If you get taken to collections over a trivial amount (<$100), its not into taken account for your credit score (latest FICO model fixed that).
Have to go to court for collections? The first words out of your mouth need to be, "Verify the debt." Ask them to produce the document you signed and agreed to. In the vast majority of cases, without this, your case will be dropped with prejudice. This is based on research I did while dealing with a personal mortgage "issue".
Not all collections agencies are so sloppy and unscrupulous. If you do owe the money and they do have the documentation to support it, you may well have a judgement against you and that definitely will hurt your credit score.
Some companies (like say gym membership) have internal collections departments that can be quite aggressive. They would certainly be able to back up any lawsuit.
In general, you really want to try to avoid being sued.
You're right; occasionally you'll find a collection agency that has their act together. Luckily, collection agencies purchase their debt for pennies on the dollar, so they're happy to get anything. Start by offering them 10% of the debt, and go from there up to no more than 25% of the debt, stipulating (in writing) that its "Pay For Delete". This will require them to remove the negative credit information from your credit report/profile in return for payment.
4 states prohibit wage garnishments at all, and other states set the maximum at between 15-25% of your disposable income: http://www.walkawayfromdebt.com/worksheets&charts/wage-garni... (Disclaimer: Colorado SUCKS. They permit up to 75% of disposable income to be collected).
I've helped negotiate away quite a bit of unsecured debt for close friends. Its easier than you think.
Debt isn't a moral obligation, and to somehow frame it as such is dubious at best. If you as a debt owner or servicer can't keep your books straight, you have absolutely no business attempting to collect on a debt. If you're taking someone to court or attempting to take their wages, you better be damn sure you're in the right.
So when an individual borrows and fails to repay, there is a moral hazard, but when a business declares bankruptcy and restructure, that's smart business?
Debt is a contractual issue, not a moral one. As HackerNews entrepreneurs should keep in mind, its the ability to easily shed debt (and not be shackled to those debts for decades) in the US that creates the environment for startups to take the risks they do.
The moral obligation is to TRY to pay it back. I fully concede that it's not a black and white issue, but there's a big difference between refusing to pay a debt and being unable to pay a debt.
If you borrow money for any reason with the understanding that you'll pay it back, but you secretly intend to keep it all along, then you are doing something wrong (morally if not legally).
> If you borrow money for any reason with the understanding that you'll pay it back, but you secretly intend to keep it all along, then you are doing something wrong (morally if not legally).
We are in complete agreement then. To do otherwise would be, in my opinion, fraud.
Am I not reading often on HN about long-term agreements startups in SFBA are committing themselves to (specifically real estate/office space leases)? That's a debt, and when a startup burns up, any time left on that lease is a debt left unpaid. Debt is not just VC money in hand.
I think the issue is assuming the company charging the account are behaving in a moral manner.
Changing terms after the fact, dark patterns, charging for things the customer didn't agree to, over billing for cable services in the hope the customer just doesn't notice or gets worn down by trying to fight it.
There are a lot of times the corporation is unequivocally in the wrong, but they already billed your card and you have to fight to get it back. Being able to cancel the card first and force the corporation to take you to court and prove their case could help put the consumer on a more level playing field.
Except that's not what happens, you borrow money with the explicit notion that you might not repay it; that's what sets the interest rate, both sides know that going in. There's nothing at all immoral about choosing to suffer the hit on your credit rather than repay as both options are expected possible outcomes in the original deal.
> you borrow money with the explicit notion that you might not repay it; that's what sets the interest rate, both sides know that going in.
The interest rate is set by the fact that money-NOW is worth more than money-in-a-few-months-or-years. This is also the case if it's certain you will get the money.
I never considered that risk would also be a factor in interest rates. It makes sense, but I really doubt it's a very big factor. Since in most cases debt means you will eventually get the money back, the risk is very little (depending on economic health, I guess). But the "money now vs money then" factor is always present.
Can anyone with a little more insight into these matters inform us whether risk of not being paid back actually represents a substantial amount of the interest rate? Cause I doubt it.
> There's nothing at all immoral about choosing to suffer the hit on your credit rather than repay as both options are expected possible outcomes in the original deal.
Is that how it works in America? Because as an outsider, this sounds very weird to me.
Say you have a debt with me, you fail to repay me but instead you opt to "take a hit on your credit score", which is, I presume, some sort of abstract "score" number kept by agreements between cc-corporations, banks and such? (or is it a government thing? probably not)
So this credit score determines whether you can get certain loans at banks, interest rates for your credit cards, stuff like that yes?
In the mean time there's me. What do I care about your credit score? Do I get to think, "hey I didn't get my money, but at least that guy is going to have a shitty time securing loans from now on and having a stable financial future". How does that help me? You still screwed me over by not paying me back, and the simple fact that, in the process, you also screwed yourself over doesn't help me at all. I'm not the vindictive kind, and some abstract revenge credit score "punishment" you suffer in your standing with other institutions won't get me my money back.
See, this doesn't make it moral, at all.
The fact that we both know, if you don't pay me back, you'll be screwing yourself over by means of credit score, just means that I might be more likely to believe you that you'd rather pay back your debt than suffer that hit. Meaning less risk for me. But if it turns out that not paying and suffering the hit is in fact a serious alternative option for you (instead of a deterrent), you may as well say "I'll pay you back or I stab myself in the eye"--what do I care? (well in fact I would prefer if you didn't, because in my personal ethical framework, such deals themselves are immoral)
This analogy doesn't relate to OP's comment. He's talking about secured debt with institutional lenders, not interpersonal loans. Risk is an integral component to determining your interest rate in the US. This is why there is an industry around protecting, understanding, and improving one's FICO score here. Try getting a good loan with a crappy (or substandard) credit score.
Risk is THE biggest factor in interest rates. If it was all timevalue we'd be paying interest closer to inflation rates.
Put yourself in the shoes of a lender. On one hand is a doctor, $300k salary, looking to borrow $30k for a new boat. 780 fico. On the other is Trevor, a bartender who makes $25k a year, has a 680 fico with some late payments and a cable bill collection from 2 years ago and wants $30k for a new car.
Would you lend to them both at the same rate? Both will have the same time value effects....
> The interest rate is set by the fact that money-NOW is worth more than money-in-a-few-months-or-years. This is also the case if it's certain you will get the money.
No, interest rates are a measure of risk; the bigger the risk of default the higher the interest rate. Bad credit score equals very high interest rate.
Secondly, stop pretending you're the lender, we're talking about banks here, not personal loans from friends.
When you take out a loan with a bank, it's a business deal with explicit exit strategies baked in: pay off loan, or default loan. Both options are valid exits according to the contract. Morality simply isn't a factor in this equation.
The bible calls for a debt jubilee - forgiveness of all debts - every seven years. No such thing has happened in hundreds of years. So who acting immorally, again?
There's some ambiguity in the scriptures. See Deuteromy 15:1-11:
"At the end of every seven years you must cancel debts. This is how it is to be done: Every creditor shall cancel the loan he has made to his fellow Israelite. He shall not require payment from his fellow Israelite or brother, because the LORD's time for canceling debts has been proclaimed."
It's interesting to imagine a world where there was no legal recourse to someone not paying back debt: easy to imagine some first-order consequences, harder to see how it'd change the grand scheme of things. I suspect it would end up being a much better world, but I come from a very anti-debt perspective.
> It's interesting to imagine a world where there was no legal recourse to someone not paying back debt [...]
I think it sounds scary. If I enter into a contract that says I have to do something in exchange for something else, I'd like a court to honor that contract, and not -- somewhat arbitrarily I'd say -- declare debts in the contract invalid after seven years.
Imagine no one being able to issue debt with a maturity of more than 7 years. That would be the consequence of such an interference into the market. This means our economy as a whole would become even more sensitive to interest rate volatility, as you can't secure the interest on a loan for more than 7 years at a time.
I think it would be even scarier than that. I imagine very few people would even issue debt. I know I would not. People default on debt all the time now and there is some legal recourse. I can only imagine how many people would default if there was no consequence. So now even people with every intention to repay their debt won't even get it. I believe that this would lead to an even bigger class gap because people who don't have the money to start businesses, buy houses or cars, etc no longer can get a loan to do it. I think it really would create a bigger divide between the Haves and the Have-Nots.
I'm not saying that having a bunch of debt is good. But imagine where you'd be right now if you couldn't get a student loan for an education. Or finance a car or a house. I'm pretty sure I would not be where I am now if I hadn't gone to school... which I would not have been able to do without a student loan. And I never would have been able to get a house without a loan.
My perspective is that a whole lot of our economic problems (in the USA) stem from personal debt. It wouldn't be the end of the world if people typically had to earn enough money to own a house before buying a house--in fact, it would decrease home prices, since the ability to get mortgages and the promise of government violence if you don't pay them back inflates the cost of housing stock. And student loans are literally slavery--they similarly inflate educational expenses, and even worse can't be discharged in bankruptcy. An end result is otherwise educated people face a large marginal tax rate that cuts into productivity, and far too many choosing education that is mostly a waste of money since they don't have to pay for it, until some unforeseen point in the future.
I think it's also easy to overstate how much loaning would decrease. The widespread use of credit scores when issuing loans belies the idea that it's only state violence that ensures people pay back debts.
Why do you want the court to honor the contract? (Which is a bit euphemistic, to my mind: it means to use organized violence or the threat of it to extract value from someone.)
Maybe it'd make sense in a totally anonymous world, but why not just do business with people or entities you can trust? Think web of trust. That's what consumers and businesses de facto do nowadays anyway.
You could still issue debt; it's just you can't expect to have violence to back it up. Past decisions and alignment of lender and borrower self-interest determine the likelihood of it being paid back.
Agreed. But I wouldn't say that MOST debts are a moral obligation.
If you borrow money, and you agree to pay it back, there should be a good faith effort to do so.
But that is only one type of debt.
In the US, where I live, Apartments are incredibly bad about charging fees after you move out, and give you very little recourse before sending you to collections.
Parking tickets, and red light camera tickets are huge sources of revenue for the city, and Seattle uses them when they need to increase city coffers.
I look at it this way, if they're not going to play by the rules, I won't either.
If I borrow from a person, I'll bleed to death in the snow to make sure they get paid back. But from a corporation? Their losses are priced into their interest rate. I'll still pay them back of course, but if I lose my job, have no income, I'm not crying over it.
That sounds exactly like my justification for stealing! Businesses usually have insurance to cover losses from theft. (And if they don't, that's on them.) And who's paying for that insurance? Right: Their customers. So it's kind of like: Unless you steal from them, they're stealing from you!
You're entitled to your opinion. Perhaps you'll understand the other side when your small business pops, you've got no income, and you exhaust any savings you have.
Now... imagine your small business popped, you had no income, and you exhausted all your savings... because too many of your customers didn't pay for the goods/services they obtained from your small business. That is quite the moral pickle to be in, if you ask me.
(Forgive me if I misunderstood... but your reply to my comment leads me to believe your business went under due to people skipping out on their debt to you.)
I'm sorry for your loss. But this is why we should all strive to repay our debts... even to corporations[1]. I would imagine that some of your customers that stiffed you may have had the very attitude you described when you said "But from a corporation? Their losses are priced into their interest rate." They, too, may have assumed that your loss was priced into your rates. It must not have been. Perhaps other businesses don't either. It makes you wonder just how many people/business get totally screwed by people defaulting on debt to them. You suggested that chasing might understand differently if s/he had lost a business. Of course you are also entitled to your opinion. But, honestly, I'm a little sad that you don't see the other side of it, having been shattered by people not making good on their debt to you.
[1] I understand that Corporation ("big C") is generally directed at the big, huge things like Walmart and Chevron. But corporation ("little c") is just a legal term and can still be the small business down the street.
I agree! Paying for things you've taken from corporations only helps perpetuate the Global Corporate Hegemony. Racking up a bunch of debts and then making excuses about why you aren't obligated to pay them is probably actually more morally correct than paying for the things you take.
Unless you take things from people. People are different. Then you should pay for those things by bleeding all over the snow or whatever. (I don't know how money works in your country. In the US we usually just use dollars. There's not much snow right now and having everyone's blood everywhere can lead to public health problems. See also: Ebola.)
Anyway. Thank god there are no people at corporations. And thank god all corporations are the size of Walmart and can easily withstand financial losses due to non-payment.
Let me get this straight, you don't feel bad about owing Walmart $10, because they factor that loss into their business model, and expect it to occur?
Well, you should care, because they factor it in by increasing prices for consumers. You're just getting everyone else that shops at Walmart to cover your debt. That's irresponsible, and I see no difference between owing Walmart $10 and owing your friend $10.
Indeed, perhaps your morals are different. I generally believe the whole CC industry is on extremely shaky moral grounds. More like sinking sand really. It only works because it can wreck poor and down-on-their-luck people.
This[1] is the type of situation where I believe the victims(yes, I'm using that word) deserve to have their debt removed.
It's possible that you will change your mind after reading David Graeber's _Debt: The First Five Thousand Years". If not, it's still a fascinating book tracing the creation and evolution of monetary and credit systems from antiquity to the present day.
I second the recommendation below to read Graeber's "Debt".
It is really a fabulous book, and can help explain why many people in many cultures feel as you do, who benefits from that belief, but also how debt has never historically been about moral obligations but has always been a contract between two parties, with limitations on both party's obligations.
a bank reposessing a house and ousting a family is a much more immoral act than being unable to pay for one. moral considerations in interactions with a corporation is foolish
The day that credit becomes a civil right, I move to Mongolia. You pay for what you have; nobody owes you anything. To view a house as some natural right is an upside-down view of the world to me.
natural rights are arbitrary and we decide what they are as a culture. god didn't pass your right to free speech to moses on mount sinai. i'm not arguing for guaranteed credit (as i already oppose capitalism) but i think guaranteed housing is both noble and easily achievable in the developed world
Believing that housing should be a natural right may be a reasonable position (even if I disagree that it is practical), but surely you don't believe that everybody is entitled to indefinite ownership of an arbitrarily expensive house. I don't have statistics, so correct me if I'm wrong, but I think most people whose houses are foreclosed end up paying rent for an apartment, rather than living on the street.
opposition to capitalism entails opposition to private property, as the latter only emerges from the former (in the formal sense, where one of the states' primary roles is enforcing property law). i don't claim to have a roadmap for how this would be incorporated in the united states were the social order suddenly upended
I thought we were just talking about whether it's immoral for a bank to foreclose on a home owner... Not sure where all this opposition-to-capitalism stuff came from.
It's not a sloppiness on the part of the agency. Often the companies selling their debt to the agency provide no other information besides the information about who the person is and how much they owe. The agency often can't produce verification of a debt because the sellers of the debt don't provide it.
> In general, you really want to try to avoid being sued.
In reality, companies will do almost anything to avoid suing you for small amounts of money. The financials don't make sense. E.g. how much gym debt would it take to justify a lawyer's fees to pursue you? Not less than several thousand dollars, probably much more.
Depends. I've personally been to small claims court and seen what appeared to be a staff attorney for Capital One suing dozens of people for overdue balances.
I'm pretty sure the big gyms that have in-house collections. I would imagine people signing a year contract and then changing their mind and trying to get out of it happens quite often.
This might be true under the US legal system, where as I understand it each party usually pays their own costs. In a loser-pays system, particularly one with an efficient small claims procedure, the conclusion might be different.
In any case, if you're wilfully and knowingly taking on debts you can't repay and using a card like this to CYA, your bigger risk in some places might be getting arrested for criminal fraud. Good luck ever getting credit again whatever the CRAs say about you if you've also got a criminal record for a fraud-related offence.
Actually, the question you should ask is 'where is your witness?' - the lender needs to have more than documentary proof of your debt.
Here's how the process plays out:
When you owe a debt what happens is the lender will contact you a few times and then, if you don't pay, they will sell the debt on to people who are in the collections business. And over the course of a year or two your debt will likely change hands multiple times, at incredible devaluation. (Listen to the This American Life episode, it's great in this regard.)
These companies will make all sorts of outlandish claims about what might happen if you don't pay. In reality, nothing at all will happen outside of the hit your credit rating will take if they take the issue that far. All things considered, that's a non-issue for most people facing debts they have no way of repaying.
In the not very likely event you are actually summoned to court, what will happen is that the lawyers working for the current owner of your debt will try to strong-arm you before you go before a judge. They'll say 'let's settle this now before things get serious in there' etc., and will offer to accept a fraction of what the paper says you owe.
That's when you ask, 'where is your witness?'. The chances of the 2nd or 3rd collection agency to purchase your packaged debt being able to haul into court the very same loan officer who witnessed you sign for a loan years ago approaches zero for cases involving less than seven figure sums.
Source: advice given to me by a debt counselor during my own business loan default 'issue'.
Update: the idea of bad debt ruining your credit score is a myth. I defaulted on a high-five-figure debt and two years later qualified for a six-figure mortgage with a mid-five-figure income. Most of the talk of 'this will go down on your permanent record' is FUD.
On point #1, I can assure you the actual person / officer who witnessed you sign for a loan does not have to be present. In fact, the vast majority of debt involves no such person - a lending contract is often undertaken electronically. What they will show is the contractual agreement of terms with your signature (physical or electronic). The original lender will not be there and in fact no longer "owns" the debt, having sold it to a collector. Even the collection agency won't be there, they generally hire someone locally (you must be sued in your location, not theirs) to be present in civil court.
On point #2, also false. Bad debt impacts your FICO score - often severely - but that impact is lessened with time. A 90-day or 120-day late (effectively a charge off) can ding a score 20 - 150 points easily depending on other credit factors. Shrugging your shoulders and saying "this won't be that bad" is not a good policy. While the record is not "permanent" (7 years for standard debt, 10 years for bankruptcies), they can have a significant impact.
Of course this is only my personal experience, your mileage may vary, but I just checked my credit report and the loan I defaulted on less than 5 years ago is not on it. At all. The single blemish is a department store credit card payment marked 30 days late in 2012.
This is after 3+ years of daily collections calls from half a dozen companies pursuing a high five-figure debt.
The takeaway being: debt is a business phenomenon and discussions about it are a negotiation. I negotiated hard; when my offers of partial repayment were refused I never answered their calls again. In fact I created a special, looong outgoing voicemail message that sounded like I was answering the phone ("Hello? What? Hello? Are you there? Okay, a large pizza? We don't do gluten free!") and forwarded any unrecognized number to it straightaway. Just maybe that made someone laugh and they decided to toss my file.
Had I gotten a summons, I was advised by a lawyer to demand a witness. I never tested that tactic, but I do suspect that if someone had the means to extract money from me they would have, and they did not.
It's all about recoverability and risk over return. Most of the time a 5-figure debt will be worth the effort. When you start getting into $5k or less debts, it's sort of a crapshoot. The original owner of the debt will often sell it for pennies on the dollar, at which point a collector will do their best to get as much as they can out of people without a civil case, because civil cases are expensive and there's no real guarantee of return (people with no money, people on the verge of bankruptcy, etc).
The general advice is not to negotiate at all with creditors. Once something's gone into collections, you will see no benefit to resolving the debt other than mitigating your risk of a law suit. And even at that point, the first phase is a mediation option wherein you'd again be able to throw out a number, do a payment plan, etc.
Did you know there are actually a dozen+ different Fico scoring products, several versions for each of the big 3 credit agencies and several product-specific models for Houses, Cars, etc?
Lenders do not update to the latest Fico version the way we all buy new iPhones. Many lenders integrate Fico scoring into proprietary models.
Having ANY collection will hurt you, period. Even under $100. Even if it doesn't drop your fico, American Express for example won't open you an account with an open collection. Any mortgage lender would make you settle the collection before closing. So in summary, i think your advice here is very bad. Yes, if you have a collection, you MAY be able to have it removed from your reports without waiting 7 years. But it's not black and white.
Right, if you put down 50% they're not taking any risk on you! They'll foreclose at a profit! Regardless, name me a mortgage underwriter that will close your loan with an OPEN collection item and I'll be truly surprised. So if you've been thru this, who was your underwriter? (Not your broker..)
Risk profiles at a company like Amex are sophisticated. But you're somebody who apparently is sharing his high-earner status here, but you don't think that was an important caveat to your original post? It's like you're saying "CREDIT DOESNT MATTER*" and in fine print you're saying "if you have enough cash to put 50% down on things and have a high income!"
It's bad advice to give, which was my point, and one I'll standby. Nothing personal of course.
The only bad thing on my credit card report is a cable box that was not returned in a timely manner. The box was returned, and I even received my deposit back.
Despite filing disputes, it remains on my report as a $500 non-payment.
I have been able to get other items removed using your strategy but it doesn't always work.
This is too funny - my bank in Turkey (http://en.wikipedia.org/wiki/Garanti_Bank) had this 10 years ago! I wonder why banks in the US are so ingrained in their ways and horribly slow at updating themselves.
edit: They also had an SMS cash thing where you can "send" cash to anyone, which is really a code you can use at any ATM to redeem cash.
I'm not saying that the US banking system is or isnt ridiculous... but in the US, anyone with a bank account can indeed send money to any other account in the world, given the account number, usually for a fee, like many other places; these are referred to often as wires, though there are actually many types of transfers. Getting it free usually requires a balance over a certain amount (banks live on fees, sadly).
Whether one can do it online depends on the bank, but most US banks and credit unions now have the ability to allow transfers and payments to anyone given a postal address (to be fair, if its just to a person, the bank may issue a paper check instead of a true electronic transfer. Sigh). They mostly call this "online bill pay" or other names, but it's become pretty full featured. In addition, most US banks are allying themselves with various person-to-person payment systems (Popmoney, though archaic and painful in use, is used by many US banks including Ally, Bank of America, TD Bank, Citibank, Fifth Third Bank, PNC, Regions, Suntrust, US Bank, and Wells Fargo, for example; Chase has it's own system as do some others. ClearXchange, Dwolla, Venmo, Paypal, and a slew of others are also gunning for this space).
So, yes, lots of problems, but I don't know if above is entirely a fair statement.
But I shouldn't have to give you my account number for you to send me money. I don't really want to maintain a mental list of who has my account number and who to update if I change banks or something. I'm not saying checks are the best solution for all situations but they have enough use cases to make them somewhere better than ridiculous.
Every time my cleaning lady comes, I just leave a check for her on the counter. I could leave cash but then I have to make sure I have that much cash on hand every time. I could probably get an account number from her and do some sort of transfer each time. But honestly, that doesn't sound at all easier for me than just writing a check. I think that is the only check I write on a regular basis anymore. I used to send my gardener a check but I started paying his invoice online through my bank. And I'm pretty sure they actually print a check and mail it to him on my behalf. :)
That's why you need a Cleaning App where you will pay 10% to the App owner, but save yourself from seeing the lady and don't have to feel bad about her life. Although you just taken off 10% off her.
Yes. My concern is not of security for my account number. But if I have to supply someone with my account number before they can give me money, then that is not the most ideal thing, IMO. They should just be able to give me the money without knowing my account number.
This is like saying that handing over a paper note to someone is more convenient than sending them an email, because you don't need to know their email address, and even if you did you can't be sure whether they still use the same email address.
That may be true but most people seem to have decided that the convenience of not needing to transfer a physical item outweighs those problems.
You're overcomplicating things... Really. That's like saying "I want people to be able to call me without my phone number"
You already give your acc number for your job.
I do that (sending and receiving money) and guess what, most of the people never changed bank acc numbers (including me). If it changes it's a non-issue.
Especially because payments either happens frequently (paying rent, for example) or it's a one-off thing.
I don't get why should I have to write a check to a landlord when they could give me they account number and let me set up a recurring payment (that's exactly what happens in Europe)
How does that add up? If I send money via my internet bank too person or company the bank has to do zero work (other than maintain their servers). Anything that requires manual work has to be a lot more expensive for the bank!?
Here, transfers are free and any "paper" business such as check cashing/bill payment has steep fees.
How can your banks provide you with the labor intensive service for free and charge for what is cheaper to provide? Aren't they creating a customer behavior they don't want?
Well, it's kind of interesting. The billpay system leverages the fact that most payments for most folks go to companies, and those are all electronic links; the checks are somewhat rarer in the big picture and only to small businesses or people. The checks in this case are not "certified" in that they are not a guaranteed transfer; like any other check, they can bounce. But yes, they are printed and mailed, and there is a cost to that vs. the electronic thing.
The wire, however, including the account (the routing number can be looked up by your bank; it just saves time if you already have it) is a very specific approach to transferring money in a certified manner. It's older, and has some overhead and history in how it's tracked and managed, if for no other reason than that the funds are guaranteed. As such, there are still fees on it (and that's probably true in most countries, btw, unless you have a balance over a certain amount).
Most folks paying their babysitter $40 aren't concerned about a certified transfer, and assume they will have funds to cover the check when cashed, so they don't need to pay any fees and will just do a regular "check". And I would bet that the banks are working on ways to do a better job of making electronic links to reduce their need to print those checks (for example, perhaps if I keep paying my babysitter 2 or more times, the bank could automatically check the clearning house for the deposited check, and, in the future, autonegotiate a direct link with the babysitters bank and account for payment or something clever like that; I don't know if that would really work but sounds cool).
Bottom line is still that any manual work (cashing a check, mailing one, cash-paying a bill at a bank...) must be one or two orders of magnitude more expensive than wiring.
I'm not sure what the costs are for wiring as it is usually packaged. I pay $30-40/year for Internet bank w unlimited wiring including p2p through phone number (yes guaranteed/negotiated transfer to the babysitter!). Meanwhile cash-paying a bill or cashing a check is probably $10 a pop, simply because banks are trying very very hard to get rid of two things: cash and staff. that makes a lot of sense from a business perspective.
I received two cheques from our landlord about two months ago. 1) I was surprise to get paper cheques 2) how surprising easy it was to deposit it into the bank.
The easy manner of depositing means that it is still quite common for them process cheques.
By the way, I live in a small German town that only got its first EC card (or cash card POS) about 10 years ago.
I can only imagine. Sometimes when you sign up for US services you need to provide "a copy of a utility bill".
I don't get bills on paper, much less pay them that way. I come from the future though. You'll love it. You won't believe this but I'm typing this very message on a palm sized computer/telephone device.
I'm in the US, and if I were you I'd drop your car insurance provider in a heartbeat. There are so many other options that let me pay online and provide competitive rates, it just is not worth my time (or the chance that I'll forget) to mail checks in every month.
Isn't there a common system for transferring money such that every corporation has a public "number" to which you can send money, meaning that HOW you do that (your internet bank or whatever) isn't really a concern of the receiver?
I mean each insurance company etc. can't each be setting up their own solutions for online payments, right?
Hilarious. Do they also invent an email standard and a currency?
Why not ditch checks and just set up a reliable/cheap money transfer system? It's peculiar how the country that is at the epicenter of the world economy and the Internet doesn't actually use the Internet for money related things (tax returns, banking, insurance...).
That's sad. The response should be proper credit card safety from banks and retailers.
I don't use the magnetic strip (only chip) and I don't without pin. Online use of MC/Visa passes through SecureCode/Verified by visa to ensure that leaking the CC details from a third party shouldn't be causing any skimming of my account. It's not fool proof but I'd say it's at least safer than cash and checks.
"I don't use the magnetic strip (only chip) and I don't without pin."
The same here, but then I encounter more and more places where they offer you to type your pin only in an open and insecure manner. This sadly makes the pin usage a joke and something of a hassle compared to the older magnetic strips.
sterile environment is best for fast system growth, until parasites come over and try to exploit it. only then you need protection against it.
united states in general enjoyed some time where people did little to defraud system and therefore number (and later exp date, later - cvv) was fine. You can't rely on people's integrity and morale now as a safe-guard for system. Same applies to paper checks by the way.
In case of turkey I bet that defrauding was problem from beginning, that's why it was first thing to solve too.
If anything, it just tells that doing tech business in usa will be more fictitious than it could be otherwise.
this and turkish people don't really have any money at all. so the only way to pay without any money is using credit cards. this is why turkey is a big market for cc companies and they try to use brand new stuff there to lure new customers.
Absolutely, virtual cards have been around for years. But we've researched the space extensively and did not find a product we like or could use consistently. So we built Final. Some of the better products out there exist for customers outside of the US.
In Sweden I can do this...you launch a desktop or phone app, tell it what limit you want on the card and when you want it to expire, and it gives you a number w/ CVC code that you can use instantly.
I can attest. It supports both "one shot" cards as well as multi-use (with a time limit, up to one year), both with a limit on how much they can be charged.
That said, I don't think it has an Android app, just a mobile website. The app that shows in Google Play is just a shortcut to the website (built by an unaffiliated developer).
And of course, it doesn't even any of the notification stuff, it's just a gateway to your regular bank account. Nor does it have physical cards.
yes, MBnet is awesome. but sometimes some sites don't accept it (when they test the card doing some transactions first), I wonder if Final will have the same issues.
I've thought about the feasibility of such a service for a long time, but I always figured you'd run out of numbers. If there are nine digits available (16 - 6 - 1), that's 1,000,000,000. If you have, say, 100,000 customers, that's 10,000 per customer, which would quickly get used up if they're using one per transaction.
I don't know enough about how it all works, but perhaps -- because the number isn't valid on its own -- giving the number to a different customer, with a different name, effectively invalidates its previous use and means it can be safely reused.
It's been around, but the most user friendly way I found was through a Paypal plugin but they indespicably removed that years ago. Been looking for a more convenient method ever since. Signed up for Final, looking forward to it. Finally someone that wants to get this right.
I think it was because it violates some patent and they have to pay to add that functionality. If that was the reason , I'm curious how they are getting around the issue.
> People on here claimed it was "impossible" because of how credit cards work
Hi,
Definitely not impossible, but if you are following the ISO you might end up running out of numbers somewhat quickly or having to reuse them, which I'm not sure it's very safe. But it really comes down to how many users you will have.
The IIN (first 6 digits) are fixed and only one can be issued for each company, etc.
BOA had this. I used to buy MP3s off a russian site that I didn't trust. It makes a temp credit card number (a pop up basically) with an expiry date you can set, and an amount you can set. So I would do 30 day credit cards with like $20 on them. I think it was called shopsafe.
Bank of America still has this. Log into your BofA account, then go to Accounts->Credit Card->Information and Services. Look under Features for ShopSafe. I use it when I buy from Alibaba.
I used this feature years ago with a Visa from MBNA. They got bought by BOA who later rolled it in to all their credit cards.
Citibank also has this feature since around 2001.
I've been using this for many years with my Citicard Mastercard. I go to the Citibank website and get a virtual CC#, where I can set a $ limit and date limit (up to 12 months in the future).
>> Final lets you give a unique credit card number to every merchant, or a disposable one-time use number for one-off purchases.
> This is something I have been asking for since forever! People on here claimed it was "impossible" because of how credit cards work, I guess not...
My Bank of America Visa had a "temporary number generator" feature that I used when buying from sites that I thought were sketchy. I haven't used the card in some time so don't know if it still exists.
Who exactly told you it is impossible? My chase card lets me generate virtual numbers and use them during online transactions. I always use one when a trial requires a credit card. The number expires in one month and I don't have to worry about any shady billing practices.
Okay, seriously, I spent like 4 hours a couple months ago trying to figure out if I could do this with a Chase card, and failed.
Can you provide URL/directions? I'm not kidding. As far as I could tell, they used to have such a service but didn't anymore; but maybe it's still hidden somewhere but just not advertised, and I couldn't find it?
Actually, this unique cc # per merchant has been available for years. Different issuers call it different things (Citi calls it Virtual Account Numbers, for example: https://www.cardbenefits.citi.com/Products/Virtual-Account-N...) but it's not "automatic" like this sounds; you usually have to click on something to generate the number and type it into the ecomm site or whatever, and your card number never changes in this model. Check with your bank or issuer, they probably have something similar.
ApplePay and other phone wallets do something similar, generating new numbers for the payment but leaving the original number on the device or in the account. This is indeed more transparent to the user, but it doesn't give the control of capping or other levers.
Doing it via the card is clever, if that's what they are doing; if they are just doing it via the mobile app, that's somewhat old news... except for the other features, and the elegant giving of control to the consumer.
> They need to be careful what they advise. That advice could (and likely WILL) result in people getting taken to collections.
I previously worked at a web hosting company where people would pull this kind of thing. Generally we didn't bother with collections because it was often more hassle than it was worth (the biggest part of our cost was the support and anti-fraud process, not the actual service), but nonpayment would get accounts deactivated and blacklisted automatically, so they'd have to call in to us (and get recorded in our tracking system in case of repeat incidents) to pay and get things turned back on.
I had some sympathy for people dealing with accidental credit card expirations, but there was always a weird minority of people who would knowingly and sometimes repeatedly cancel cards or dispute payments and yet get angry at us for the audacity of turning off their websites.
> They need to be careful what they advise. That advice could (and likely WILL) result in people getting taken to collections.
I do this all the time with PayPal. It's way easier to just sign up for a free trial then immediately deactivate the recurring payment than having to remember to cancel it later.
> They need to be careful what they advise. That advice could (and likely WILL) result in people getting taken to collections.
> Don't like your ISP? Just cancel the CC number, then 12 months later get a bailiff turn up and seize your stuff...
Cancelling payments like that is what a lot of UK banks do advise their customers to do. Particularly with (but not exclusive to) insurance services. I've known banks actually recommend cancelling the payments through them instead of trying to cancel via the company itself.
Services like internet / phone lines, gas and electric would be different though since they're paid in arrears.
On collections - if you sign an agreement to pay and you don't make a payment, you run the risk of that going to collections. However, many monthly subscriptions have you prepay and charge you without your direct consent. There are many unscrupulous businesses out there, and it's easy to put a simple control over those charges to limit your exposure and the "grey charges" on your statement that are tough to get rid of.
I'd be interested to know if cancelling the card number actually cancels recurring payments. Last time I tried this, my bank told me the recurring payments would still continue even if the card was cancelled. And I needed to contact the vendor and raise a depute before they would consider cancelling the recurring payment. This was however for a debit card, rather than credit.
In general, the way recurring payments are setup seems really bad.
This sort of reminds me of public key cryptography. I generally really like the idea. I've always felt really uneasy about credit cards, the fact that all I have to do is enter the same numbers to every single website I purchase from.
The programmer in me tells me "this just can't be secure", and the only hope I have that my card number is never stolen is, well, hope.
In developing countries (INDIA) because many people do not have CC many good banks allow you to generate Virtual Credit Cards No with predefined amount for single use -- for 5+ years now.
So the point is technology and the idea is pretty old but finally someone has implemented it right.
MBNA offered one-time-use, limited-time use, and limited total charge disposable credit card numbers in the early 2000's. It was very handy, then Bank of America took them over and discontinued the feature. Boo.
> Tired of your monthly yoga pants subscription? Or a two-week "free" trial that lasted four months? Just deactivate that card number. It's that easy.
Why not just cancel the subscription? If you remembered you are getting charged for a subscription, and took the effort to cancel that card number. Why wouldn't you just cancel the subscription in the first place?
Having panned Plastc yesterday, this is like night and day - where Plastc is trying to solve "I have too many credit cards in my wallet" with an overdose of technology, Final is solving an actual real problem (credit card fraud) with an intelligent use of technology.
In fact, I don't even want a physical card (chip and pin will make that difficult anyway), I just want an online service that will generate a new credit card number for me on demand.
The budget tracking etc. is nice (and I understand why you want to add it for customer engagement and blah) but I'd love a totally stripped down service that gives me card numbers and pings me when they're used - and I would happily pay for it.
Is credit card fraud really a big problem (for consumers I'm asking, not banks or merchants)? In my experience, chargebacks are pretty easy, debit or credit. Same with reporting a lost or stolen card and voiding any purchase made on it. And every credit card I've ever had has been remarkably proactive about alerting me to possible fraudulent activity.
There's also an issue of anonymity and trust. There are plenty of websites from which I'd like to make purchases (some of an unflattering disposition) that may continue to bill after cancellation requests (because they know nobody would take them to court for fear of having their names associated) or that I just don't want bound to my name.
How many times have you found yourself shying away from a site because you were worried about what they'd do with your credit card number? This isn't a perfect solution (especially with the limited pool of numbers), but it's nice.
Last month my Visa debit card was cloned at an ATM and several hundred dollars were withdrawn. It happened on a Friday and my bank had to cancel my card leaving me without access to any funds. It took about five days to get a new card created and shipped to me.
If I had a local bank it wouldn't have been much of a problem as I would have been able to withdraw funds in person. I agree that chargebacks are pretty easy but in my experience the card itself had to be canceled and reprinted causing an inconvenience. Luckily I have credit cards for emergencies such as this.
All things considered it wasn't a huge deal to me personally but I could see how fraud could potentially be quite the problem for some.
Edit: To add, I also needed to print out, sign, and fax an affidavit form for my bank along with a scan of the card itself to prove it was still in my possession.
When banks have to pay millions of dollars a month in credit card fraud, it impacts consumers. And there is peace of mind that there is no POSSIBLE way your card can be used for fraud.
You're tempting the gods when you say "no possible way." Recent history has shown repeatedly that when it comes to hacking especially access to funds, defenses are good for only short periods of time.
It's one of those things you never really think about until it happens to you.
It happened to me but I got lucky with my CU's fraud detection (froze the card after 2 hours), but took about 8 hours of my time to sort out. Now when I'm at that random liquor store on the corner I tend to ask myself, "Could this be another compromised card reader?"
When you have to update 15 different recurring accounts, and it happens 2 or 3 times a year, it gets to be a burden. Despite it happening that often to me, I almost invariably would find some account I forgot to update every time until they got mad when charges started getting declined. I finally fixed this situation for myself by using a dedicated card just for recurring charges, and thus far (knock on wood), it hasn’t been compromised while my primary cards have.
Also, three out of the last four times my card was compromised, it happened during a trip or once the day before I left (on a Saturday). So an overnighted card didn’t really help me. I have backup cards, but it’s still a hassle.
Finally, because fraud is so rampant, the banks seem to have gotten super paranoid about suspicious charges. I’ve had my card declined at the grocery store I shop at multiple times per week. My spouse had her card declined at a local clothing store. Again, not a huge deal because we have backup cards, but it’s both annoying and embarrassing when this happens.
This. The Target breach cost me a late fee. I have numerous things on reoccurring subscriptions. When I was sent a new card I remembered most of those subscriptions, but it only took forgetting one. Only a few months later did I realize I hadn't updated that account.
You don't even have to bother updating your old recurring accounts -- Amex seems to recognize those transactions and continues to allow charges to go through to the old number.
> I just want an online service that will generate a new credit card number for me on demand.
I'm wondering why it's not more widespread. My (small) bank has been providing me a unique card number for every purchase for at least the last 5 years, and they're not usually on the cutting edge regarding banking technology. You can also give a maximum amount that can be withdrawn on the card, and once someone has withdrawn money using that number, no one else can do it.
There's a service called MaskMe that offers on-the-fly credit cards like this. It's a paid service, but what they do is you right click on a field, and generate a new card number. This card is basically prepaid - the service provider charges your real card for whatever the value you say, and the person you're buying from gets the number you just created.
Only real downside is that the generated cards are all MasterCard, and some merchants don't take anything but Visa.
Final is what we built to take back control of our own credit cards for how and when we’re charged, instead of leaving it up to merchants. That led to merchant-specific numbers and limits, managed automatically, as well as transparency in statements. It’s our stake in the ground, a way to shift the culture in credit towards consumer friendliness.
Do you actually know, for a fact, that you can generate arbitrary card numbers? Meaning have you got an agreement with visa, mastercard, or similar where they allow you to do that.
Is there a limit on how many customers/unique card numbers you can have, and is there an inherent cost in gaining a new number (e.g. will accounts be capped at X disposable numbers per Y period).
Once you delete a card number how quickly is it returned to the "pool?" And do you re-assign it to a new user requesting a number?
Do you think third party web-sites will break because a card number is used twice for two different users (e.g. user 1 and user 2 both have the same number on their accounts, because user 1 let it expire, and then user 2 received it and utilised it).
Are you worried that these numbers could be used for fraud or abuse (e.g. unlimited trials).
They need a relationship with the issuing bank on top of Visa/MC. That is rather impossible. However, Visa/MC new TSP that was announced with Apple Pay really solves this problem. In essence, we all get this new feature for free just next year :)
One of the problem w/ traditional credit cards is that my interests are not aligned with those of the card issuer. It's better for me to pay off my balance every month, but better for my bank if I don't so they can collect interest.
Will this be any different with Final? If so, how do you plan to make money?
Don't worry, the banks love it when you pay the account in full every month. They make more money from merchant fees than they do from interest payments.
Banks work hard to make sure credit card holders are happy. After all, it's fairly easy to switch credit cards.
It's the merchants that have the short end of the stick in the three way relationship between banks, customers and merchants.
Speaking of which, how will you be different from other small credit cards when it comes to merchant relations? If I go to "Jo Shmo's Taco Shop" am I still going to need a back up Visa card because that's all they are willing to take?
Actually, ALL Visa and MasterCard cards are backed by some other institution. MasterCard and Visa are (well, were: it's more complicated lately) associations of banks.
We make money when our customers are happy. Yes, we still make money the traditional way - via transaction fees and interest on debt. But we make a lot more money if we have millions of happy customers - we can't win this market if we treat our customers like every other bank.
We're building this product for ourselves and for our friends first. And many of them are unhappy with how banks treat customers and optimize for fees and increasing debt.
We don't think encouraging conspicuous consumption is the only way to be a successful credit card company.
But you also make money from advertisers. From your privacy policy:
"you agree that we may provide any of the information we have collected from you in non-personally identifiable form to an Advertiser, in order for that Advertiser to select the appropriate audience for those advertisements and/or offers."
"Final is aligned with you"
No, not aligned with me at all.
Why can't we have a business model that is straight up, you know, where the ENTIRE relationship is between you and us, the end user, where your profit comes ENTIRELY by making us happy. The free-market works much better that way.
Will the physical card have a number embossed on it, similar to other cards? Or can the physical card number be changed in some way (e.g. Plastc's demo supposedly leveraging e-ink display on the card[1])?
Also, does Final aim to become a credit card payments processor similar to Visa, Mastercard, et. al., or will you be leveraging a banking/credit institution in the backend to start with?
I was wondering about the number embossing as well. I could see it confusing or sketching out some cashiers, especially with all the recent news about credit card fraud. I like the e-ink idea that Plastc had and would be very attracted to this card if it had that just for ease of use.
I've had situations (recently) where the card machine wasn't working so they manually tapped in the number on the front instead. Without the number and given the same situation I might be left without a working card.
Agreed. In many retail locations they often type in the last 4 digits shown on the physical card even if it's not the entire card number, even when the PoS card scanner is working.
I have a credit card from capital one without embossing. The number and name is just written with ink, and the card surface is smooth. I've never had an issue using it.
Card design standards have been changing in the last year. We'll be issuing a card over the V/MC/Amex network, which requires the card to have a network logo on it. Exact branding is battle we know we will have to fight with the networks and our partner bank, but ultimately 100% acceptance at all merchants is our goal.
The eInk display is one of the reasons that Plastc probably won't work on a credit card size. If you browse through the comment you'll see more details but it boils down to the circuitry to drive an eInk display is thicker than the space available.
Looks very cool. Few questions off the top of my head:
1) I presume since you'll be an actual credit card, there's an issuing bank behind you somewhere. Are you an actual startup, or is this a "division" of some huge bank trying to appeal to the tech set? Can you talk about who your issuing bank is?
1) An actual startup, currently graduating from the TS Boulder. Talking with a bunch of banks to see who can get this thing into consumers hands fastest.
2) We'll work with ApplePay 100% (currently its the only way to get to the NFC chip on the iPhone)
Apple Pay requires the vendor to have an NFC card terminal, which won't be universal for a long time if ever. This looks like it'd be usable with a normal credit card terminal.
For nerds, we know to enter our email address into the box... but I would add some text above it for the regular folk who just say "wtf do I type into this box"
Which I don't understand. All their stuff has such a hipster aesthetic. I'm not knocking the hipster aesthetic (I don't like it, but that's a whole different conversation), but it's certainly not an everyman aesthetic, which I would think one would want for an advertisement which is supposed to appeal to a wide audience. I'm sure other industries have put a ton of research into this and I assume this is why people in most ads are so ultra-generic. So, why go with these guys? Path of least resistance? Do people in SF not realize that the rest of the country is not like them? Do they think the rest of the country wants to be like them? This isn't snark, but genuine curiosity.
1. These guys have produced numerous videos for businesses that have gone viral and spread to millions of people. That's not to say that others can't do the same thing -- just that these guys have a history of success, which suggests that not possessing an "everyman" aesthetic may not be such a bad thing.
2. Most companies that use Sandwich for their videos are early stage startups looking for early adopters. Lots of early adopters work in tech and live in the Bay Area. So at this stage, making a video that would appeal to this niche of people makes perfect sense.
"It's easy to think that the ads are designed to draw in the demo shown in the ads, but that's not the way advertising works, and consequently that's not how America works. If you're watching it, it's for you. These ads play heavy during late and late late night talk shows: the target is boring middle aged white people. Blackberry isn't targeting gays and limber blondes, it's pretending they are already on board so you don't feel like a dork without a touch screen."
The same video production company is being used all over for startups like this. It does not imply any relationship to coin or any others. http://sandwichvideo.com/
As some have pointed out, Citi had this[1] since about 2004, Fleet/Bank of America [2] had it in their setup as well for as long as i can remember.
The problem is going to be PCI compliance - the rules that govern merchant procedure for accepting physical credit cards. Specifically, the last 4 digits must be visually validated on the card and typed in to avoid cloned cards (chips largely solve this) in most stores.
Furthermore, giving a new CC number to each transaction is going to deplete the pool of available CC numbers rather soon (as im sure everyone knows, CC number is not just random collection of 16 numbers 0-9).
As other people pointed out, this solves a non-problem: if i don't want to be liable for a fraudulent purchase, i just use a credit card, not a debit card. In case of CC fraud, it is the MERCHANT who is responsible, not the customer or the bank.
Monitoring software that flags "odd" purchases is all that's needed - and banks have been running such things for ages.
Yes, there is hassle if your CC gets lifted/swiped, but chances are, its not an evil hacker doing it, but that cute waitress at your local bar with a $30 ghost reader in her hand.
Unless the physical card generates a new number on EACH swipe, it is just another example of technology looking to complicate an otherwise streamlined process.
The banks' monitoring software is in fact a hassle for me. I've only ever had legitimate purchases denied. The retailer's order flow is not usually optimised for this case, requiring a tedious, often manual process to get my order reinstated, while at the same time often causing the retailer to treat me with suspicion (they can't tell why the charge was denied the first time, and are sometimes reluctant or unable to retry the same card again).
As far as I can tell, Final is not really about reducing fraud, which, as you correctly state, is mostly a non-problem for customers. Instead, its value is in increasing my personal convenience, by reducing the annoyances the credit card companies force me to deal with as a direct result of their absurdly outdated technology.
I was traveling across the country last month and bought some expensive sunglasses and my card was declined. (My cab purchases and other legit looking travel items worked just fine). I immediately on my phone got a text asking if this purchase was legit, replied with '1' for yes, and my card was accepted after trying again few seconds later.
I've headed this off before by calling the 24x7 number on the back of the card before I leave the country or go on vacation across the USA and tell them to flag my account that I will be traveling. This usually takes about 5 minutes.
I want you to consider how wrong you might be. Filtering is defensive in nature, and the quality of a banks' filtering affects the value of CC numbers stolen from it. How many false positives will you accept in order to make your CC number virtually worthless to thieves?
I have no idea of course. Maybe the bank is incompetent and getting robbed blind, but I think what I describe above is a distinct possibility.
I would look into other credit cards or banks then. Capital one and my local back (San Francisco Fire) just talk to me about "hey we've noticed these suspicious transactions, verify please?"
Bank of America also has disposable numbers for their credit cards, one reason I still keep my card with them. You just pick how long the number is active for (min 1 month) and it spits out 16 digits. I use it for all my online transactions.
> As other people pointed out, this solves a non-problem: if i don't want to be liable for a fraudulent purchase, i just use a credit card, not a debit card.
The video never claims to solve the problem of being liable for fraudulent purchases.
The video claims it solves the problem of having only a single credit card number, and having to change the credit card number on file with all your web services (PayPal, Apple/Google, various subscriptions, etc.) when you get a new card, because it expires, or when one is cancelled because someone snatched your card info.
I'll also add that other banks, I think Chase, also had this feature. But they stopped doing it because I guess not enough people were using it.
So yea, while I am happy for Final, as someone who has used disposable numbers for years, I am having one of those "I listened to their music way before they were cool" moment.
I was very interested in something like this few years back. But, my quick research showed me that
(a) A company called Orbiscom (acquired by MasterCard) had patents in this space [1], and they are the ones behind Bank of America's ShopSafe and a few other such services offered by various banks.
(b) Almost all of those services (except for ShopSafe) are now discontinued. Which indicates that either users don't care about something like this, or that banks don't like offering something like this for some reason. Maybe that explains why nobody knows about MaskMe [2] etc.
I would be curious how Final guys are overcoming those issues.
The industry goes much deeper than that, and there are many vendors that also issue virtual cards via other methods. Checkout Wex & Conferma for a few.
A few big changes are happening on the backend of payments that we also plan on leveraging. See this spec if you want to learn more about them: http://www.emvco.com/specifications.aspx?id=263
"A credit card built for the 21st century" is an oxymoron. It's like saying a car phone built for the 21st century.
For the love of all that is holy and sacred, please eliminate the need to carry cards at all. Just let me pay with my phone. Put my drivers license, health insurance card, membership cards, gift cards, car keys, and payment methods into my phone. All of this already exists in some form or another, but Apple and Google have utterly failed to make it work in the real world outside of a few outliers like Starbucks.
It's 2014: there is no reason I should have to carry keys and a wallet when I have a modern cell phone. Eliminate paper receipts while you're at it; email them or aggregate in some other way digitally. Save 10 million trees.
There are reasons - separation of concerns, for one.
Having a single point of failure for your identity, access to all of your accounts and finances, and the locks on your car doors and home is a bad idea. Making that somehow mandatory is even worse. Because you wouldn't be putting them on the phone, you would be putting them in the cloud, and the companies running the servers and building the apps that monetize your locking and unlocking and spending and self-identifying activities will not be putting security first because they never do.
I don't want my legal identity and physical security to depend entirely on cloud-driven Android apps, a contract and a working battery, thank you.
Dear gods, please eliminate any ability to pay with my phone! Cards are fragile enough. I don't want to lose access to all of my money if I accidentally drop my phone the wrong way.
EDIT: Not to mention my ID and keys! I'm honestly not sure I could think of a worse idea.
For you, butterfingers. I've never accidentally destroyed a phone. I have left credit cards and wallets and IDs and keys at bars and hotels. I have had CC numbers used by scammers online, requiring I call my credit card company, figure out what expenses are fraudulent, cancel the card, and have them send another. Magnet strips die all the time. Then I am stuck without one for a week.
New car keys are $500+.
The DMV. Oh God, the DMV.
A phone is not only trackable, but remote wipeable. Order a new one online and pick it up right then in a store or an Amazon same day box or something. All lost information restored in a few minutes via the internet.
I've never had a phone destroyed, but electronic devices are, in many ways, far more fragile than plastic cards. I would never want accessibility to absolutely everything tied to only one device, and I literally cannot imagine how anyone would consider this to be a good thing.
"Oh crap, my phone fell into a puddle. Oh, well, guess I'll just buy a new one--oh, wait...
Well, I could use a drink--oh, wait...
Bah, let me just go home--oh, wait..."
If you had your way, anyone who lost their phone would be effectively homeless (at least temporarily). Do you now understand how shit-flingingly insane your idea sounds?
The way it is now, you lose your keys and you're effectively homeless. This is why people have spare keys under mats. This is why backups are a good idea. Have everything on your phone, but still keep a spare key if you lock yourself out, keep a spare method of identification, keep a spare method of payment. I don't see why we would sacrifice redundancy when we consolidate to make things more convenient.
Does the world end when you lose your keys or wallet now? Then why would it things change if their form changes? Again, it is far, far more convenient for me to replace a phone than it is for me to replace the half dozen cards I carry in my wallet; not to mention the countless more I won't/can't fit in my wallet without looking totally crazy.
Oh, and the existing spare key option is wildly insecure. I'd rather have a Lockitron-type device that will also accept a password or fingerprint or something. That'll drive some security experts nuts, but honestly it's far more easy and likely someone will smash in my window than hack my computerized lock or lift my fingerprints.
> Does the world end when you lose your keys or wallet now?
No.
> Then why would it things[sic] change if their form changes?
Because the forms are consolidated into one: if you had your way, losing one's phone could mean losing keys, ID, wallet, etc. It's replacing metal fucking keys--the only thing allowing you into your home (without breaking in)--with fragile electronics.
Oh, and what would happen if you had your way and someone lost their phone?
"Oh well, lemme make a call and see if I can get a replaceme--oh, wait..."
Replacing my ID, keys, and cards wouldn't be fun, but all of that would be a fucking pleasant walk in the park compared to replacing a phone containing all of those things.
Again, I find myself literally unable to comprehend how anyone could possibly think that this is anything but a horrible idea.
This isn't really going anywhere, so I'll make my last set of points. Relevant http://xkcd.com/386/.
> losing one's phone could mean losing keys, ID, wallet, etc.
Yes. It also means replacing them all is also only one step: getting a new phone and restoring settings from the cloud. Some comparisons:
Losing my keys:
Analog:
--4 with backups are a quick trip to a local Lowes or Home Depot, ~30 min, ~5 bucks
--2 without backups == I'm buying new locks. Same trip to Lowes, also installation time of an hour or so. ~$250 bucks. (also a good reason for me to go make the 30 min, couple buck trip to make copies now)
--1 car key. Trip to the car dealership. At least an hour, minimum $300.
Total: several hours, ~$600.
Phone:
--1 trip to T-mobile, cost of new phone.
Total: an hour, cost of new phone.
Losing my wallet:
Analog:
--3 credit cards, 1 debit card: ~15 min/card for calling and ordering replacements, > 2 days until a replacement arrives. Free.
--health insurance card. >30 min phone call. Probably more. Health Insurance has the worst customer service, a week before replacement. Probably free.
--Driver's license. Between 30 min and 6 hours at the DMV. ~$50.
--Clipper. Quick to order online, takes a few days to show up. $3.
--Safeway Club Card, Membership cards. Probably a trip and a few minutes per card. Probably free.
Total: > 1 week to return to normal. < $100.
Phone:
--1 trip to T-mobile, cost of new phone.
Total: an hour, cost of new phone.
The problem with these comparisons is that they compare losing keys or a wallet with losing a phone. I would argue from personal experience that it's much easier to keep track of 1 object than 3, but that's not exactly solid. The negative arguments might make more sense: comparing losing a phone in both situations.
Now, it is true that consolidation increases the consequences of a lost phone. It requires backup methods of personal identity, payment, and home access, which as I said before is true of both wallet and keys anyway. It is, however, much easier and quicker to recover everything lost: 1 trip and one restoration done in minutes or hours instead of requiring many trips over the course of many days. Replacing a phone is really easy these days since everything is stored in the cloud.
> Oh, and what would happen if you had your way and someone lost their phone?
"Oh well, lemme make a call and see if I can get a replaceme--oh, wait..."
Really? This is just obstinance. Do you really try to replace your lost phone by making a call with your phone? No. You go to a store or order one online.
>Replacing my ID, keys, and cards wouldn't be fun, but all of that would be a fucking pleasant walk in the park compared to replacing a phone containing all of those things.
I've lost a wallet before. That was a nightmare. Hours and hours wasted calling CC companies, the DMV sucks. A long time to recover. Keys are similar.
A few years ago I had a phone stolen. Remote wiped it, ordered a new one online and picked it up in store, life as usual an hour later. Not a big deal like you're making it out to be, and honestly not very much different than losing a phone today since you need proper backups in either situation.
So, let's say you get your way and lose your phone, and let's say you lose it outside walking distance from your home.
How will you get a new phone? You can't call anyone. You can't drive anywhere. You can't take a bus or subway or train. You can't take a cab. You'd either have to walk or hitchhike (or, if you were with someone you know, you could catch a ride).
But where would you go? You can't go home. You could try going to a Verizon/T-Mobile/etc store, but you can't pay for a new phone. Even if you had sufficient cash on you, you'd probably need to show ID (which you can't do).
"Ah ha! Cash!", I possibly hear you say. Well, you could try to get to a branch of your bank, but you don't have ID, so you're unlikely to be able to withdraw anything (and that's assuming that you arrive when the bank is open...since you don't have your phone you can't use an ATM, of course).
So, honest question: if you had your way, how would anyone be able to replace a suddenly broken or lost phone?
Borrow someone else's phone to make a call. Carry some amount of cash on you. Credit cards don't displace the need for cash anyway. Curl up in a ball and hope someone pities your total helplessness?
>you can't pay for a new phone
You can if there is a computer you can use there or on the way. Most companies allow you to pick up in store.
>You can't go home.
Again, locking yourself out is a problem whether you have a physical key or your phone is the key. Have a backup key, or better yet a lock that can accept a password or something.
Like I was saying, consolidating doesn't eliminate the need for backup options... it actually increases that need somewhat. But it does make remote wiping and recovery considerably easier and reduces the number of things I have to carry/remember.
I think I would be able to handle most situations, but maybe it wouldn't be for everyone. Not saying I'd want to be in the middle of Harlem at 3AM without my phone that is also my wallet and keys, but I think if that were the scenario I would take the proper steps to not get myself into that situation. Tap to pay NFC tag? Pebble vibrates when you move more than 50 feet from your phone? Dunno, but I bet, given more time and thought than a HN thread, there would be solutions almost any scenario that would be as good or better than today.
That said, seems like this kinda thing would be optional and not mandatory for quite some time...
> Borrow someone else's phone to make a call. Carry some amount of cash on you.
Okay, so if you were to have your way, the only thing that I'm seeing as anything within a reasonable neighborhood of an answer to "how do I replace my phone?" is to always carry cash on you and always be with someone who has a working phone and either lets you borrow it or can drive (or otherwise cover your transportation costs) to the nearest phone store. That actually seems like an answer. A horrible, horrible answer, but an answer. We're making progress!
> You can if there is a computer you can use there or on the way. Most companies allow you to pick up in store.
Most companies also don't let you replace your cell phone--or make any significant changes to your account, for that matter--without showing ID. Without your phone, you have no ID. Hence, you're fucked.
> Tap to pay NFC tag?
"Damn, where did my tag go? Oh, well, I'll just have to buy anoth--oh, wait..."
> Pebble vibrates when you move more than 50 feet from your phone?
I think the point is that your phone is a proxy for the internet/cloud where your information is encrypted and stored, able to be reached from any other internet accessible device through the use of a key/password. (at least in theory/ideally)
This isn't true of physical keys/ID/money/currency, where it's completely possible to physically lose all of them, permanently.
Its coming, but theres about 3 decades of PoS systems that need to be phased out, and even then there needs to be a clear winner (or maybe 2/3) in the space before you're going to see adoption at the walmart and mcdonalds of the world.
Ugh... I'm not doing the "There are X people ahead of you. Get access sooner by inviting your friends!" thing again. I got tricked into doing it for RobinHood.io over a year ago, convinced a bunch of friends to sign up, but there's still no product in sight.
> Tired of your monthly yoga pants subscription? Or a two-week "free" trial that lasted four months? Just deactivate that card number. It's that easy.
I'm a little wary of this functionality. Although most responsible businesses just cancel the subscription after a declined payment, some will sic a debt collection agency on you because they claim you owe them the money. My Google-fu is failing me now, but I know I've read of this happening recently.
I'm also wondering how the magnetic strip on the back works. Does that get changed with each swipe as well? That would be really nice functionality to have, though I understand the complexity of implementation.
What sounds unethical to me is incredibly one sided abusive contracts that are incredibly difficult to cancel, even with agreed upon terms.
It sounds perfectly ethical to me. "I don't want to pay for goods and services I don't want to receive anymore". This is an idea that has been tested many many times in US case law, and therefore sounds perfectly legal as well.
What sounds unethical to me is incredibly one sided abusive contracts that are incredibly difficult to cancel, even with agreed upon terms.
Nothing in the description on the site implied a one-sided, abusive contract. There is nothing inherently one-sided or abusive about either an ongoing subscription or a service that offers a free trial but automatically starts charging at the end of the trial period if you don't cancel.
Obviously if the charging organisation is misleading it's a different matter, whether that was hiding or being deceptive about what would really be charged or offering a trial but then creating barriers to permitted cancellation. I don't know about the US, but here in Europe there are now some very one-sided (pro-consumer) rules about this kind of thing.
However, if the deal was legit, knowingly using a card that won't stand up and thus avoiding payments genuinely due is fraud, pure and simple.
Chip and PIN, at least in the US, is useless right now because virtually no merchants have the equipment. As for the browser plugin that generates a unique number for each transaction, PayPal had this in 2008 and closed it down. I'm not exactly sure why, but if they couldn't make it work, I have my doubts about newcomers being successful with it.
The one interesting thing this card can do is disable charging to the physical card number when it is seperated from the phone. Of course that will be annoying when someone wants to buy something after they have left their phone in the car or had their phone lost or stolen. It's also unclear if simply running out of battery on the phone would disable the card. If my understanding of their system is correct, it would.
I've actually noticed a lot of merchants have installed chip-and-pin compatible terminals over the last 6 months or so. (mostly at the larger retailers)
Not "required", just that after Oct 2015 the merchants will become liable for fraud (instead of the banks), if they are not equipped for Chip and PIN (apparently "pay at the pump gas stations" get an extended date of Oct 2017 instead).
Parent was talking about US though, which is what I commented on. From what I have read[1], the US seems to be going mostly chip and signature for some weird reason. Anecdotally, Amex[2] only offers chip and signature cards to US customers -- no support yet for chip and pin.
Not quite. If I understand correctly, as of that date Chip and PIN will be encouraged, by charging higher fees to merchants when they fail to do a chip and PIN transaction.
Am I crazy or doesn't this (temporary credit card numbers) already exist with a lot of major credit card vendors? I remember getting an Amex Blue card back in the early 2000's because it could do just that thing...
Same here. I recall it came with a USB card reader. You had to put the credit card into the reader to get the single use number... or something like that. The user experience was horrible. I don't think I actually ever got it to work. Surely things have improved since then though.
I've got a Visa card from Bank of America. I can log into their website, generate a disposable credit card number on the fly -- specifying my own credit limit and expiration date -- and then just paste the card info into the website I'm ordering from.
There's not a lot of friction in using this feature, and I use it all the time, so I find it pretty surprising that many people here seem to regard Final's implementation of the same thing as a brilliant innovation.
This is awesome! I love the idea and was actually discussing a couple months ago why this doesn't exist yet with current CC companies like AMEX or Visa.
All these all-in-one "supercards" coming out are cool, but this is beyond cool and serves a real purpose.
I imagine they'll add a sharing component to purchases eventually too. This way you just spin up a new credit card number that is split between a group of people (e.g.: at a dinner for the check) and set percentages for everyone. You no longer have to ask waiters to split bills, Venmo friends after, etc.
I can't help but think this must be vaporware. I worked in the credit card industry for several years. A credit card company is not something anybody can just start from scratch - you need data to model chargeoffs, fraud, spend, ect in order to be profitable. And unlike Robinhood, you need a source of capital to fund the cash you float, usually securitization or deposits.
I may be completely wrong, but I simply don't buy it. There's so much more to a credit card product aside from the nice-sounding features they have on their landing pages.
I'm happy to say that we're not vaporware. We're partnering with a bank that provides all of the pieces you mentioned. Our model is similar to that of Simple, which partnered with Bancorp Bank to launch their product.
He feels anti-corporate, quirky but not annoyingly so. He absolutely has his own brand so where it once felt refreshing now it just feels sandwich, but it's not to a point where that's a bad thing.
I watched the video only after I saw your remark and I have to agree. It's the first advertisement in ages that nearly got me interested into what they have to sell. I usually can't stand a classic video presentation.
Thank you! Adam is a creative genius who knows the right way to convey complex messages. It took many iterations to get it just right, but he's the real star here.
I really like this concept, it's great for using sites that you want to buy from but aren't too confident on their security, but it's not exactly new.
I had virtual card number generators in the UK 5+ years ago with cahoot (unfortunately they shut that service down) and you can get this kind of thing with Entropay and similar providers at the moment.
That said the app+management features look pretty nifty, so this could be a nice advancement of the concept.
Essentially your credit card number is like a transaction token now. If the token is compromised, no big deal the transaction is over and that token is no longer valid. But it has some backwards compatibility built in so you can re-use the token for systems that are setup to charge one number / token every month. Your credit card number is essentially an implementation detail of your card. Very cool.
No scrolljacking, beautiful colors, product screenshots, nice imagery and typography.. this is a successful execution of the ubiquitous "startup site" style. Not a comment on the product, but I had to commend you for getting this right when so many others get it wrong.
From what I understand, each 16-digit credit card number has 9 digits for the account number. With only 1-billion combinations don't you risk using up all the numbers if everyone gets a new number for every transaction?
What about confidentiality: I assume you collect what I purchase, when, where, and the cost. What do you do with this data? (Of course this question applies to every credit card vendor, not only to Final.)
This looks like the right solution to work around the current craziness of sharing a single credit card number across all purchases. (An ideal solution would involve some kind of assymetric crypto for authorization, but this seems like the best we can do with the current credit card infrastructure.)
The biggest question the FAQ doesn't answer: Will this interoperate with (at least one of) MasterCard, Visa, or American Express? Because if not, it isn't going to work with most merchants.
Bank of Brazil (BB) released something very similar called Ourocard-e to all 33mi customers in April 2014. It's very cool this idea gaining more acceptance in other markets.
Citi cards had this for a while, but got rid of it. It was quite nice, but needs more organization. Also the paypal model has it right. Even though I, like many others, loath paypal, I've been using them everywhere just to save time entering my CC. This doubles as security as merchant never get your CC in the first place.
Apple pay will probably fix the organization of the random CC # generation. Final seems to be a little late in the game.
As a U.S. citizen, next time I hear about a major credit card breach I will definitely relax as federal regulation limits my liability to $50 (and that is if the physical card is stolen). If only my credit card number is stolen, I have ZERO liability.
If you have to partner with a bank can you guarantee the interest rate will be below 10%?
Unless you're offering a 9% or lower rate for everyone and no annual fee this is not a truly customer friendly product, it's like every other bad bank. How can you say you're customer friendly if ANY customer has even a small risk of getting charged more than 10% interest.
How is this different from what BoA's ShopSafe? I've been using "virtual" cc for a few years now, that is the main reason I'm with BoA at the moment...
The only thing is that it's a bit of hassle to use their tool.
Also, I get a notification when my cc is used online or phone...
The site doesn't say anything about if this will be available world wide or just in the us?
Even so, I have used virtual credit cards for several years already as my bank provides a service for it. It works really neatly tbh even if the UI isn't as nice as in the video promotion.
I don't know if its just me, but the person in the video looks very similiar (if not the same guy) from the Coin (https://onlycoin.com/) video. Similar industry, similar beardy face?
This is neat idea, but I primarily use credit cards (over debit cards) for their benefits--in my case, airline miles. Why would I forfeit these benefits that save me hundreds of dollars a year in airline travel costs for this card?
In the video, Adam glances at the guy behind him in line as he says "checking my statement for sketchy charges". Dude looks a lot like weev. Not sure if it's the guy himself, but that has to be intentional.
I wonder if it would be possible to integrate this into existing online banking. Being able to use this through an existing bank account could be a good selling point to privacy-aware customers, at least in Germany.
I want a next-generation payment card shoehorned into the same form-factor as legacy credit cards about as much as I want to access the internet with an acoustic modem.
(Which is: only if there's absolutely no other way.)
Not only do they need to work with every single party in the ecosystem to succeed (they have no leverage), but have they heard of umm, Apple Pay and Visa's/MC/AMEX new TSP?
One question: Does it cut in 'payment processors' or other financial institutions for a percentage of every transaction?
If so, then it has absolutely no place in this century. Transferring numbers does not get more difficult when the numbers are larger, and any percentage-based system is unjustifiable. Transferring numbers is also terribly easy now, so such a service does not even warrant a significant flat fee.
We are rapidly moving toward a situation where virtually every single transaction in our economy gets skimmed by banks for 5% or so. This is giving a ridiculous amount of economic control to banks for absolutely no reason.
That product is Navdy and the guy in the video, Adam Lisagor, is indeed the same guy in the Final video. Lisagor's company Sandwich Video (http://sandwichvideo.com/) produced both videos and countless others for startups, many of which he has appeared in.
Do you mean a non Final number? That shouldn't happen since ever issuer is uniquely identified by the first 6 numbers on the card. For collisions with Final numbers they'll have to keep track of the numbers they've issued and if they have expired or not. Aren't online transactions validated with a combination of CC# and other details. They could use that to deepen their pool of numbers. They can also get multiple issuer numbers (the first 6 digits) giving them more numbers as well. Also temporary card numbers aren't completely new so they're probably drawing on existing solutions to collision issues.
Well, systembolaget.se and alko.fi do… Fantastic choice, exceptional service, and crazy expensive because the excise taxes are paying for the perfectly fine and very expensive education of Nordic children. Also, not available in the US. (Sorry, just left the country to start a new job in London, still under the shock of having cheap, good, strong alcohol in supermarkets.)
More seriously, I think the sweater thing was a tease at a competitor (who's presentation include an awkward “Say you want to buy a nice sweater… — But I don't! — Let’s say you do!”). Then that-guy-who-makes-all-the-cool-product-videos got creative with URLs.
Tired of your monthly yoga pants subscription? Or a two-week "free" trial that lasted four months? Just deactivate that card number. It's that easy.
It really isn't, and you just publicly encouraged people to commit a criminal offence.
Please talk to an actual lawyer before making that kind of statement, or your business is likely to be short-lived regardless of any other merit it has.
This is something I have been asking for since forever! People on here claimed it was "impossible" because of how credit cards work, I guess not...
> Tired of your monthly yoga pants subscription? Or a two-week "free" trial that lasted four months? Just deactivate that card number. It's that easy.
They need to be careful what they advise. That advice could (and likely WILL) result in people getting taken to collections.
Don't like your ISP? Just cancel the CC number, then 12 months later get a bailiff turn up and seize your stuff...