Please provide feedback: How to break into Fiat medium of payment monopoly?

[chiefhodler]

How to break into Fiat medium of payment monopoly?
In any commerce transaction, the buyer typically has more power than the seller. If a seller is unable to offer the payment method that the buyer prefers, they may lose the sale, especially if they are selling a commodity product or service. To prevent this from happening, sellers often offer a range of payment options, including traditional methods such as ACH, credit card, debit card, and wire transfer.

Credit card payment is considered to be one of the most successful financial products in history. It has established a business model that is acceptable to both buyers and sellers. Sellers have factored in the cost of processing credit card payments, including interchange fees and the cost of chargebacks, as part of their overall cost structure. Buyers, meanwhile, have become accustomed to the rewards points and chargeback capabilities of credit cards.

Over the past 50 years, the credit card payment system has become so well-established that it is difficult for new payment methods to compete with it. For a payment system like the Bitcoin lightning network to successfully compete with credit cards, it would need to offer an even better business model for both buyers and sellers.
One possible business model for the Bitcoin lightning network could involve merchant service providers charging sellers the same interchange fees as traditional credit card systems (around 2.8% of the transaction value). These providers could then share a portion of these fees (for example 230 basis points) with Bitcoin lightning wallets. The wallets could offer buyers a 2% cashback on their purchases, funded by the fees collected from merchants. The wallets could keep a small commission (30 basis points) for themselves, and use the remaining 200 basis points to fund the cashback for buyers.
This cashback incentive could be an attractive reason for buyers to switch to the Bitcoin lightning network for their payment needs. The wallets could use their commission fees to support customer acquisition and manage chargebacks.

The merchant service providers, meanwhile, could keep a small portion of the interchange fees (50 basis points) to cover their costs related to integrating POS endpoints and acquiring training and supporting merchants.

To make this business model work effectively, merchant service providers and wallet providers would need to work closely together. They could potentially form a non-profit organization to help develop, implement, and manage operational processes and best practices for the Bitcoin lightning network.

Please provide feedback on the above. It is practical, does it make sense?

[jackg]

The UK made a system like this illegal for credit and debit cards recently (with decent reasons imo). Companies used to be able to charge a flat fee whenever anyone used a card over using cash, it meant a 2% fee the business would have been paying turned into a 10-20% fee for the consumer.

Offering and advertising a discount is probably better than offing cashback but it works about the same way. Bitcoin has more protections for the seller than credit cards do (less risk of charge backs that cost the seller).

I think this thread has popped up quite a bit before if you fancy searching for other times it's been discussed, you might also find places that offer discounts for buying things in btc.

[avikz]

How to break into Fiat medium of payment monopoly?

The only answer to this is - user convenience!

Unless and until a payment system is able to provide user convenience and less fees structure than the market, it's impossible to break into fiat monopoly!

I will encourage everyone to read about the IMPS payment system designed and introduced in India. It has now been adopted by six other countries.

https://www.thehindubusinessline.com/money-and-banking/imps-rated-worlds-best-in-real-time-payment-service/article29459995.ece

Now, I don't need to carry a wallet. I just need a phone with a simple camera. regardless of what I am buying and what's the cost of it, I can just scan a QR code and enter a PIN code to complete the payment. It has been adopted by big brands as well as street vendors because it just needs a simple QR code. The money gets deducted immediately from my bank account and reaches the seller's account without fees. It's free!

Unless cryptocurrency can provide a similar kind of user experience and convenience, it's impossible to break into fiat monopoly! Otherwise it will remain as an investment!

[Doan9269]

As for me i wouldn't buy yhe idea of using any payment means whereby the transaction fees is not customizable by me, those involved will have to inflate the charges to their taste and using any form of payment system doesn't make any tangible difference as long as you're dealing with fiat currency, this challenges is what bitcoin has come to take off the hands of the central authorities, by now i think transaction charges shouldn't be a thing of threat anymore except you decided to go with how it's been presented to you with fiat instead of bitcoin.

[EarnOnVictor]

What you are asking for is already being done, we only need more competition to reduce the dominance of fiat while more initiatives are going on in this regard. However, as fiat payment is stable and more reliable than crypto payment in value, this is not a task that would be most appreciated because BTC for example will always fluctuate in favour or against the holders, and the non-reliability of it might cost the holders and companies dealing with it. So there is no way disparity will not set in, hence the preference for fiat in this regard.

And this would always cause extra fees on the path of the companies handling payment. Mind you, nothing like a non-profit arrangement when it comes to money and payments like this, no party would agree to that.

[franky1]

How to break into Fiat medium of payment monopoly?
..
For a payment system like the Bitcoin lightning network to successfully compete with credit cards, it would need to offer an even better business model for both buyers and sellers.

A. it would need to be a payment network thats not promoted as full of empty 'promise' (ends up full of poop)

B. easy to set up. low maintenance cost, doesnt require certain things to occur to assure a successful payment

..
when a sub par network says "payment in milliseconds"
but then you realise you have to scan a QR code and then wait for the app to translate a few route options, where the fee is not just 1 middle man but multiplied by many route-men depending on route taken.. thus not knowing the fee until you attempt to make payment.
and then attempt a route and hope everyone is online and liquid to facilitate payment. (they all hit accept at the same time)

and then.. realising the system only really works high % of the time for coffee and about 30% of the time for a weekly grocery shop
.. you soon learn its not really a effective payment system. and thats before getting into all the drawbacks of the flaws and bugs where your value can become nothing/liquidity available used up without you realising
..
there is a good reason why blockchain currencies of the 2009+ were invented, as oppose to the silly smart contract networks of the 90's-00's
(lightning payments(onion packets) use old tech. not new tech)

The only answer to this is - user convenience!

Unless and until a payment system is able to provide user convenience and less fees structure than the market, it's impossible to break into fiat monopoly!

Unless cryptocurrency can provide a similar kind of user experience and convenience, it's impossible to break into fiat monopoly! Otherwise it will remain as an investment!

agree, fully
and to add to this

the two aspects are. the currency thats common and the platforms of that currency that are common

EG once having a venmo/paypal account they were easier and better than the silly chip and pin debit card option.
but visa, then upgraded where you can 'upload' your card data to your phone and use qr code/tap and pay to compete against 'mobile payments'

as for the currency.
breaking fiat where crypto is common requires legal tender status (changing tax, minimum wage, court penalty, victim compensation laws, debt value laws) where by other currencies can be used as the main payment currency required/measured

so without a legal tender status of paying options for bills and taxes and wages. a crypto currency wont become a common utility for every day use of peoples full lifestyles

thus would require alot of better conveniences, benefits of use to get people to use crypto for full lifestyle payments that both benefit all the merchants/employers and the customers/employees

where by a easier to use app also comes into play to make it desired to use this alternative currency to fiat
..

as for wanting to just "break fiat"
wel that can be done. instead of exchange market a crypto to a rate of fiat.
exchange rate it to a rate of say "minimum wage" where by the crypto in the Us is $10. but that same unit crypto sells for $0.30 in africa.
then sit back and watch arbitrage raid the FOREX market to spin the cycle of trade from US-africa-crypto-us.. repeat and truly disrupt the forex rates of fiat as people take advantage of the new crypto exchange rate mechanism..
.. but that wont happen. its just a pipe dream to crash fiat forex markets. as nations see that as a national security attack and such exchanges would get removed from the internet quick

[Ucy]

You don't need to compete with fiat for customers. Simply build Circular or Interdependent Economy within the Bitcoin space by supporting & grooming independent businesses and people to create products and services they will exchange for Bitcoin, and possibly fiat/stablecoin acting as alternative currency within its economy.
I actually do not fancy the idea of crypto trying to reap where it didn't not sow by stealing or leeching customers off fiats. The relationship should be mutual or Bitcoin should completely create it's own Nation with Citizens that mainly depend on it for transactions in its economy like fiat currencies of other Nations do.. I think survival products and services like Mobile homes, foods, gadgets etc will do great in such economy. Let's stop pretending all is well  and start using Bitcoin for its true purpose : an alternative to survive a failing system.




This is a great opportunity for truly decentralized and independent systems like Bitcoin to build a thriving economy by attracting people within its system to create products and services and exchange for it native currency.

[chiefhodler]

How to break into Fiat medium of payment monopoly?

The only answer to this is - user convenience!

Unless and until a payment system is able to provide user convenience and less fees structure than the market, it's impossible to break into fiat monopoly!

I will encourage everyone to read about the IMPS payment system designed and introduced in India. It has now been adopted by six other countries.

https://www.thehindubusinessline.com/money-and-banking/imps-rated-worlds-best-in-real-time-payment-service/article29459995.ece

Now, I don't need to carry a wallet. I just need a phone with a simple camera. regardless of what I am buying and what's the cost of it, I can just scan a QR code and enter a PIN code to complete the payment. It has been adopted by big brands as well as street vendors because it just needs a simple QR code. The money gets deducted immediately from my bank account and reaches the seller's account without fees. It's free!

Unless cryptocurrency can provide a similar kind of user experience and convenience, it's impossible to break into fiat monopoly! Otherwise it will remain as an investment!

I did deep dive on both PayTm and BharatPe business model. Both depended heavily on cashback and rewards to make customer switch their payment preference. Yes, UPI then after made it really easy for Merchants, but buyers still get good amount as cashback and rewards mostly funded by VC rounds.

[chiefhodler]

Based on the results of my survey of 200 merchants, it appears that the primary motivators for integrating new payment methods are customer demand and transaction cost savings. A large number of merchants (132) cited customer demand as their primary motivator, while a significant number (62) cited both customer demand and cost as factors in their decision. A small number of merchants (6) cited transaction cost savings as their primary motivator. No merchants indicated that they wanted to earn and save in Bitcoin.

One issue with the 6 merchants who are only cost-focused is that they may not realize cost savings if their buyers are not using a BTC lightning wallet to pay. A large portion of merchants are payment method agnostic and will integrate whatever payment method their customers prefer, unless it increases their already-factored-in cost for payment methods in their business model.

Given these findings, my proposal is to charge merchants at the same rate as fiat charges, but reward buyers with hefty kickbacks. This way, merchants will not be deterred by additional costs, and buyers will have an incentive to use the new payment method.

[Hydrogen]

I think public opinion and support and the best levers for implementing positive social change. With positive social change being a slow moving trend that can take hundreds or thousands of years to become a reality.

They say that it took 10 years for sailors to accept the explanation of citrus fruits being legitimate treatments for scurvy. Even when the answer to life's biggest problems lies right in front of us, it can still take decades before we are willing to accept it.

Imagine walking the streets and asking people how to break the "fiat monopoly". What responses would we receive? It could naturally take time for the public to become educated on these topics. In some cases, it took thousands of years before practices like slavery were illegalized and abolished. And, it could take thousands of years more before the general public understands the necessity of things that many of us today take for granted.

Its been said that tectonic plates which compose the earth's crust move only a few inches every year. And so it is with positive social change.

[chiefhodler]

I think public opinion and support and the best levers for implementing positive social change. With positive social change being a slow moving trend that can take hundreds or thousands of years to become a reality.

They say that it took 10 years for sailors to accept the explanation of citrus fruits being legitimate treatments for scurvy. Even when the answer to life's biggest problems lies right in front of us, it can still take decades before we are willing to accept it.

Imagine walking the streets and asking people how to break the "fiat monopoly". What responses would we receive? It could naturally take time for the public to become educated on these topics. In some cases, it took thousands of years before practices like slavery were illegalized and abolished. And, it could take thousands of years more before the general public understands the necessity of things that many of us today take for granted.

Its been said that tectonic plates which compose the earth's crust move only a few inches every year. And so it is with positive social change.

I wish I lived that long. I want to see my kids live in bitcoinized world. I don't want them to burn through Fiat rat race.

[Darker45]

In all countries, I guess we just have to admit that the primary currency will always be fiat. That monopoly will stay. There's no competition. Bitcoin is an alternative. In that respect, will it ever dethrone fiat? I don't think so. However, Bitcoin has a special place in global e-commerce as an internet money and in international remittances. When it comes to cross-border transactions, especially involving large amounts, I guess Bitcoin is much quicker, cheaper, and smoother than fiat.

[Mauser]

To make this business model work effectively, merchant service providers and wallet providers would need to work closely together. They could potentially form a non-profit organization to help develop, implement, and manage operational processes and best practices for the Bitcoin lightning network.

Please provide feedback on the above. It is practical, does it make sense?

This sounds very nice and would be awesome if we could implement it in todays world. It would be so much more efficient to have a decentralised payment system that works directly between the buyer and the seller, without the banks sitting in between all the transaction. First of all consumers could cut down on the huge credit card fees. Just imagine how much money would remain in the pockets of consumers, if there were no more credit cards. This is the most lucrative business of banks and they will likely fight hard through lobbying parties to try and stop and removal of the payment monopoly. Another huge saving factor would be on all the bank fees that consumers have to pay on top of the credit card fees. With a decentralised payment system in place we could save a lot of money, but this is also increasing the chance of people not paying their taxes. I think that politcians are too afraid to give up the payment monopoly. Without they can’t enforce easily that all the taxes are being paid directly to the government. We would need some form of oversight that ensure that there is no misuse of funds. So the system would be very practical, just hard to get it rolled out across a whole country, if politcians are trying to sabotage it.

[danskgraes]

Everything comes from considerations of expediency. As soon as the use of fiat currencies ceases to be appropriate, governments will replace them with government cryptocurrencies.

[chiefhodler]

I think we have shot at disrupting Fiat medium of exchange with lightning network. Having medium of exchange will put floor under Bitcoin price and significantly reduce volatility.

[bitcoinsFTW9]

The business model you described for the Bitcoin lightning network is certainly a potential way for it to compete with traditional payment methods like credit cards. By offering buyers a cashback incentive, the lightning network could potentially attract more users and encourage them to switch from credit cards.

One thing to keep in mind, however, is that the success of this model would depend on a number of factors, including the level of adoption and acceptance of the lightning network by merchants and buyers, as well as the overall competitiveness of the fees and rewards offered by the network compared to other payment methods. It's also important to consider the regulatory environment and any potential compliance issues that might arise.

Another factor to consider is the overall usability and user experience of the lightning network. For it to be successful, it would need to be easy for both buyers and sellers to use, with a smooth and reliable payment process. Additionally, the security of the network and the ability to prevent fraud or chargebacks would also be important factors for users to consider.

Overall, while the business model you described is certainly a possible way for the Bitcoin lightning network to compete with traditional payment methods, it will depend on a variety of factors and will require careful planning and execution to be successful.

[chiefhodler]

I think we have shot at disrupting Fiat medium of exchange with lightning network. Having medium of exchange will put floor under Bitcoin price and significantly reduce volatility.

[hatshepsut93]

There's basically three major obstacles that stop Bitcoin from being a widely used currency.

1. Scaling/fees/tx times - Lightning Network mostly solves it, but LN itself is still not widely adopted or polished

2. Legal concerns - fiat payment networks are regulated, there's financial monitoring, AML and so on, so merchants don't have to worry about it. But using Bitcoin would create a lot of problems for them in this field. Most countries prohibit large cash transactions, and it's likely that Bitcoin is prohibited too, if the law says that only bank transfer is acceptable.

3. Volatility. People don't want to hold a currency that always changes its value. Plus the whole deflation thing makes people who do own Bitcoin not want to spend it, because it will be worth more in the future.

[franky1]

1. Scaling/fees/tx times - Lightning Network mostly solves it, but LN itself is still not widely adopted or polished

not polished... more like its very rusty (excuse he dev name pun)

3. Volatility. People don't want to hold a currency that always changes its value. Plus the whole deflation thing makes people who do own Bitcoin not want to spend it, because it will be worth more in the future.

seeing a whole unit as $16k where it shows $500 daily movement looks like volatility
but bring the unit to say 0.00000100(1 bit)
where 1 bit is $0.016=$0.0165
     100 bits is $1.60-$1.65

people dont notice it as much. because most things in life have a change of magnitude more then that

bread can be the difference of $1.70-$2.20 depending on vendor in any given week.

albeit having a 5x multiple this 4 year cycle is a large change. but that will settle down.
after all we are not having up 100x event of 2011($0.3-$30) any more
after all we are not having down 15x event of 2011-12($30-$2) any more