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Online payment fees come from fraud, chargebacks, and credit card points/benefits. I don’t see how crypto solves the fraud problem. Sure there will be lower fe

Online payment fees come from fraud, chargebacks, and credit card points/benefits. I don’t see how crypto solves the fraud problem. Sure there will be lower fees, but higher risk of fraud.

crazydoggers 7y ago
It puts fraud mitigation in the hands of the parties involved. Often times this can be done via escrow. There are an enormous number of use cases where escrow works, or even where fraud is of no concern (transfers between trusted parties). For cases where fraud is a concern, third parties can step in and charge appropriate fees. Crypto provides a lot more flexibility in your choice of payment process than credit cards.
- thoraway1010 7y ago
  I've heard some horror stories about escrow. Bad wiring instructions in/out (intercepted emails), bogus escrow companies. Glad to hear these crypto folks have figured it out.
  - worik 7y ago
    Optimist
    - not_really 7y ago
      What does this comment make you?
- jkhdigital 7y ago
  Exactly, payment security is now entirely in the hands of the merchant. Whether this is preferable to existing payment systems is unknown at this point, but it's hard to make a compelling argument either way. Furthermore, credit cards aren't just payment methods--they represent credit extended to consumers by banks. This actually influences the money supply, since (1) consumers can potentially carry unsecured debt balances, and (2) consumers have less need to park money in savings since credit cards provide access to liquidity. In other words, there are a lot more factors in play here than just the transaction fees and fraud mitigation mechanisms.
vngzs 7y ago
Cryptocurrencies transfer the risk of fraud from a company to the user. Good luck getting your funds back if someone scams you. I agree that it's not clearly better than what we have.
- xur17 7y ago
  But there are definitely use cases where I would love to have the option to reduce fees and take on fraud risk myself. In my mind, the simplest way to define it is "cash for the internet".
  - hocuspocus 7y ago
    In many countries wire transfers cost nothing to the customer and maybe 1-2 cents to the business account holder. No need for blockchain if you just want cheap payments without protections.
    - xur17 7y ago
      In the US they cost anywhere from $15 - $30.
  - chrischen 7y ago
    How do you think those online scammers that rob grandpa and grandma get their money? They don't use crypto—in fact some use gift cards!
- qqii 7y ago
  This is not always strictly true, with projects like OpenBazaar the risks can be transfered to an explicit third party with a proven record of being impartial.
  - joosters 7y ago
    Please name me some of these impartial third parties, then? Can’t be hard for you to track them down if they really do exist, after all they should be on some immutable blockchain somewhere...
perl4ever 7y ago
"Online payment fees come from...credit card points/benefits." I think this is part of the picture but not explicit enough. You could ask "but why should there be points and benefits when it's just a shell game?" What I've seen claimed is that the underlying incentive for such programs is that having fees and benefits is a way of avoiding directly charging for credit with interest that is subject to truth-in-lending regulation. I would be careful about claiming crypto can be cheaper when some part of the fees on credit cards is just interest by another name and not really transaction fees.

Online payment fees come from fraud, chargebacks, and credit card points/benefits. I don’t see how crypto solves the fraud problem. Sure there will be lower fees, but higher risk of fraud.

crazydoggers 7y ago

It puts fraud mitigation in the hands of the parties involved. Often times this can be done via escrow. There are an enormous number of use cases where escrow works, or even where fraud is of no concern (transfers between trusted parties). For cases where fraud is a concern, third parties can step in and charge appropriate fees. Crypto provides a lot more flexibility in your choice of payment process than credit cards.

thoraway1010 7y ago
I've heard some horror stories about escrow. Bad wiring instructions in/out (intercepted emails), bogus escrow companies. Glad to hear these crypto folks have figured it out.
- worik 7y ago
  Optimist
  - not_really 7y ago
    What does this comment make you?
jkhdigital 7y ago
Exactly, payment security is now entirely in the hands of the merchant. Whether this is preferable to existing payment systems is unknown at this point, but it's hard to make a compelling argument either way. Furthermore, credit cards aren't just payment methods--they represent credit extended to consumers by banks. This actually influences the money supply, since (1) consumers can potentially carry unsecured debt balances, and (2) consumers have less need to park money in savings since credit cards provide access to liquidity. In other words, there are a lot more factors in play here than just the transaction fees and fraud mitigation mechanisms.

vngzs 7y ago

Cryptocurrencies transfer the risk of fraud from a company to the user. Good luck getting your funds back if someone scams you. I agree that it's not clearly better than what we have.

xur17 7y ago
But there are definitely use cases where I would love to have the option to reduce fees and take on fraud risk myself. In my mind, the simplest way to define it is "cash for the internet".
- hocuspocus 7y ago
  In many countries wire transfers cost nothing to the customer and maybe 1-2 cents to the business account holder. No need for blockchain if you just want cheap payments without protections.
  - xur17 7y ago
    In the US they cost anywhere from $15 - $30.
- chrischen 7y ago
  How do you think those online scammers that rob grandpa and grandma get their money? They don't use crypto—in fact some use gift cards!
qqii 7y ago
This is not always strictly true, with projects like OpenBazaar the risks can be transfered to an explicit third party with a proven record of being impartial.
- joosters 7y ago
  Please name me some of these impartial third parties, then? Can’t be hard for you to track them down if they really do exist, after all they should be on some immutable blockchain somewhere...

perl4ever 7y ago

"Online payment fees come from...credit card points/benefits." I think this is part of the picture but not explicit enough. You could ask "but why should there be points and benefits when it's just a shell game?" What I've seen claimed is that the underlying incentive for such programs is that having fees and benefits is a way of avoiding directly charging for credit with interest that is subject to truth-in-lending regulation. I would be careful about claiming crypto can be cheaper when some part of the fees on credit cards is just interest by another name and not really transaction fees.