4 ms·

That's exactly what they are doing except the part with "absorbing debt". Banks and credit card companies don't suffer any losses because it's the merchants who

That's exactly what they are doing except the part with "absorbing debt". Banks and credit card companies don't suffer any losses because it's the merchants who absorb them. And that's the root of the problem. Majority of CC fraud is easy to eradicate but banks just have no incentive to do it.

maxxxxx 8y ago
Sounds a little like the economics of employer based health insurance. The parties with negotiating power (companies and health insurance) don't have much incentive to get a good deal for the patient because the patient is captive. Same for merchants and credit card companies.
- namibj 8y ago
  It could/should tho be changed so that health insurance up to x% of income is tax-deductible, but only if freely chosen on a free market by the employee, with any other constellations being taxed as regular income, without the tax-deductibility. There can still be plans only offered to employees of a specific company, but the issue of preventing an employee from shopping insurance himself is gone.
namibj 8y ago
There are alternatives e.g. girocard/giropay in Germany where the bank of the buyer takes the risk (only if a PIN was used, iirc.). The former is POS, the latter online. Accepting the latter does still cost 3%, and like 20ct or so per transaction. The risk is just not there for the merchant, so this might make sense. Therefore it is in the interest of the buyer's bank to make him adopt tighter security, e.g. with 2FA, in the form of sms or a rubber keyboard/lcd/photodiode based device that enables HID and limited automatic reading of a 5-bar blinking code on the screen to the chip in the bank card, which provides an 8-digit code bound to this specific transaction that has to be entered below the blinking bars. The main benefit there is that banks are iirc. legislated to provide this to everyone, and because merchants have no risk this way they don't ever have to filter potential customers based on perceived creditworthiness and similar factors.
MaxBarraclough 8y ago
> it's the merchants who absorb them In the case of eBay seller fraud, eBay absorbs the loss. Report the fraud to them and you'll get your money back. They don't even bother suggesting that you report it to the police. Insurance companies might insist on you telling them a crime-report number (I imagine this is quite effective in reducing fraudulent claims of fraud), but eBay don't.

maxxxxx 8y ago

Sounds a little like the economics of employer based health insurance. The parties with negotiating power (companies and health insurance) don't have much incentive to get a good deal for the patient because the patient is captive. Same for merchants and credit card companies.

namibj 8y ago
It could/should tho be changed so that health insurance up to x% of income is tax-deductible, but only if freely chosen on a free market by the employee, with any other constellations being taxed as regular income, without the tax-deductibility. There can still be plans only offered to employees of a specific company, but the issue of preventing an employee from shopping insurance himself is gone.

namibj 8y ago

There are alternatives e.g. girocard/giropay in Germany where the bank of the buyer takes the risk (only if a PIN was used, iirc.). The former is POS, the latter online. Accepting the latter does still cost 3%, and like 20ct or so per transaction. The risk is just not there for the merchant, so this might make sense. Therefore it is in the interest of the buyer's bank to make him adopt tighter security, e.g. with 2FA, in the form of sms or a rubber keyboard/lcd/photodiode based device that enables HID and limited automatic reading of a 5-bar blinking code on the screen to the chip in the bank card, which provides an 8-digit code bound to this specific transaction that has to be entered below the blinking bars. The main benefit there is that banks are iirc. legislated to provide this to everyone, and because merchants have no risk this way they don't ever have to filter potential customers based on perceived creditworthiness and similar factors.

MaxBarraclough 8y ago

> it's the merchants who absorb them In the case of eBay seller fraud, eBay absorbs the loss. Report the fraud to them and you'll get your money back. They don't even bother suggesting that you report it to the police. Insurance companies might insist on you telling them a crime-report number (I imagine this is quite effective in reducing fraudulent claims of fraud), but eBay don't.