Outsiders simply have no idea how much money the payments industry steals on the backs of society while creating negligible value.
Payments is this amazingly simple exchange of commerce that’s made intentionally complicated so that the intermediaries can grab as much as they can to enrich themselves.
And then have the gall to defend the practice as if they’re doing something divine.
The payments industry made so much money for so long that they didn’t even need products to work.
Have you ever read the “API documents” for a legacy processor?
Criminal.
It’s why the more modern payment companies that care about product (Adyen, Stripe, and the verticalization of payments into point software solutions) are eating share from the legacy processors.
But new or old, payments companies still earn an absurd amount of money.
So much so that payments has rightfully been described a heat shield for incompetence, meaning that you don’t even have to do half of something right and you’ll rake in so much cash that it can all be forgiven.
Still believe payments has a COGS because you watched card scheme execs on CSPAN?
Look to India’s UPI or, even better, Brazil’s PIX to see how easy – and cheap – it can be to move money.
Here are some truisms.
- Moving money should be free
- Those who need credit should pay for credit without subsidies from other stakeholders in the value chain
- Merchants should not subsidize marketing for issuing banks
- Fraud, the only real cost of a transaction, could be nearly eliminated if payments people weren’t idiots
Our years of payments exposure have led us to this theorem that we think holds incredibly true:
Successful payment processing means creating leverage over merchants, and holding those merchants hostage for as long as one can.
It’s not about value.
Or duty.
Or morality.
It’s rent-seeking at its finest.
And if that wasn’t enough, payment companies hurried lawyers into a back office cubicle and drafted merchant agreements that made it impossible for merchants to litigate damages in any fair way so that moral hazard could pile on the rent-seeking.
#Winning
Any vestige of value is left to those loser software companies.
People that are dumb enough to invest their limited time solutioning problems don’t deserve to reap the lucrative rewards of fraudulent inducement.
The closest a payment company’s ethos can permit them to approach the notion of value is the head fake of, “Oh we have some software… and you can only use it with our payments.”
A cursory look at their disclosed R&D expenditures reveals a number so close to zero you wonder why they bother disclosing it at all.
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