I am an artist in OtherCountry. You want to buy art from me. How do you do it?
Physical money? Okay. You now need a way to track that YOU sent 40 bucks in the mail and that I received 40 bucks in the mail and that is (at least) two different national postal services involved. And now I need a way to convert 40 YourLandia dollars into OtherCountry pounds. AND we need to make sure all of that happened quickly enough that exchange rates didn’t meaningfully change
Digital money? Who is running the site? How many different sites do I need to have accounts on to accept payment from all the countries I want to sell to?
At the end of the day: For any transaction that is not face to face transfer of hard currency (and even then but…), you need an intermediary that both parties trust. Payment processors are that intermediary. Sometimes they are the person taking my IOU and turning it into money so that you can give me a hamburger. Sometimes that is effectively a courier making sure your money gets to me no matter where on the planet we are.
It is what lets us have transactions that aren’t “Okay, you drop your armor and I’ll drop my money and then we’ll slowly change places and… who the fuck just ran out of the bushes to steal the money I put down while waiting for you to put down your armor? And why are you now both doing the Carlton?”
You seem to know a lot of this, in order for your point to click for me, could you explain why some extra payment processor is needed? Would a simple bank transfer not work? If you give me your IBAN, we could let our banks take care of it, right?
You DO realize your banks are the payment processors in that case, right? And they are also working through an intermediary to facilitate said transfer (which has almost all the same problems as above). The money still has to get from Bank A to Bank B which gets even harder if they are in different countries.
And just to preempt “then why not just do everything with bank transfers?”
Credit card companies provide a LOT more fraud protection.
We basically do. You transfer money from your bank to your card (either as debit or credit). Your card then uses Visa/Mastercard to transfer money across whatever barriers to the destination card which then is transferred to the destination account
I’m going to be really dumb
Why does a payment processor need to exist?
I am an artist in OtherCountry. You want to buy art from me. How do you do it?
Physical money? Okay. You now need a way to track that YOU sent 40 bucks in the mail and that I received 40 bucks in the mail and that is (at least) two different national postal services involved. And now I need a way to convert 40 YourLandia dollars into OtherCountry pounds. AND we need to make sure all of that happened quickly enough that exchange rates didn’t meaningfully change
Digital money? Who is running the site? How many different sites do I need to have accounts on to accept payment from all the countries I want to sell to?
At the end of the day: For any transaction that is not face to face transfer of hard currency (and even then but…), you need an intermediary that both parties trust. Payment processors are that intermediary. Sometimes they are the person taking my IOU and turning it into money so that you can give me a hamburger. Sometimes that is effectively a courier making sure your money gets to me no matter where on the planet we are.
It is what lets us have transactions that aren’t “Okay, you drop your armor and I’ll drop my money and then we’ll slowly change places and… who the fuck just ran out of the bushes to steal the money I put down while waiting for you to put down your armor? And why are you now both doing the Carlton?”
You seem to know a lot of this, in order for your point to click for me, could you explain why some extra payment processor is needed? Would a simple bank transfer not work? If you give me your IBAN, we could let our banks take care of it, right?
You DO realize your banks are the payment processors in that case, right? And they are also working through an intermediary to facilitate said transfer (which has almost all the same problems as above). The money still has to get from Bank A to Bank B which gets even harder if they are in different countries.
And just to preempt “then why not just do everything with bank transfers?”
Hmmm. Something still isn’t clicking in my head.