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1:03 PM · Jul 16, 2022Twitter Web App

3) Let's start with payments, both domestic and international.

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4) Here are some bad things. a) Let's say you go to a store and buy some stuff--you know, bread and bananas and boogie boards. You go to check out; your goal is to transfer $123.81 to the cashier standing three feet from you.

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5) Years ago, this was a bit of a hassle; you had to go fish out bills and coins and make change and stuff. But now we have the internet! And so instead all you do is swipe your credit card... ...and pay ~1% of every purchase you make as a fee.

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6) b) You want to send money back home to a relative in Brazil. You... walk to a physical Western Union store, I guess? Or maybe use some app, figure out how to load money on to it, and then send it... ...to your relative who doesn't have a bank, let alone USD?

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7) In general remittances are *hard*. People regularly lose 10%+ on their transfers (!!!); it can take a week; and you run the risk of funds not getting there in the first place.

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8) c) A US business wants to send 100m to a European business. So you initiate a wire transfer. A day later, your bank sends it out. Over the next week, 3 other banks touch that wire transfer, and sometimes it gets stuck in the middle, waiting for you to rescue it somehow.

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9) Oh, and you pay 1% in FX fees, plus $50 in wire transfer fees. d) You are living paycheck to paycheck, and get an overdraft fee. You are surprised, and investigate why. It turns out your paycheck takes 4 days to deposit, your cash won't hit until the next business day.

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10) Meanwhile your credit card just batched together a few weeks of expenses and deducted them from your account, and your landlord finally cashed a check from a few weeks ago. So all your deposits are pending and all your withdrawals just hit.

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11) The moral of the story is: payments are hard. There are many reasons for this, but they all circle around the same core problem: What, exactly, does it mean to send someone money? What does it mean for that money to "settle"?

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12) ACH and credit card transfers can take a day to a month to take effect. And then for the next month, they can, maybe, be recalled. (Even if there's no reason!) There's no way to send USD to a non-US bank unless they are whitelabeling one; there are tons of intermediaries.

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