Re: SSL challenge -- broken !

From pierre@shell.portal.com Thu Aug 17 18:29:41 1995

	Unfortunately, in this case, insecure credit cards are not an
	obstacle to banks making money, so why should they care?

At the risk of sounding like Perry, if you think that the major card
issuers "don't care" about cutting (or eliminating) fraud, you're not
talking to the right people.  Fraud eats away a big chunk of revenue
and can quite significantly affect competitiveness in a market with
thin margins.

/jordan

jordan@Heuristicrat.COM (Jordan Hayes) writes:
> talking to the right people.  Fraud eats away a big chunk of revenue
> and can quite significantly affect competitiveness in a market with
> thin margins.

The credit card market has thin margins?  That's news to me.

Lyle Seaman writes:
> jordan@Heuristicrat.COM (Jordan Hayes) writes:
> > talking to the right people.  Fraud eats away a big chunk of revenue
> > and can quite significantly affect competitiveness in a market with
> > thin margins.
> 
> The credit card market has thin margins?  That's news to me.

Its true. The issuers often end up making most of their money for a
transaction on the fee and not on the two points off the top -- that
money ends up getting divvied up and lots of it disappears into fraud
costs and other similar places. The other big place they make their
money is on the interest they charge people who don't pay off their
balance every month, but for someone like me who does, they are
indeed earning a fairly small margin.

Perry

On Fri, 18 Aug 1995, Perry E. Metzger wrote:
> > The credit card market has thin margins?  That's news to me.
> 
> Its true. The issuers often end up making most of their money for a

actually the NYT reported this week that banks make super-profits on 
credit cards.  economists are not sure why the margins are about 3 times 
that of other lines of biz.

A. Michael Froomkin        | +1 (305) 284-4285; +1 (305) 284-6506 (fax)
Associate Professor of Law | mfroomki@umiami.ir.miami.edu
U. Miami School of Law     | 
P.O. Box 248087            | It's hot here.  And humid.
Coral Gables, FL 33124 USA |
See http://www-swiss.ai.mit.edu/6095/articles/froomkin-metaphor/text.html
and http://www.law.cornell.edu/jol/froomkin.htm

Michael Froomkin writes:
> On Fri, 18 Aug 1995, Perry E. Metzger wrote:
> > > The credit card market has thin margins?  That's news to me.
> > 
> > Its true. The issuers often end up making most of their money for a
> 
> actually the NYT reported this week that banks make super-profits on 
> credit cards.  economists are not sure why the margins are about 3 times 
> that of other lines of biz.

The overall business is very profitable. The margins on transactions
are very thin.

Perry

On Fri, 18 Aug 1995, Michael Froomkin wrote:

> On Fri, 18 Aug 1995, Perry E. Metzger wrote:
> > > The credit card market has thin margins?  That's news to me.
> > 
> > Its true. The issuers often end up making most of their money for a
> 
> actually the NYT reported this week that banks make super-profits on 
> credit cards.  economists are not sure why the margins are about 3 times 
> that of other lines of biz.

Thats the business of banking. In any case most business run tight net 
margins. Over half of the gross margin in Retail Electronics dissapears, 
and in some markets like Los Angeles, its as low as 6 or 7 percent.

The Credit card companys dont have a whole lot to worry about other then 
public image, and only a few like American Express worrys about this 
alot. A large portion of phone calls paid for by credit cards are 
declined for payment. Its the establishment that didnt check the person 
using the card that looses out. Mail order business take the loss when a 
computer is carded, beacuse they dont have a signature on hand to back up 
the charge. The credit card company dosent take the hit at all. American 
Express is the toughest of all the companys that I have delt with. While 
I can steal a card in the mail, sign it, and use it, at which case the 
person who the card was intended for can be held liable for the bill, 
AmEx requires that teh person who's name is on the card sign for the 
charge. Basicaly what it comes down to is, card companys and banks dont 
take the hit unless they want to for public image and customer service. 
What do they care if their card is being used by someone who shouldnt 
have it. They can decline payment at will without a signature. 

I in some ways hope using credit cards on the net takes off, is abused, 
and people go back to using cash, and checks, and buying things in 
person. 


						Groove on Dude
						Michael Conlen
						meconlen@intnet.net