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people agreed to represent imaginary goods – goods that do not exist in the present – with a special kind of money they called ‘credit’. Credit enables us to build the present at the expense of the future. It’s founded on the assumption that our future resources are sure to be far more abundant than our present resources. A host of new and wonderful opportunities open up if we can build things in the present using future income.
Sapiens
Yuval Noah Harari
Here and there a Luddite holdout refuses to open an email account, just as thousands of years ago some human bands refused to take up farming and so escaped the luxury trap. But the Agricultural Revolution didn’t need every band in a given region to join up. It only took one. Once one band settled down and started tilling, whether in the Middle East or Central America, agriculture was irresistible. Since farming created the conditions for swift demographic growth, farmers could usually overcome foragers by sheer weight of numbers. The foragers could either run away, abandoning their hunting grounds to field and pasture, or take up the ploughshare themselves. Either way, the old life was doomed.
Sapiens
Yuval Noah Harari
Everyone benefits from each other:
Customers and Banks:
Customers want to have always-available credit
Banks want to provide credit with high fees and interest rates
Customers and Merchants:
Customers want to have a card that works everywhere
Merchants want to be able to accept payments from anyone
Merchants and Banks:
Merchants want to be able to sell on credit while still getting their money immediately
Banks want to collect a fee on every purchase in exchange for managing credit and pooling risk
Visa and Mastercard, the other major credit card network,1 sit in the middle of each of these relationships, across billions of customers, millions of merchants, and thousands of banks, collecting a network fee — on top of the interchange fee paid to banks — on every purchase (about 0.05%). The total revenue collected — $20.6 billion in 2018 — is rather small, particularly relative to Visa’s market cap of $420 billion, but that multiple is a testament to just how durable Visa’s position is in the network it created.
Visa, Plaid, Networks, and Jobs
Ben Thompson
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