data connection, simultaneously ensures that they don’t have to dig coinage out of a back pocket or pick up quarters from the gutter, and that they have not mislaid their precious phone in the taxi.
(I don't know anything about UPI, but in Indonesia we use a similar system)
Its just a URI.
upi://pay?pa=payeeID&pn=payeeName
You can add things like &am= to prefill the amount. Merchant txns have reference IDs and all that stuff.