The Business of Check Cashing

For the largest banks, interchange was the primary way they monetized consumers who lived paycheck to paycheck. If you live paycheck to paycheck, you have high volatility in your income and expenses and you generally don’t keep a balance in your bank account, so the bank relies on interchange fees to profitably service you.

At the heart of the story of how the internet broke the media business model is the simple fact that the internet was not built to facilitate the flow of money. Payments weren’t built into the internet’s infrastructure—it was considered too risky. Marc Andreessen called this “the original sin of the internet.”

The lack of granularity and legibility means that all those little fractions of a cent, over billions of people, accrue to the center. And the center invests, turning those cents into dollars. That’s great, that’s the trade we’ve had no choice but to accept, and it’s exactly what companies are supposed to do.