But it goes beyond credit card companies too. It applies to the whole banking system.
It will soon be the case where the majority of Americans live in states where recreational cannabis is legal (it was ~1 in 3 last year but NY, NJ and others will push it over). Yet you can't use a credit card to buy cannabis pretty much anywhere AFAIK.
Worse, dispensaries have to operate on an all-cash basis because they simply can't get bank accounts.
Granted, the legality of cannabis is a grey area since states allow it but the Federal government still maintains it as illegal.
I personally don't like the financial system being gatekept for legal activity this way.
Whether or not they could is a legal question. It seems though they're happy to appease politicians and "values" voters by virtue signaling on these issues, however.
As for sex work, in particular, this one is tricky. While I fully support body autonomy and in an ideal world, sex-for-money and the like should be legal, it's not that simple in reality. Why? Because the sex industry is deeply tied to human trafficking. I have no idea how to solve that problem.
> Granted, the legality of cannabis is a grey area since states allow it but the Federal government still maintains it as illegal.
This isn't some incidental detail - it's the entire reason why the banking and credit card industry doesn't want to interact with cannabis right now.
Guess who regulates the banking industry and has authority over interstate commerce? The federal government. This particular example has nothing to do with credit card companies making a statement against cannabis, and everything to do with them not wanting to break the law.
> This isn't some incidental detail - it's the entire reason why the banking and credit card industry doesn't want to interact with cannabis right now.
FYI - Banks do work with cannabis in states where it's legal. Those banks just can't be national banks - they have to be state ones that are regulated by the state. In other words, Chase/BoA/etc. can't touch it because they operate at the federal level and are highly regulated.
The moment they’re legally allowed to they will be all over legal weed. It’s not like the finance industry has any issues profiting from other recreational substances, such as alcohol or tobacco.
You don't give the banking industry enough credit here. They are involved in designing the legislation/regulations governing themselves.
The market for legal marijuana projected to be $100B by 2030. If the banks want a piece of that pie, then they will change the rules and "fix" the problem.
The US is an exception in its fragmented banking system. Usually there's no conflict of legality between state and federal government, and banks are consolidated in a few big players that are pretty eager to satisfy business owners demands so having bank accounts is not usually an issue (even for somewhat-illegal or unregulated market business). Even startups nowadays are getting fast access to corporate credit cards.
But credit cards are on scope of an entirely different order of magnitude compared to a local bank checking account. Visa and Mastercard are global authorities on cashflow. And this is exactly why they're accidentally becoming regulators, they transcend the US weirdly fragmented banking system.
The clothing manufacturing industry is also deeply tied to human trafficking, but no one is talking about banning credit card transactions at the Nike store.
As for sex work, in particular, this one is tricky. While I fully support body autonomy and in an ideal world, sex-for-money and the like should be legal, it's not that simple in reality. Why? Because the sex industry is deeply tied to human trafficking. I have no idea how to solve that problem.
You can't solve that problem, but I believe you could mitigate it by making prostitution legal. Funny thing is that prostitution is legal at the federal level, it's just that all the states except Nevada have laws against it. So it's kind of the opposite of cannabis, and if the credit card companies wanted to be consistent in following federal law they would allow it.
I was initially going to say the same thing, but then I reflected on what I saw in the past.
In a very real sense, government required compliance effectively forces banks into a gatekeeper position. And while some BSA enforcers do act in their interest the same any group does ( cops, politicians, IC, doctors ) by extending their reach and influence, others are wary of expanding it beyond current regime ( which is already pretty onerous ).
It does help that banks tend to get very sensitive about some things as they do rely on deposits to survive. In one of the banks I used to work for, teller BSA training included a mention to be sensitive about customers and questions along with a story of a teller, who prodded a little beyond what the customer deemed acceptable and who then proceeded to close the account with 'none of your god damn business'.
What I am saying is that things are only the way they are, because we allow it that way. Cash is still a viable, albeit annoying choice.
And banks have been complacent until now, but the cost of complacency seems to be going up.
All that said, ABA better gets it shit together. Between high compliance burden on banks combined with low to non-existent compliance on fintech startups can quickly amount to real trouble for the banking system in US.
I find it remarkable that in the same post where you criticize those who would maintain bans on drug purchases, you end up finding your own reasons why to maintain a ban on a different vice. But sex work has externalities I guess is how you might respond, but drug bans are also based on arguments of externalized social harm.
At first I thought you were going to give an argument for removing financial gatekeeping, which I think is an inappropriate point to apply leverage towards moral ends. But -- and this is the heart of the problem everywhere -- you end up picking and choosing between vices. This maintains the processor's position as the morality enforcer, which is the entire issue: it's just one more thing that power-driven agents can strive to influence.
> ... where you criticize those who would maintain bans on drug purchases, you end up finding your own reasons why to maintain a ban on a different vice.
Well done on missing my point entirely, possibly intentionally. I'm fine with whatever happening between consenting adults. Unfortunately, there's a link between sex work and human trafficking that cannot be ignored [1]:
> Countries with legalized prostitution are associated with higher human trafficking inflows than countries where prostitution is prohibited.
and
> Criminalization of prostitution in Sweden resulted in the shrinking of the prostitution market and the decline of human trafficking inflows.
Sex trafficking impacts people who aren't consenting (including minors).
So what are the negative externalities of cannabis consumption? Long term cannabis abuse can be a problem but pales in comparison to, say, alcohol abuse. Basically, there's no world that makes sense for alcohol to be legal and cannabis not to be.
Also, cannabis legalization has arguably hurt the illegal drug trade [2].
> you end up finding your own reasons why to maintain a ban on a different vice.
From my understanding, based on that 2018 rule, the executives at CC processors are personally liable if they process money for sex work. Like "you are an accomplice to human trafficking" guilty.
Dispensaries are getting wise too. Even though you can't use a credit card anywhere, they have found a way for you to use a debit card. Basically it's just like an ATM withdrawl but they tie it into the checkout flow so to you the customer, its just like you paid with a debit card.
The credit card companies, like every heavily regulated industry works like the federal government without the rules holding them back. Banking is only the most powerful hammer for it's favorite nails, but has been reluctant to use it much until recently. Once they started removing the gun industry's credit card access, it has slowly creeped everywhere. I am happy because it will only be a matter of time before people move to alternatives like crypto.
> Why? Because the sex industry is deeply tied to human trafficking. I have no idea how to solve that problem.
I mean, drug trafficking is deeply tied to human trafficking, as well, and your post concerns cannabis legalization, which is one way to combat that problem.
The reason the payments industry doesn't like sex isn't human trafficking. It's the high fraud and charge back rate.
When your parent or partner finds out you paid for an OnlyFans membership, you lie and tell them you lost your card. This happens incredibly often, and payments companies don't want to touch this.
The benefit of public oversight over free trade is accountability via due process. If you manufacture a hot dog and it's contaminated with something, or falsely advertised as kosher or halal, or doesn't meet any of a thousand little constraints in production, maintenance, delivery, and communication about the product, you are held accountable for violating the law.
Sex trade is different because of stigma and culture and prohibition. Stigma and culture have to change through education, activism, and time, but prohibition can be dealt with immediately. Create a robust framework of protections for sex work, protecting the rights of workers, and incorporate the industry into the existing legal system.
Getting rid of trafficking, pimps, and lack of recourse for workers and consumers negates far greater harms than any moral social corruption predicted by pearl clutchers.
The same applies to almost everything which society tries to cope with through prohibition. Black markets spawn second class dealers in vice, money and trade off book to the detriment of everyone except kingpins and corrupt agents of government and law enforcement. The vulnerable and desperate get locked into feedback loops of abuse and exploitation.
Legalizing all drugs and sex work almost completely eliminates the niches that perpetuate black markets. Forcing banks and legal jurisdictions to treat trade in vice equally to any other economic activity gives society the opportunity to treat drug abuse as a health issue. It enables sex workers to receive justice for abuse. It virtually eliminates the primary sources of income for cartels and kingpins. It forces culture to adapt, eventually allowing activists the opportunity to destigmatize responsible activities of adults in private.
We have laws that protect consumers and service providers, that give resource for violence and theft and fraud. It shouldn't matter what substance or sex act or hot dog brand was involved if a citizen is injured.
Adults have no business telling other adults what they can consume, or do in private. The business of government is behavior in public and in maintaining the rights of citizens in private.
We have ample and overwhelming evidence that prohibition always creates more harm than good, across thousands of years of history. It never works and always creates opportunities for abuse and horror. We also know that legalized vice results in more responsible use and less frequent consumption and fewer harms across the board.
It should be a no brainer. We should have responsible drug use education. We should have public sex work education.
Financial institutions crafting pseudo-moral gatekeeping policy from the whims of executives, pr departments, and Twitter outrage is a disgusting offense against society.
> Yet you can't use a credit card to buy cannabis pretty much anywhere AFAIK.
Every dispensary I've visited here in the northeast accepts cash and debit cards, I assume they don't accept credit due to higher processing fees and higher risk of chargebacks rather than processors being problematic (otherwise they would not accept debit since they get ran through the same system anyway).
That's not true at all. I live in the northeast and my dispensary simply can not take credit cards even if they wanted to; credit card companies are liable for the transaction and they don't want to run up against federal law.
Some dispensaries can take debit card transactions, and they have to do so through "high risk" processors... companies like Square will not work with them because of federal law.
Your assumption is wrong, they are being refused by Square, Stripe, etc, etc. CBD are also in a grey zone which cause them tons of problems accepting credit cards. This isn't because of higher processing fees.
> Yet you can't use a credit card to buy cannabis pretty much anywhere AFAIK.
The dispensaries I've been to in LA will generally take credit cards now. They round it up to multiples of 5 and give you change in cash, and I think under-the-hood they're doing a cash advance or something?
This doesn't detract from your point; if anything, it reinforces it. Just an interesting factual point.
>It will soon be the case where the majority of Americans live in states where recreational cannabis is legal (it was ~1 in 3 last year but NY, NJ and others will push it over). Yet you can't use a credit card to buy cannabis pretty much anywhere AFAIK.
There is not a single state where cannabis is legal, there are only states that have decided they won't enforce federal law.
> There is not a single state where cannabis is legal, there are only states that have decided they won't enforce federal law.
The feds don't really enforce it either. Is there a state the feds have sanctioned over legalization? They even collect federal tax dollars on the businesses selling these "illegal" products. Unless a law is actually enforced, it's just words on paper.
Everybody wants to become a "reluctant regulator of the web" if it means them getting a cut of all economic activity (as the new tax man) without any liability
Let us not be naive. The decades long preference for oligopolistic rather than competitive markets is what created behemoths (both new and old) and now the only question is who of them is going to be granted the keys to the digital kingdom by fiat.
What do you mean, "are becoming"? They have always been. If the payment processors don't want to be associated with a service, they'll refuse to handle payments and then there's simply no way for the service providers to get paid. See wikileaks and other "problematic" sites.
Advertisers are also regulators. I've seen sites start heavily censoring themselves because someone complained to Google and they pulled the ads. Stuff like this ruins the web.
In a world where cash is starting to dissapear, payment processors and banking in general should be regulated and treated just like some sort of utility company (Ex: Water, electricity).
Advertising is a different beast altogether. Being able to to exchanges (money for goods, etc) is something quite a basic right(If I can call it that). That doesn't apply to making money though. I don't think it's normal in any way to force anyone to conduct business with someone they don't want to unless is a basic necessity in that particular day and age.
How credit card processing hasn't been classified and regulated as a utility is truly baffling to me. Especially with governments explicitly recommending contactless card payments instead of cash during the pandemic and many doing things like taking large bank notes out of circulation for years now.
We don't need crazy things like crypto - we need decentralised and accountable banks and payment processors (not that the distinction between the two makes any sense either). Speaking of credit card companies: why do they exist?? Why can't my card just sign a digital request for transfer and tell the POS terminal to send it to my bank to be executed. A room of computer science students could write an open standard for that in like a month and have a working implementation within the year.
> In a world where cash is starting to dissapear, payment processors and banking in general should be regulated and treated just like some sort of utility company
I'm not sure if you are missing contacts or providing irony. But the fact is payment processors and banking in general is extremely heavily regulated.
A few years ago when you saw almost all banks and payment companies starting to crack down on spending money to buy and sell cryptocurrency, that was to no small extent because federal regulators gave them a little side-eye about the subject. No specific regulations, to be clear, but a few pointed questions.
When every means of sending money overseas demands clear documentation of your identity, That's not so much because banks feel the need to know every detail of your business; it is strictly mandated by federal law. And while my examples all involve US banking, most governments around the world are similarly strict.
This is a recent situation. Back in the early 00's, paying for something online with a credit card, other than porn, was a novelty. I think things started to change in the late 00's.
I remember a LOT of software being sold online (licenses and such) was sold via money orders or sometimes wire transfers.
I was accepting credit cards online from 1994 (although I have to confess now that the business is defunct that the form—which didn't use https(!)—just emailed the entry to me(!)). My first order from Amazon was in 1997 (it was two books: The Psychology of Religion and Varieties of Religious Experience). I bought a number of musical instruments online with credit cards as early as 1998. Buying things from individuals was a bit dicey for a while, with a lot of trust involved where you'd send a check or money order to the seller and hope they'd send the promised merchandise. Paypal did a lot to mitigate that, and I opened my Paypal account in 1999.
The first time I had a customer lose their credit card merchant acct for political incorrectness was in 1997. They put a goat on stage with a "Clinton" sign on it at an event.
In the US/Canada and Japan at least, it’s not that recent Perhaps a novelty in the early 90s - even then, the major online services all had online shopping options. Ebay, PayPal, and Amazon were all growing rapidly by 1999, and the dot-com boom was filled with retail shopping startups that were popular - just not profitable or well managed.
> If the payment processors don't want to be associated with a service
Generally financial institutions are happy to take anyone’s money, and lend to them too unless they don’t think they’ll get their money back.
Their regulators can change those criteria though, forcing upon them an unfunded mandate. This is no different than policing entities washing their searches through private entities (e.g. the telecoms).
More like your web is ruined because the site that tries to write about some controversial topic has to stay less controversial else they can't make money by showing ads.
And they should, for their own protection; they will be taken down hard if they are found to be complicit in financing things like terrorism and child pornography.
When it comes to the recent events around Pornhub and Onlyfans, the payment processors erred on the side of caution, because those two customers of theirs couldn't for definite guarantee that nothing shady was going on on their websites.
> they will be taken down hard if they are found to be complicit
How can the provider of vital infrastructure be complicit in anything? Is the engineer who designed and built a bridge complicit when a criminal crosses it?
They should be considered neutral. Just like information carriers are considered neutral. Not liable for what goes on inside their networks. Searching for and punishing anyone violating any law is up to the authorities and they must do that without violating everyone else's privacy no matter how frustrating it must be for them.
"But calibrating that response raises questions of principle, practice and priority. Businesses will go their own way. Some, such as PayPal, Visa and MasterCard, which handled donations to WikiLeaks, and Amazon, which provided web-hosting services, have dumped it as a customer in response to American outrage. More may follow. They risk attacks from its fans, just as those that refuse face hostility from their customers in America. Too bad: business is full of hard choices."
Every single time there’s a HN discussion about censorship and I comment about how we shouldn’t be okay with censorship of anyone regardless of how offensive they might be or whether or not it’s some private corporation and usually it gets downvoted.
When the wind starts blowing the opposite direction, only then do people wake up.
The biggest problem with this is that we already have regulations than punish banks for processing illegal transactions.
If you don't want that, and you want the banks not to refuse any legal transactions, that's easy. They then don't refuse to process any transactions at all.
If you do want them to refuse illegal transactions, and they're allowed to refuse legal transactions, that makes it easy for the bank because then they just refuse anything marginal even if it's totally legitimate. This is what we have now. It's not a problem for the bank but it's a big problem for the people getting unjustly locked out.
Expecting the bank to process no illegal transactions and all legal transactions is an impossible burden, because nobody actually knows what that means. The meaning of a lot of laws isn't even settled until they get litigated in court and set a precedent. It would require the bank to be infallible, and know everything about everybody's business, because a mistake in either direction would incur penalties.
So which one do you want? (The first one actually looks pretty good when you consider the alternatives. Let the police be the police and the bank be the bank.)
Isn't that a false choice, that's only phrased to cater to the "that makes it easy for the bank"? They are now categorically refusing certain businesses. If those businesses could at least appeal and demonstrate that they are within the law, why wouldn't banks be mandated to process the transactions? This could go with some sort of safe haven for the banks, that if they did this review process that they won't be liable if an illegal transaction slips through. (And sure, some illegal transactions would slip through, but I'm convinced that this is already the case.)
It should not be so much whether it is legal or illegal in the strict sense. The question is whether bank has sufficient evidence to suspect that illegal activity is taking place.
So bank should be held liable if they:
- do not collect evidence
- do not act on evidence
- if they act without evidence
The bank should face appropriate penalties for making misjudgments in both directions. For example, you should have a right to sue bank for refusing to provide a service. The court could judge whether bank had sufficient grounds to refuse to conduct the business with you.
The bank should also provide the evidence to law enforcement to trigger investigation into alleged illegal misconduct. If the judicial systems clears you, then again, you should be able to compel bank to provide the basic financial services.
There is regulation like that for individuals in EU. Banks are obliged by the law to provide basic financial services (bank account and identification services if I recall correctly) to EU residents as part of the European Single Market.
There is a third way. Financial institutions cannot facilitate money laundering (well...). But they can’t just let that hang. You do due diligence, you’re either happy that the business looks legit enough, or you have doubts . In the latter case you inform authorities, and they sort the question. Either you get the go ahead or you’re dealing with a criminal, and the state takes it out of your hands.
You can imagine a similar model for payments. The bank can’t just indefinitely say “umm not sure”, it has to go one way or the other.
> a mistake in either direction would incur penalties.
It seems reasonable to just make the fines small, and the bank can try to minimize them by having their policies match what a court will find for those which are taken to court.
It's a very difficult task to determine if a transaction is legal or not, sometimes impossible. Regulations differ not only on the country and state level, but sometimes the city level.
For example, can you buy alcohol in Delaware? Well, not if it's Sunday. How about a weekday? Not if it's between 1am and 9am.
Can you buy alcohol in New Jersey on Sunday? Sure, well not if you're in Bergen County.
That's one product. How do you propose these companies codify the entire world's regulations? It would require thousands of people to maintain the rule engine.
So, are you suggesting that credit card firms no longer process liquor transactions? I think it's understood that there are nuanced difficulties, but does that mean they should categorically shut out entire industries? (I feel like for liquor we generally fall on the side of "no".)
>If it's legal then banks should have no choice but to handle it.
Right. But banks are regulated by the US Federal government. And according to US federal law[0], possessing and selling cannabis is just as illegal as possessing and selling methamphetamine or heroin.
As such, unless and until that changes, the banks aren't going to involve themselves in what the US Federal government deems a felony, regardless of what the several states do.
From the way you frame this, you seem to think legal or illegal is an easy thing for a bank to evaluate quickly and accurately. Is that a correct statement of your position?
The issue there is when it comes to likely fraudulent transactions. Like, a bank shouldn't have to give you 10MM in US currency because you hand them a "totally real check from Bill Gates" that looks like it was printed off a laserjet printer. But, they do make laserjet printed checks and maybe Gates uses them for the lulz.
All transactions have some likelihood of fraud, so it's a fuzzy line.
We would need at least _one_ chain of bank - payment processor that only works on payment fees and has a public mandate of letting the maximum transactions go through.
Basically a pubic service PSP with loss financed by govs. I'm not holding my breath, and I can't see a single action I could take that would bring us even a millimeter closer to this goal. It's depressing.
What would be the impact on consumer protections like chargebacks if banks were forced to process transactions they deemed to have a high risk of fraud?
We would need at least _one_ chain of bank - payment processor that only works on payment fees and has a public mandate of letting the maximum transactions go through.
Basically a pubic service PSP with loss financed by govs. I'm not holding my breath, and I can't imagine what could realistically be done at our level to be even an inch closer to that ideal. It's depressing.
> I would want to see regulations where banks are explicitly forbidden from blocking legal transactions.
I want the same thing from web service providers - if the content is legal then Amazon, etc. should not be permitted to refuse service.
Twitter should not be permitted to have its own terms and conditions, rather they should follow the law - it's either illegal, and ban the person, or it's legal and they must leave it up.
Maybe put a limit like: If your number of registered users is at least 5% of the US adult population, then a new set of rules kicks in.
There are some details I don't have answers for: What if someone posts things that are legal, but offtopic for the location? I don't want to prevent moderators from removing that kind of thing, but I also don't want them using it as a false reason.
I'm sure there are other edge cases I have not thought of.
That literally flies in the face of the first amendment. Forcing a website to host something they don’t like is compelled speech. They’re private corporations and can do what they want. The courts are very clear on that. If you want them to be forced to host everyone, you nationalize them into a utility.
Credit card firms should be just utility providers... Like roads are. You go on a highway, pay your toll, and noone asks you if you're driving to meet your parents, if you're going to get a prostitute or if you're going to buy drugs.
Law enforcement should deal with the endpoints, so dealers, brothels, and your moms shitty meatloaf.
Regulations like OFAC are still going to restrict payments, especially those made internationally or over a certain amount.
I'm not saying that the regulatory framework should allow payments to known terrorists or terrorist groups, more pointing out that electronic transfers are never going to be structured like a utility without significant restructuring of banking laws.
HN readers are wrong to think this will be fixed when the government creates a CBDC or regulates payment providers like a utility.
In addition to the government currently blocking transactions from semi-legal industries that should be legal (cannabis), the government has a history of censoring mail mentioning contraceptives (Comstock Laws) and pressuring banks to cut businesses with legal, undesirable industries (Operation Chokepoint). A few weeks ago, an IRS agent at a service center refused to help me because they didn’t like my clothes. (I was wearing a tank top.) This is inevitable when you create government-backed monopolies.
How strange, because your examples don't make sense.
Sure, some things should be legal but aren't. It hardly seems surprising that while they are illegal the federal government tries to prevent them.
The Comstock Laws applied to all carriers (private or public) and therefore would apply to FedEx or UPS as well. They also were ruled unconstitutional over a hundred years ago.
Meanwhile, Operation Chokepoint was something that lasted less than a year before the same administration said it was an overreach and reversed it. It was an error, and between that and congressional oversight got fixed. It sucks, but it should be pointed out that, again, it was government pressure on private entities. Nothing that wouldn't be at least as good under government control.
Meanwhile, if an IRS agent refuses to help you because you're wearing a tank top, that seems like something you should escalate. But I will point out many private enterprises (airlines, etc.) have refused to serve people wearing tank tops. To the point of refusing to honor their ticket and screwing up their whole vacation with no recourse. But the only official IRS dress code deals with profane/offensive writings. Tank tops are allowed, even for IRS agents.
I think that a cursory search for banking and cannabis will reveal the pressure the US government puts on this industry. Banking for cannabis is much easier in canada. You can purchase weed with a Visa no problem.
The Lightning Network might or might not lead to a widely used open payment network.
I would love to hear more from people who already use it. How well does it work?
As far as I know, El Salvador is currently trying to shift their whole economy to Bitcoin. Handling day to day payments via Lightning. Is anybody from HN there? How practical is it for non tech people to use it for their daily payments?
Basically a litmus test will be when a gigantic brothel in Europe or a European country’s Caribbean district does a very public but permissionless capital raise, gets filled by retail, and pays dividends while shares being actively traded permissionlessly.
Thats when you’ll know the floodgates are open. Just given how much unwanted attention and publicity that will generate.
To me, its surprising it hasnt happened yet but I think now it is just a matter of time. Many services will take a second look when ownership by address is still concealed. Most crypto platforms do not offer that yet for shares/assets issued on their platform (ie. Monero has no ability to have fungible assets traded on it). Lightning Network has a theoretical but limited ability to do this. Bitcoin will have a greater ability to do this after its current inprogress upgrade goes live (taproot, schnorr) but not a complete solution out of the box even then.
You don't generally need to raise capital for sex work, and the problem there is having a physical location that will be raided if it's illegal.
To me, the important litmus test is when bitcoin gets definitively linked to a specific terrorist incident. Now, terrorism in the West is mostly out of fashion, except US rightwing extremists, because it's hard to have a death toll that anyone would notice over COVID, but that's not to say it won't happen in the future.
Very poorly. The only way it's usable is by relying on third parties, at which point you might as well use standard services. Or even actual cryptocurrencies for that matter.
Readit News
But it goes beyond credit card companies too. It applies to the whole banking system.
It will soon be the case where the majority of Americans live in states where recreational cannabis is legal (it was ~1 in 3 last year but NY, NJ and others will push it over). Yet you can't use a credit card to buy cannabis pretty much anywhere AFAIK.
Worse, dispensaries have to operate on an all-cash basis because they simply can't get bank accounts.
Granted, the legality of cannabis is a grey area since states allow it but the Federal government still maintains it as illegal.
I personally don't like the financial system being gatekept for legal activity this way.
Whether or not they could is a legal question. It seems though they're happy to appease politicians and "values" voters by virtue signaling on these issues, however.
As for sex work, in particular, this one is tricky. While I fully support body autonomy and in an ideal world, sex-for-money and the like should be legal, it's not that simple in reality. Why? Because the sex industry is deeply tied to human trafficking. I have no idea how to solve that problem.
This isn't some incidental detail - it's the entire reason why the banking and credit card industry doesn't want to interact with cannabis right now.
Guess who regulates the banking industry and has authority over interstate commerce? The federal government. This particular example has nothing to do with credit card companies making a statement against cannabis, and everything to do with them not wanting to break the law.
FYI - Banks do work with cannabis in states where it's legal. Those banks just can't be national banks - they have to be state ones that are regulated by the state. In other words, Chase/BoA/etc. can't touch it because they operate at the federal level and are highly regulated.
https://www.riskscout.com/post/the-state-of-cannabis-banking
The market for legal marijuana projected to be $100B by 2030. If the banks want a piece of that pie, then they will change the rules and "fix" the problem.
https://flowhub.com/cannabis-industry-statistics
But credit cards are on scope of an entirely different order of magnitude compared to a local bank checking account. Visa and Mastercard are global authorities on cashflow. And this is exactly why they're accidentally becoming regulators, they transcend the US weirdly fragmented banking system.
https://www.borgenmagazine.com/textile-industry/
You can't solve that problem, but I believe you could mitigate it by making prostitution legal. Funny thing is that prostitution is legal at the federal level, it's just that all the states except Nevada have laws against it. So it's kind of the opposite of cannabis, and if the credit card companies wanted to be consistent in following federal law they would allow it.
In a very real sense, government required compliance effectively forces banks into a gatekeeper position. And while some BSA enforcers do act in their interest the same any group does ( cops, politicians, IC, doctors ) by extending their reach and influence, others are wary of expanding it beyond current regime ( which is already pretty onerous ).
It does help that banks tend to get very sensitive about some things as they do rely on deposits to survive. In one of the banks I used to work for, teller BSA training included a mention to be sensitive about customers and questions along with a story of a teller, who prodded a little beyond what the customer deemed acceptable and who then proceeded to close the account with 'none of your god damn business'.
What I am saying is that things are only the way they are, because we allow it that way. Cash is still a viable, albeit annoying choice.
And banks have been complacent until now, but the cost of complacency seems to be going up.
All that said, ABA better gets it shit together. Between high compliance burden on banks combined with low to non-existent compliance on fintech startups can quickly amount to real trouble for the banking system in US.
At first I thought you were going to give an argument for removing financial gatekeeping, which I think is an inappropriate point to apply leverage towards moral ends. But -- and this is the heart of the problem everywhere -- you end up picking and choosing between vices. This maintains the processor's position as the morality enforcer, which is the entire issue: it's just one more thing that power-driven agents can strive to influence.
Well done on missing my point entirely, possibly intentionally. I'm fine with whatever happening between consenting adults. Unfortunately, there's a link between sex work and human trafficking that cannot be ignored [1]:
> Countries with legalized prostitution are associated with higher human trafficking inflows than countries where prostitution is prohibited.
and
> Criminalization of prostitution in Sweden resulted in the shrinking of the prostitution market and the decline of human trafficking inflows.
Sex trafficking impacts people who aren't consenting (including minors).
So what are the negative externalities of cannabis consumption? Long term cannabis abuse can be a problem but pales in comparison to, say, alcohol abuse. Basically, there's no world that makes sense for alcohol to be legal and cannabis not to be.
Also, cannabis legalization has arguably hurt the illegal drug trade [2].
[1]: https://orgs.law.harvard.edu/lids/2014/06/12/does-legalized-...
[2]: https://time.com/3801889/us-legalization-marijuana-trade/
From my understanding, based on that 2018 rule, the executives at CC processors are personally liable if they process money for sex work. Like "you are an accomplice to human trafficking" guilty.
Deleted Comment
I mean, drug trafficking is deeply tied to human trafficking, as well, and your post concerns cannabis legalization, which is one way to combat that problem.
When your parent or partner finds out you paid for an OnlyFans membership, you lie and tell them you lost your card. This happens incredibly often, and payments companies don't want to touch this.
Sex trade is different because of stigma and culture and prohibition. Stigma and culture have to change through education, activism, and time, but prohibition can be dealt with immediately. Create a robust framework of protections for sex work, protecting the rights of workers, and incorporate the industry into the existing legal system.
Getting rid of trafficking, pimps, and lack of recourse for workers and consumers negates far greater harms than any moral social corruption predicted by pearl clutchers.
The same applies to almost everything which society tries to cope with through prohibition. Black markets spawn second class dealers in vice, money and trade off book to the detriment of everyone except kingpins and corrupt agents of government and law enforcement. The vulnerable and desperate get locked into feedback loops of abuse and exploitation.
Legalizing all drugs and sex work almost completely eliminates the niches that perpetuate black markets. Forcing banks and legal jurisdictions to treat trade in vice equally to any other economic activity gives society the opportunity to treat drug abuse as a health issue. It enables sex workers to receive justice for abuse. It virtually eliminates the primary sources of income for cartels and kingpins. It forces culture to adapt, eventually allowing activists the opportunity to destigmatize responsible activities of adults in private.
We have laws that protect consumers and service providers, that give resource for violence and theft and fraud. It shouldn't matter what substance or sex act or hot dog brand was involved if a citizen is injured.
Adults have no business telling other adults what they can consume, or do in private. The business of government is behavior in public and in maintaining the rights of citizens in private.
We have ample and overwhelming evidence that prohibition always creates more harm than good, across thousands of years of history. It never works and always creates opportunities for abuse and horror. We also know that legalized vice results in more responsible use and less frequent consumption and fewer harms across the board.
It should be a no brainer. We should have responsible drug use education. We should have public sex work education.
Financial institutions crafting pseudo-moral gatekeeping policy from the whims of executives, pr departments, and Twitter outrage is a disgusting offense against society.
Dead Comment
Every dispensary I've visited here in the northeast accepts cash and debit cards, I assume they don't accept credit due to higher processing fees and higher risk of chargebacks rather than processors being problematic (otherwise they would not accept debit since they get ran through the same system anyway).
Some dispensaries can take debit card transactions, and they have to do so through "high risk" processors... companies like Square will not work with them because of federal law.
You can in the UK. Dispensaries here do accept credit cards.
(Yes, I also hate it, but I do concede that America is physically big.)
The dispensaries I've been to in LA will generally take credit cards now. They round it up to multiples of 5 and give you change in cash, and I think under-the-hood they're doing a cash advance or something?
This doesn't detract from your point; if anything, it reinforces it. Just an interesting factual point.
Those are debit cards; the transaction is a cashback (that's why they give change in cash).
There is not a single state where cannabis is legal, there are only states that have decided they won't enforce federal law.
The feds don't really enforce it either. Is there a state the feds have sanctioned over legalization? They even collect federal tax dollars on the businesses selling these "illegal" products. Unless a law is actually enforced, it's just words on paper.
Let us not be naive. The decades long preference for oligopolistic rather than competitive markets is what created behemoths (both new and old) and now the only question is who of them is going to be granted the keys to the digital kingdom by fiat.
Advertisers are also regulators. I've seen sites start heavily censoring themselves because someone complained to Google and they pulled the ads. Stuff like this ruins the web.
Advertising is a different beast altogether. Being able to to exchanges (money for goods, etc) is something quite a basic right(If I can call it that). That doesn't apply to making money though. I don't think it's normal in any way to force anyone to conduct business with someone they don't want to unless is a basic necessity in that particular day and age.
We don't need crazy things like crypto - we need decentralised and accountable banks and payment processors (not that the distinction between the two makes any sense either). Speaking of credit card companies: why do they exist?? Why can't my card just sign a digital request for transfer and tell the POS terminal to send it to my bank to be executed. A room of computer science students could write an open standard for that in like a month and have a working implementation within the year.
I'm not sure if you are missing contacts or providing irony. But the fact is payment processors and banking in general is extremely heavily regulated.
A few years ago when you saw almost all banks and payment companies starting to crack down on spending money to buy and sell cryptocurrency, that was to no small extent because federal regulators gave them a little side-eye about the subject. No specific regulations, to be clear, but a few pointed questions.
When every means of sending money overseas demands clear documentation of your identity, That's not so much because banks feel the need to know every detail of your business; it is strictly mandated by federal law. And while my examples all involve US banking, most governments around the world are similarly strict.
https://www.frbservices.org/financial-services/fednow
You are correct. Web advertising is long overdue for some trust-busting. But for some reason, antitrust law is rarely enforced.
I remember a LOT of software being sold online (licenses and such) was sold via money orders or sometimes wire transfers.
Generally financial institutions are happy to take anyone’s money, and lend to them too unless they don’t think they’ll get their money back.
Their regulators can change those criteria though, forcing upon them an unfunded mandate. This is no different than policing entities washing their searches through private entities (e.g. the telecoms).
I consider this a pernicious trend.
You mean my web is ruined because I don't see more those ads selling the newest crypto ponzi scheme which promises 10000% yearly returns?
Let's deal with it, if advertising was totally uncensored that would be a nightmare for average user.
When it comes to the recent events around Pornhub and Onlyfans, the payment processors erred on the side of caution, because those two customers of theirs couldn't for definite guarantee that nothing shady was going on on their websites.
There is more childporn on Facebook than Pornhub, you know why? Because pornhub requires an ID. But Facebook is untouchable because it's too big.
If they were concerned about 'shady', they would shut down Wells Fargo for fraud
How can the provider of vital infrastructure be complicit in anything? Is the engineer who designed and built a bridge complicit when a criminal crosses it?
They should be considered neutral. Just like information carriers are considered neutral. Not liable for what goes on inside their networks. Searching for and punishing anyone violating any law is up to the authorities and they must do that without violating everyone else's privacy no matter how frustrating it must be for them.
I guess they started blocking things The Economist care about.
"But calibrating that response raises questions of principle, practice and priority. Businesses will go their own way. Some, such as PayPal, Visa and MasterCard, which handled donations to WikiLeaks, and Amazon, which provided web-hosting services, have dumped it as a customer in response to American outrage. More may follow. They risk attacks from its fans, just as those that refuse face hostility from their customers in America. Too bad: business is full of hard choices."
https://www.economist.com/leaders/2010/12/09/the-right-react...
If it's legal then banks should have no choice but to handle it.
If you don't want that, and you want the banks not to refuse any legal transactions, that's easy. They then don't refuse to process any transactions at all.
If you do want them to refuse illegal transactions, and they're allowed to refuse legal transactions, that makes it easy for the bank because then they just refuse anything marginal even if it's totally legitimate. This is what we have now. It's not a problem for the bank but it's a big problem for the people getting unjustly locked out.
Expecting the bank to process no illegal transactions and all legal transactions is an impossible burden, because nobody actually knows what that means. The meaning of a lot of laws isn't even settled until they get litigated in court and set a precedent. It would require the bank to be infallible, and know everything about everybody's business, because a mistake in either direction would incur penalties.
So which one do you want? (The first one actually looks pretty good when you consider the alternatives. Let the police be the police and the bank be the bank.)
So bank should be held liable if they:
- do not collect evidence
- do not act on evidence
- if they act without evidence
The bank should face appropriate penalties for making misjudgments in both directions. For example, you should have a right to sue bank for refusing to provide a service. The court could judge whether bank had sufficient grounds to refuse to conduct the business with you.
The bank should also provide the evidence to law enforcement to trigger investigation into alleged illegal misconduct. If the judicial systems clears you, then again, you should be able to compel bank to provide the basic financial services.
There is regulation like that for individuals in EU. Banks are obliged by the law to provide basic financial services (bank account and identification services if I recall correctly) to EU residents as part of the European Single Market.
You can imagine a similar model for payments. The bank can’t just indefinitely say “umm not sure”, it has to go one way or the other.
Deleted Comment
It seems reasonable to just make the fines small, and the bank can try to minimize them by having their policies match what a court will find for those which are taken to court.
For example, can you buy alcohol in Delaware? Well, not if it's Sunday. How about a weekday? Not if it's between 1am and 9am.
Can you buy alcohol in New Jersey on Sunday? Sure, well not if you're in Bergen County.
That's one product. How do you propose these companies codify the entire world's regulations? It would require thousands of people to maintain the rule engine.
Next, TESLA eula will forbid you from going to questionable establishments, and the car will shut off if you arwle going to a strip club.
USSR couldn't dream of this level of surveillance, turns out the trick was to privatise it.
Right. But banks are regulated by the US Federal government. And according to US federal law[0], possessing and selling cannabis is just as illegal as possessing and selling methamphetamine or heroin.
As such, unless and until that changes, the banks aren't going to involve themselves in what the US Federal government deems a felony, regardless of what the several states do.
[0] https://en.wikipedia.org/wiki/Controlled_Substances_Act
https://en.wikipedia.org/wiki/Operation_Choke_Point
All transactions have some likelihood of fraud, so it's a fuzzy line.
Basically a pubic service PSP with loss financed by govs. I'm not holding my breath, and I can't see a single action I could take that would bring us even a millimeter closer to this goal. It's depressing.
Basically a pubic service PSP with loss financed by govs. I'm not holding my breath, and I can't imagine what could realistically be done at our level to be even an inch closer to that ideal. It's depressing.
I want the same thing from web service providers - if the content is legal then Amazon, etc. should not be permitted to refuse service.
Twitter should not be permitted to have its own terms and conditions, rather they should follow the law - it's either illegal, and ban the person, or it's legal and they must leave it up.
Maybe put a limit like: If your number of registered users is at least 5% of the US adult population, then a new set of rules kicks in.
There are some details I don't have answers for: What if someone posts things that are legal, but offtopic for the location? I don't want to prevent moderators from removing that kind of thing, but I also don't want them using it as a false reason.
I'm sure there are other edge cases I have not thought of.
Law enforcement should deal with the endpoints, so dealers, brothels, and your moms shitty meatloaf.
https://www.frbservices.org/financial-services/fednow
I'm not saying that the regulatory framework should allow payments to known terrorists or terrorist groups, more pointing out that electronic transfers are never going to be structured like a utility without significant restructuring of banking laws.
This could happen, but it would also mean overhauling some of the finance laws that hold credit card companies accountable.
In addition to the government currently blocking transactions from semi-legal industries that should be legal (cannabis), the government has a history of censoring mail mentioning contraceptives (Comstock Laws) and pressuring banks to cut businesses with legal, undesirable industries (Operation Chokepoint). A few weeks ago, an IRS agent at a service center refused to help me because they didn’t like my clothes. (I was wearing a tank top.) This is inevitable when you create government-backed monopolies.
Sure, some things should be legal but aren't. It hardly seems surprising that while they are illegal the federal government tries to prevent them.
The Comstock Laws applied to all carriers (private or public) and therefore would apply to FedEx or UPS as well. They also were ruled unconstitutional over a hundred years ago.
Meanwhile, Operation Chokepoint was something that lasted less than a year before the same administration said it was an overreach and reversed it. It was an error, and between that and congressional oversight got fixed. It sucks, but it should be pointed out that, again, it was government pressure on private entities. Nothing that wouldn't be at least as good under government control.
Meanwhile, if an IRS agent refuses to help you because you're wearing a tank top, that seems like something you should escalate. But I will point out many private enterprises (airlines, etc.) have refused to serve people wearing tank tops. To the point of refusing to honor their ticket and screwing up their whole vacation with no recourse. But the only official IRS dress code deals with profane/offensive writings. Tank tops are allowed, even for IRS agents.
What does this refer to?
I would love to hear more from people who already use it. How well does it work?
As far as I know, El Salvador is currently trying to shift their whole economy to Bitcoin. Handling day to day payments via Lightning. Is anybody from HN there? How practical is it for non tech people to use it for their daily payments?
Any custodial ones I have tested have worked well, though.
Any benefits over paying with credit cards / cash / direct deposits?
Basically a litmus test will be when a gigantic brothel in Europe or a European country’s Caribbean district does a very public but permissionless capital raise, gets filled by retail, and pays dividends while shares being actively traded permissionlessly.
Thats when you’ll know the floodgates are open. Just given how much unwanted attention and publicity that will generate.
To me, its surprising it hasnt happened yet but I think now it is just a matter of time. Many services will take a second look when ownership by address is still concealed. Most crypto platforms do not offer that yet for shares/assets issued on their platform (ie. Monero has no ability to have fungible assets traded on it). Lightning Network has a theoretical but limited ability to do this. Bitcoin will have a greater ability to do this after its current inprogress upgrade goes live (taproot, schnorr) but not a complete solution out of the box even then.
To me, the important litmus test is when bitcoin gets definitively linked to a specific terrorist incident. Now, terrorism in the West is mostly out of fashion, except US rightwing extremists, because it's hard to have a death toll that anyone would notice over COVID, but that's not to say it won't happen in the future.