Credit and debit cards are issued by banks and banks are exempt from money transmission laws.
This is why you see most startups gravitating toward niche markets that revolve around the existing infrastructure, but those niches are becoming awfully narrow.
In contrast, I contend that the system itself is flawed and needs to be replaced.
Ah, thank you for explaining that to me. I some how missed that from reading the link. Though, it was quite verbose and I am, admittedly, partially into a celebratory post-coding-session bottle of wine.
I agree. The system most definitely appears to be flawed.
Isn't Paypal forced to operate as a bank in Europe as opposed to the way they exist in the U.S.?
Note that banking in Europe is in part regulated by national law of the member states. To operate as a bank in Germany, you need not only 0,5-5 million € as starting capital (depending on the type of financial transactions you are getting into), but you also need two reliable* executive managers who have at least three years experience leading a bank of the intended size (or similar experience).
Thus, the barrier to entry is rather high in Europe, too. But after that, if you get big enough, the tax payers will pay all your bills, like in the US.
* no criminal record and no other facts known that would cast doubt on their trustworthiness.
Yes, Europe is full of regulations, and I don't think anyone that's read HN for long enough isn't tired of hearing about a lack of innovation in Europe vs. the US (especially SV).
Yes, Paypal is a bank in Europe. They have a bank license in Luxemburg and have devised some pretty nifty technique's for porting that around the rest of the EU.
This is why you see most startups gravitating toward niche markets that revolve around the existing infrastructure, but those niches are becoming awfully narrow.
In contrast, I contend that the system itself is flawed and needs to be replaced.