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?

> middlemen don't have much value add

On the contrary, the middlemen in credit card transactions are providing a service whose value add is so obvious that it's basically invisible, because it's become so normal: financial intermediation. The credit card company is basically covering your debts for you until you pay your monthly bill--and shielding you from having to give every merchant you purchase from your bank account information. On the other side of the transaction, the credit card company is guaranteeing payment to the merchant, who now doesn't have to care about trying to assess the financial reliability of every customer. It's become so normal that we don't realize what a huge value add it is, as compared with, for example, trying to convince the grocery store to accept your check, which forces you to hand them your bank account information, and forces them to decide whether they think you (and your bank) are reliable enough that your check isn't rubber.

Payment networks are not an easy thing to build or maintain. The security contexts you are operating within are extremely adverse.

I understand why this makes HN so upset. To the uninitiated nerd brain, these are just pieces of information flowing in and out of some computer system across networks. How expensive could it possibly be to actually send a packet to perform an online authorization with a bank's database? We all know the actual communication is ~free. What you are paying for is the maintenance of that connection, the security around it (e.g., PCI-DSS compliance), the ability to dispute that communication out-of-band, etc.

We could cut the cost of VISA's network in half or better if we could drop the compliance piece. I don't know how that would play out for the consumer segment though. How much economic activity would be curtailed if the average consumer had to start worrying about the security and stability of payment networks? Card skimming is a great example of this. Consumers will avoid certain retailers if they perceive an elevated risk of theft.

The biggest thing is disputes. I have no problem with an escrow service asking for a cut if I want to use them, cause they have real costs. The creepy thing is how that escrow built into credit cards is forced on every little transaction.

A government run public service means:

1) The government now has a full purchase record of every purchase you make

2) There is not a competing infrastructure where you can distribute your transactions across multiple companies to avoid a full profile building up

3) The government now has an incentive to eliminate un-surveilled options like cash and checks.

4) The government is now required to consistently legislate every single "he said, she said" fraud situation. Since it requires publicly available and consistently followed guidelines, this means everyone knows exactly which sorts of fraud work well

5) The government can trivially ban payments to anyone they disapprove of (porn, bitcoin, Iranian refugee charities, anyone who has the wrong opinion on Israel, etc. etc.)

6) The government can also wield all of this as a cudgel to threaten bad actors - do what we want or else we propose you go the Non-Payment List, we reveal your porn receipts, etc..

7) I don't even want to know what this does to the complexity of trying to use a card when traveling internationally

3% is 100% worth it to me to be able to do a chargeback when a vendor fails to deliver what they promised.

"I do think we're getting to the point that middlemen don't have much value add."

Does this idea apply outside of the credit card industry

The middleman business, intermediation, seems to have worked well for the so-called "tech" industry

I largely agree. What V/MC became is essentially an abdication of a core government function of providing the secure means of economic activity. If the US government can print the currency in “paper” it should also provide the means of communicating that currency electronically.

There is absolutely not reason that the government should have abdicated its core function and allowed a monopoly effectively have a license to print the dollar bills and rent them out for a cut from ever single economic transaction.

Imagine if the government had suggested that in addition to all the other criminal extortions called taxes, when you use dollar bills to purchase something, you have to pay a 3% dollar-bill-usage surcharge every time a bill changes hands.

But it was obfuscated that this constant drain and fraud was being perpetrated because the whole system became extremely financially lucrative to the very people whose responsibility it would have been to stop the crime; so it has continued since. The mob was in control of the police.

AI is certainly becoming the ultimate middleman at this point.

As AI compute will be within 15 years.

Oh please. Every "public service" in the US is provided by a private entity.

> Possibly neutral markets, payments, and logistics should just be a public service.

Yes let’s give the economy to the people that run the DMV.

Just like HN that the top comment is completely off topic and totally misses the point.

"Value add" is the wrong framework for thinking about these sorts of services. The reason Visa and MasterCard exist is that there's value in relationships. If you want to have your accounting system available in all stores, you have to talk to Visa or MasterCard. Conversely, if you run a store and want to accept payments, you only have to deal with Visa and MasterCard. Sure, "public service", but run by who? Visa and MasterCard are cross border, good luck getting any sort of international coalition of governments to build a payments system in the current political climate.