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It would be ideal to see extra data attached to the transaction, to include VAT information to enable it to be extracted during the course of a transaction, at least in some situations.

The commencement of the VAT on digital goods change from January, 2015 (to be based on the residency of the buyer, not the base of the merchant) gives an initial target for real time VAT collection.

Merchants are expected to be able to perform relatively complex data analysis, including in some cases, having to manage the FX risk on three currencies in a single transaction, so it makes a lot of sense to assist them by having a central core reporting format.

Of course, nobody really likes paying taxes, but perhaps the better view is to think how to reduce the $200 billion per annum loss in the EU to VAT to a reasonable level. Adding data to the transaction is a very good way to start.     

It will be interesting to see which aspects of banking Facebook may wish to compete in. It may be solely for card acquiring and other ecommerce payments, reducing clearing costs, but it could be much wider.

The sector which could make the greatest change would be in the granting of credit, essentially taking on the Visa/ MasterCard issuing banks. The consumer knowledge base is something that can optimize value for Facebook, by linking credit facilities with ad revenues in a way which enables a far lower cost base to occur.

The big question, in my mind, is whether they can do it soon enough to get an advantage before Google et al go the same route. In any case, I agree with the author; banks (and card associations) are likely to have some lively competition very soon! 

This is excellent news for the underbanked in USA. It would be even better if Walmart could adjust the price break so that it is $200 before the upward rate is applied, so that the G20 ceiling of 5% is not breached.

Hopefully this is also a way for international transfers, such as our RTpay gift program, to be funded at Walmart stores at a competitive price, so our zero cost policy can be applied.

In any event, it is good to see that attention is being paid to the most needy by a major organization.  

Pehaps a little extreme - but a great idea! I would suggest that there is a genuine reason to follow much of this argument and withdraw all notes over $10, or maybe over $5. The ability of criminals to conduct many transactions in cash with what would become quite large sacks of notes would be interesting. That includes the tax evaders (plumbers, gardeners, cleaners) who want to get paid in cash! 

It would also be interesting to see how much of the currently issued larger bills came in to be converted to electronic money, or go into bank accounts - or, I suppose, changed into $5 bills.

Of course, while the EU has a 500 euro note (so $700 in value) we may just see that take over even more for the criminals.

Going to happen? Not a hope; way to simple. But what if it did? Lower taxes for honest people??

Bo, I am sure you are correct in pushing for e-invoicing to be promoted better - and faster - by governments and companies. Where it runs into resistance is from those international companies that continue to take advantage of the inefficient way VAT is collected within the EU. If we could get greater concentration on moving to real time, automated settlement within the transaction flow - with high costs for those not moving to this format - then e-invoicing would get a shot in the arm.

My other comment is that we should aim to see e-invoicing as a part of the solution to the BEPS targets of the G20/ OECD for later this year. The clearer we can track the flow, the sooner we can eradicate the tax evasion. To this end, working with LDC governments is very important - and can get better responses than just in the EU.

Nobody suggests cash should disappear completely, not least so those who mistrust any electronic system can have an option. However, it would be nice to see it made more difficult and more limited, so that progress in reducing crime (tax evasion, as well as others) and lowering administrative costs can take place. Perhaps a maximum-valued note of $5 would make it harder to launder large amounts? And a 10% added tax on any ATM conversion to cash?

For all the fine words about tax evasion, little action is taken; let's make carrying large amounts of cash a bit harder, please!

The question then becomes whether domestic transactions should be made non-competitive by having far higher interchange rates than intra-EU? Is that going to be addressed by Visa and MC?

The current proposed solution will adversely affect processors in large countries, such as the UK and Germany, while Cyprus, Malta etc. will have what may be seen as an unfair advantage.

This is a weak initial play in what is going to be the marketing story of the next ten years. All the big players now understand that payment processing is a great marketing function, linked with incentives for repeats. Separating payments into store-specific balances is not the way - but i am sure Facebook, Google, Twitter etc. will change that soon. The question is whether Visa and MasterCard join the ad-based pricing, or stay tied to the banks - who can only see processing as a direct income generator. Either way, that is in its last days as a business model.

Clearly there is enormous scope for mobile remittances, but with the opportunity comes risk. My belief is that central banks can best ensure this market is developed securely by having all such payments made through a central clearing structure, where real time fraud analysis takes place. This is also a good point to control the FX rate margin and all fees, to avoid rip-offs.

The time is right to centralize payments at the governmental (central bank) level so that much of this problem can be resolved - as well as offering enormous additional benefits. A central clearing where real time fraud analysis takes place (and blocks 'bad' transactions before they settle) is possible now we have the bandwidth and processing power to manage this.

From this fundamental change, we can see how to incorporate mobile phone-based payments as well as cards and transfers.

And, a massive added value for governments, would be in collecting sales tax or VAT in the course of the payments, so reducing the debt levels by cutting tax evasion, not raising rates.

It is time for governments to take the lead - with new technology it can be the best way to widen competition of financial services and lower administrative costs for merchants and consumers alike.