Patrick Collison: commitment

Transcript context

…Is Visa an example of this? One might even say, that one of the downsides of being able to use implementation for many decades in the future is, even if it's self-sustainable and you have this ecosystem in equilibrium set around it, if you can't modify it because of people's local incentives, you get stuck in this equilibrium that's worse than it could be otherwise. I see. The card networks generally, Visa and MasterCard, are pretty good at equilibrium. It's easy to judge today with the world as it exists in 2024, but you have to look at the world as it was when they started out and the particular problems that they were solving. When you compare the financial landscape in the US or in the Western world to those in other places, it's certainly not clear to me that the US has gotten a bad hand, so to speak, or is somehow stuck in any meaningful way. The card networks do a couple of things. Originally, they were designed to replace store credit. It was a credit card originally, not a debit card, right? That was important. The availability of structured consumer credit is a pretty big deal and is beneficial, especially for lower income people. Then, with the advent of jet travel, mass market tourism and so forth, they helped to supplant travelers checks and various worse alternatives, like carrying cash around in your bag. Then, with the internet, they were substantially involved in enabling online transactions. The fact that they got the architecture so right, that so many different use cases were able to be addressed by their core design is really impressive. The guy who designed all this,Dee Hock, was a remarkable person. People complain about interchange. Lest I sound like a defender of the card ecosystem. You could look at it multiple ways, but many people would consider Stripe to be on the wrong side of the interchange cost equation, in the sense that we're giving away the interchange revenue to other companies. So I don't think I'm structurally biased in favor of interchange, and yet, I will say it's pretty interesting what interchange made possible. It is a distribution incentive fee, where you're paying other entities for recruiting customers, convincing them to get a card, getting them to maintain the card and to pay it off at the end of the month etc. So you're paying for that, just the pure distribution. There's a person at the end of the flight telling you: "Hey, sign up for the United Credit Card!" That's what interchange is paying for. That guy annoys me.…

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