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>Then why does it only happen using bitcoin? Because some people insist on waiting for the payment to settle before actually providing the services, although i

by ryanl0l 10y ago

>Then why does it only happen using bitcoin? Because some people insist on waiting for the payment to settle before actually providing the services, although it's not nearly as common as it used to be. This is just completely unrealistic with credit cards where settlement times are far longer than with bitcoin, days or months. >Wherever you want to lay the blame (anywhere but bitcoin) it's a problem for anyone using bitcoin, making it more useless than (not "immensely superior" to, as claimed) using a credit card or Paypal, which makes it a problem for bitcoin. I don't know, I use bitcoins to pay for things regularly and pretty much everyone accepts zero-confirmation transactions nowadays (which is pretty much the same as accepting credit card payments, except the settlement will most likely take less than an hour).

ChemicalWarfare 10y ago
Credit card payment is a '2 phase' process. The second phase you are referring to as settlement - moving funds from the issuing bank to merchant's bank does take days. The first phase of the process - authorization, when successful not only makes sure the customer has enough credit on their account, it also reduces their buying power by the grand total of the auth thus guaranteeing the funds to the merchant. And it takes 2-4 seconds.
- ryanlol 10y ago
  Bitcoin works exactly the same, except settlement times are significantly shorter. You authorize (sign) a transaction, broadcast it and the network confirms it. Signing a transaction takes only a fractions of a second, and to the merchant it's a significantly stronger guarantee of settlement than a credit card authorization.
  - ChemicalWarfare 10y ago
    Credit Card authorization guarantees the funds to the merchant. Signing a bitcoin transaction and broadcasting it to the blockchain does not. Successful confirmation of the tx on the blockchain does, and to be on the safe side the rule of thumb is to wait for 6 confs on the bitcoin blockchain before considering the funds to be guaranteed. Tx confirmation times are a known problem with BTC in terms of the payment acceptance flow, this is one of the hurdles preventing wider merchant adoption of BTC acceptance.
    - Natanael_L 10y ago
      Credit card chargeback fraud isn't that rare, and the merchants usually take the hit.
      - ChemicalWarfare 10y ago
        Yup, and that is one of the selling points of bitcoin from the merchant's perspective. I was specifically talking about funding confirmation times, to claim that CC processing is slower than bitcoin because it takes longer to settle is misleading.
    - ryanlol 10y ago
      >Credit Card authorization guarantees the funds to the merchant. It absolutely does not. Even if the customer isn't actively trying to screw you it's still possible for the hold to expire before settlement. >Signing a bitcoin transaction and broadcasting it to the blockchain does not. With a reasonable fee it's a far stronger guarantee of settlement than a cc authorization as it's way harder for the customer to reliably cheat you. >Successful confirmation of the tx on the blockchain does, and to be on the safe side the rule of thumb is to wait for 6 confs on the bitcoin blockchain before considering the funds to be guaranteed. 6 confirmations makes sense if you're selling a house, surely you wouldn't just rely on a cc auth if you were doing that.
      - ChemicalWarfare 10y ago
        Successful auth is the issuing bank telling the merchant - 'yes, the customer has the funds and the money is yours for the taking via the capture request against this auth.' Which is a GUARANTEE. Yes, as a means of customer protection it expires if the merchant did not request the capture within a certain timeframe which is at least 2 weeks, 4 weeks in most cases. For digital goods (and POS) this is a non-issue since the capture request is combined with the auth request. For physical goods - well if I'm a customer and the merchant hasn't shipped in 2+ weeks it's fair to me to get the hold removed from the funds my bank GUARANTEED to the merchant. 6 conf is a rule of thumb bitpay (and other bitcoin payment processors that I'm aware of) are following before GUARANTEEING the funds to the merchant. sure, if this is a P2P transaction and I was personally selling you $10 worth of merchandise I'd be ok with 1 conf, when talking 'industrial' scale payment acceptance things work just a little bit different. So now in this particular case - steam can revoke the license if the payment eventually fails which is precisely why I think this sort of market is perfect for BTC (I commented on this in this thread). And finally since you're claiming high tx fees are 'a far stronger guarantee of settlement than a cc authorization as it's way harder for the customer to reliably cheat you' - how would you cheat the merchant after the auth (let alone auth/capture) went through?

by ryanl0l 10y ago

ChemicalWarfare 10y ago

Credit card payment is a '2 phase' process. The second phase you are referring to as settlement - moving funds from the issuing bank to merchant's bank does take days. The first phase of the process - authorization, when successful not only makes sure the customer has enough credit on their account, it also reduces their buying power by the grand total of the auth thus guaranteeing the funds to the merchant. And it takes 2-4 seconds.

ryanlol 10y ago
Bitcoin works exactly the same, except settlement times are significantly shorter. You authorize (sign) a transaction, broadcast it and the network confirms it. Signing a transaction takes only a fractions of a second, and to the merchant it's a significantly stronger guarantee of settlement than a credit card authorization.
- ChemicalWarfare 10y ago
  Credit Card authorization guarantees the funds to the merchant. Signing a bitcoin transaction and broadcasting it to the blockchain does not. Successful confirmation of the tx on the blockchain does, and to be on the safe side the rule of thumb is to wait for 6 confs on the bitcoin blockchain before considering the funds to be guaranteed. Tx confirmation times are a known problem with BTC in terms of the payment acceptance flow, this is one of the hurdles preventing wider merchant adoption of BTC acceptance.
  - Natanael_L 10y ago
    Credit card chargeback fraud isn't that rare, and the merchants usually take the hit.
    - ChemicalWarfare 10y ago
      Yup, and that is one of the selling points of bitcoin from the merchant's perspective. I was specifically talking about funding confirmation times, to claim that CC processing is slower than bitcoin because it takes longer to settle is misleading.
  - ryanlol 10y ago
    >Credit Card authorization guarantees the funds to the merchant. It absolutely does not. Even if the customer isn't actively trying to screw you it's still possible for the hold to expire before settlement. >Signing a bitcoin transaction and broadcasting it to the blockchain does not. With a reasonable fee it's a far stronger guarantee of settlement than a cc authorization as it's way harder for the customer to reliably cheat you. >Successful confirmation of the tx on the blockchain does, and to be on the safe side the rule of thumb is to wait for 6 confs on the bitcoin blockchain before considering the funds to be guaranteed. 6 confirmations makes sense if you're selling a house, surely you wouldn't just rely on a cc auth if you were doing that.
    - ChemicalWarfare 10y ago
      Successful auth is the issuing bank telling the merchant - 'yes, the customer has the funds and the money is yours for the taking via the capture request against this auth.' Which is a GUARANTEE. Yes, as a means of customer protection it expires if the merchant did not request the capture within a certain timeframe which is at least 2 weeks, 4 weeks in most cases. For digital goods (and POS) this is a non-issue since the capture request is combined with the auth request. For physical goods - well if I'm a customer and the merchant hasn't shipped in 2+ weeks it's fair to me to get the hold removed from the funds my bank GUARANTEED to the merchant. 6 conf is a rule of thumb bitpay (and other bitcoin payment processors that I'm aware of) are following before GUARANTEEING the funds to the merchant. sure, if this is a P2P transaction and I was personally selling you $10 worth of merchandise I'd be ok with 1 conf, when talking 'industrial' scale payment acceptance things work just a little bit different. So now in this particular case - steam can revoke the license if the payment eventually fails which is precisely why I think this sort of market is perfect for BTC (I commented on this in this thread). And finally since you're claiming high tx fees are 'a far stronger guarantee of settlement than a cc authorization as it's way harder for the customer to reliably cheat you' - how would you cheat the merchant after the auth (let alone auth/capture) went through?