VISA and Mastercard vs. Bitcoin

[lorix]

It is clear that the credit card companies have a lot to lose should Bitcoin gain a foothold in the global economy. Indeed, there are articles out there already the cite anti-bitcoin vitrol coming from this direction - http://www.teribuhl.com/2013/10/22/mastercard-hates-bitcoins/

One question that has always concerned me is this: Do credit card companies have the legal power to refuse their services to businesses that also accept Bitcoin for payments?

My understanding is that if Bitcoin was a company as it stands this couldn't happen. Anti-trust and anti-competitive laws is various countries would prevent credit card companies from taking such an action but in the case of Bitcoin we are dealing with a technology that has no central authority and only quasi-legal recognition to date. Should the big CC companies decide to play hard ball and dictate take-it-or-leave-it terms to businesses do we really have any recourse here?

We already have a major global player - Apple - refusing to allow Bitcoin transaction related apps on their iOS platform. If they can do this, what is stopping the global credit card players from taking a similar stance?

[trace666]

If Mastercard could dictate payment options for a business' customers, wouldn't the first thing they do be to make sure their main competitor Visa cannot be used in transactions?

[hostmaster]

The bigger bitcoin will be smaller playground left for card companies.We must expect heavier attacks. I dont know who will win? Bad guys (govverment control) or good guys (pirates) --we..

[lorix]

If Mastercard could dictate payment options for a business' customers, wouldn't the first thing they do be to make sure their main competitor Visa cannot be used in transactions?

No, in the case of Visa they are another company so the anti-trust/anti-competitive laws provide protection against that. It's all enshrined in corporate law around the world, but Bitcoin isn't a company or corporation so doesn't have the same protections - hence my concerns here.

[bryant.coleman]

If Mastercard could dictate payment options for a business' customers, wouldn't the first thing they do be to make sure their main competitor Visa cannot be used in transactions?

Visa and Master are rivals. Agreed. But in recent times they have collaborated with each other for their own common good (i.e for exploiting hard working people like us).

[pening]

It is clear that the credit card companies have a lot to lose should Bitcoin gain a foothold in the global economy.

No, really they don't.  Whats the primary purpose of a Visa or Mastercard?  Credit.  Second?  Convenience, instant transactions with about every vendor in the first world.  Third?  consumer protection

To the first, Bitcoin offers no credit.
To the second, Bitcoin offers delayed transactions, potentially to all vendors in the world. 
To the third, Bitcoin pointedly does not offer any consumer protection, theres zero redress from any problems like non-delivery, faulty merchandise etc.

I know someone will pipe in with fees here, but I don't pay fees.  Maybe you do in the US, but here in UK and in Europe the fees are hidden.
Chargebacks, another issue often raised, is a problem for the vendor too, not me as the user. 

Bitcoin is maybe have an affect on paypal and western union for peer-to-peer money transfer, but Mastercard and Visa are least affected.

[7Priest7]

BTC cannot and will not compete as a payment processor.
BTC lacks the ability to handle the sheer volume of transactions that the world needs.
I doubt BTC could handle Paypals daily load effectively,
we would be resorting to fees or long confirmation times.
It is important to note: current payment processors charge the merchant the fee.
In the case of BTC the consumer would be responsible for the fee/long confirmation time.

[Kryptox]

BTC cannot and will not compete as a payment processor.
BTC lacks the ability to handle the sheer volume of transactions that the world needs.
I doubt BTC could handle Paypals daily load effectively,
we would be resorting to fees or long confirmation times.
It is important to note: current payment processors charge the merchant the fee.
In the case of BTC the consumer would be responsible for the fee/long confirmation time.

Nonsense.  You're making some broad and uninformed declarations.

We already have a major global player - Apple - refusing to allow Bitcoin transaction related apps on their iOS platform. If they can do this, what is stopping the global credit card players from taking a similar stance?

I use MT4 on my ipad to trade Bitcoins, and there are a few apps providing info and alerts for Bitcoin as well.  Is it just wallets they won't allow?

[fendlestick]

Bitcoin has the advantage that anyone can take payment in it in around 30secs (download the wallet, load it and get an address, take payments).  To use paypal visa or mastercard I am sure I will need to fill in forms and do a whole bunch of boring paperwork stuff.

The network is strong so for little things you dont even need a confirm, I pay for my usenet in BTC and they extend me account via Bitpay on 0 confirms.  And by the time I have picked and packed an item ready for postage it will most likely confirm atleast once.

In it's current state Bitcoin favours the little guy which makes a nice change.

[7Priest7]

BTC cannot and will not compete as a payment processor.
BTC lacks the ability to handle the sheer volume of transactions that the world needs.
I doubt BTC could handle Paypals daily load effectively,
we would be resorting to fees or long confirmation times.
It is important to note: current payment processors charge the merchant the fee.
In the case of BTC the consumer would be responsible for the fee/long confirmation time.

Nonsense.  You're making some broad and uninformed declarations.

The irony in you calling my statements uninformed....

Read this then this.
Perhaps one day BTC will be to scale with a real payment processor, perhaps not.
No consumer is going to want to pay the fee with BTC when visa/mastercard/paypal charges the consumer no fee.
We could ignore confirmations, this will lead to merchant distrust after a few scammers create a few apps to inject false transactions.
Leading back to a huge issue, The 10 minute confirmation time(greater without a fee).
The confirmation time for a working cryptocurrency should be 1ms with no fee.

Lastly, I am ignoring you. You called my declarations uninformed, while citing no references to backup your opposition of my statements.

[lorix]

An interesting debate so far, but referring back to my original question - Do credit card companies have the legal power to refuse their services to businesses that also accept Bitcoin for payments? - and can traditional antitrust/anti-competitive regulations be applied?

For example, say I was a restaurant who started offering Bitcoin as a payment method. Could a credit card company (or issuing bank as their agent) legally turn around and demand I stop accepting BTC on grounds of it being "high risk" or some other pretext, under threat of losing access to their services? Given that the bulk of business is done via credit cards these days a business may have no other choice but to comply.

The case in point I mentioned in my previous post of Apple refusing to allow BTC wallet related apps on it's iOS platform is what has me most concerned here.

It would be good if someone with legal experience could comment on this.

[carolynwneal25]

The bigger bitcoin will be smaller playground left for card companies.We must expect heavier attacks. I dont know who will win? Bad guys (govverment control) or good guys (pirates) --we..

u funny but i agree anyway.. i think this war betwen good and evil will be over in the last day of earth

[Meuh6879]

BTC cannot and will not compete as a payment processor.

... when i have buy my butterflylab box (in butterflylab invoice form main site), i have send in BTC, the sum ... in a complete and automated process (you have 15min to validate the correct BTC transaction from your source of BTC).

BTC is a valuable payment if the rules are respected (API to read/confirm deposit like all credit card process).

[davedx]

An interesting debate so far, but referring back to my original question - Do credit card companies have the legal power to refuse their services to businesses that also accept Bitcoin for payments? - and can traditional antitrust/anti-competitive regulations be applied?

For example, say I was a restaurant who started offering Bitcoin as a payment method. Could a credit card company (or issuing bank as their agent) legally turn around and demand I stop accepting BTC on grounds of it being "high risk" or some other pretext, under threat of losing access to their services? Given that the bulk of business is done via credit cards these days a business may have no other choice but to comply.

The case in point I mentioned in my previous post of Apple refusing to allow BTC wallet related apps on it's iOS platform is what has me most concerned here.

It would be good if someone with legal experience could comment on this.

Well, they stopped accepting payments for Wikileaks donations. But then IIRC, Wikileaks sued them and won. Article: http://www.techweekeurope.co.uk/news/mastercard-the-first-to-lift-banking-blockade-against-wikileaks-120944

MasterCard has become the first financial company to revisit the issue, and once again allow payments to WikiLeaks.

The organisation was informed of this decision by Valitor. Lawyers representing WikiLeaks and its service provider DataCell sued Valitor in 2011, claiming the company breached its contract when it refused to take donations on request of Visa and MasterCard.

Wikileaks won the lawsuit in April 2013, forcing Valitor to resume payment processing. The company complied with the decision of the Supreme Court of Iceland, but also filed a formal notice, informing that it would terminate the aforementioned contract on 1 July. On Wednesday, after negotiating with MasterCard, Valitor suddenly changed its mind and announced it will honour the contract with DataCell. There is currently no indication Visa will do the same.

IANAL, but it appears as if it's up to the individual merchants who accept credit cards and Bitcoin to resolve any breach of contract from MC, Visa etc, should that occur.

Of course, it might be legal for them to write into the contract that merchants may not accept Bitcoin, but as you said, I'm not sure what anti-competition laws would have to say about that...

[zagerfish]

superior technology can only be suppressed for so long.

If Apple refuses to allow bitcoin for example, then all the bitcoin people will choose android.

No transaction fees allows online payments for industries that are low margin or can't support a 3% discount fee.

Industries that could only accept cash, or bank transfer before, or industries that are prone to fraud, like buying expensive computers online.

The only way to stop it would be for government to come out with their own version of the bitcoin.
___________________________________
Get 420 with bitcoins at zeltasgarden.com

[emeraldforce]

I would not consider Apple to be "a major global player". In my opinion their stock is ludicrously over valued and their proprietary products are based soley on bloviated PR.

[nestor]

Gut feeling tells me that Visa and MasterCard are way less the future bitcoin competitors to worry about. Payment provider functionality as bitcoin mockups embedded into the big online marketplaces of Apple, Google and Amazon could turn into a perfect alternative for BTC. As these are real and attractive markets to so many people.

[lorix]

IANAL, but it appears as if it's up to the individual merchants who accept credit cards and Bitcoin to resolve any breach of contract from MC, Visa etc, should that occur.

Of course, it might be legal for them to write into the contract that merchants may not accept Bitcoin, but as you said, I'm not sure what anti-competition laws would have to say about that...

Thanks for the reference to the Wikileaks situation update, I wasn't aware their situation had improved. Mind you it did take legal action from Wikileaks before anything happened - but at least here we had a case of a specific organisation being singled out that was able to successful defend itself.

If CC companies attempt a similar stunt to try and stamp out Bitcoin acceptance the question is who would defend Bitcoin? The addition of terms and conditions to service agreements preventing Bitcoin use would need to be tested legally, would it be up to individual vendors to fight this because I'm fairly certain small to medium businesses would not be willing to risk losing their primary transaction processing means for the sake of what is for now a niche method. There is always hope a major player (eg: overstock.com) would be willing to take a stand but it ultimately comes down to the question of whether or not it is determined to be a legal tactic by the CC institutions.

On the mobile platform front, Apple currently limits Bitcoin related apps to the informational type only. Anything that explicitly allows Bitcoin transactions to be performed on the iOS platform is swiftly removed from the app store. That's not to say there aren't Bitcoin transaction apps available on the iOS platform - but you either have to have installed it to your device prior to the app store removal or rely on a jailbroken device to run it. Google's Android platform on the other hand does not restrict the development and installation of Bitcoin wallet and transaction processing apps. To my knowledge, to date Google has not officially made a statement on their position with regards to Bitcoin but I believe they allow staff to spend project time working on Bitcoin/Crypto related developments and have public involvement. Mike Hearn https://plus.google.com/+MikeHearn/posts being one such individual.

[Bitcoinpro]

well its like what email did to the post office

can't cry about spilt milk

the banking and finance sector is where the layoffs will happen

its going to be like 2008 again

[bryant.coleman]

I would not consider Apple to be "a major global player". In my opinion their stock is ludicrously over valued and their proprietary products are based soley on bloviated PR.

I would agree. Apple is losing its market share to Samsung. So I don't care whether they hate Bitcoins or not. Their arrogance is causing their downfall.