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Fraud protection of credit cards is the root of modern e-commerce. In some ways, Visa and Mastercard are the privatized court systems of the internet. If I end

Fraud protection of credit cards is the root of modern e-commerce. In some ways, Visa and Mastercard are the privatized court systems of the internet. If I end up on a random, self-hosted ecommerce site and decide to make a purchase - what guarantee do I have that the item will show up or be as-described? If I bought something through a bank transfer, reversing that purchase would be incredibly difficult. And, suing a merchant is prohibitively slow, expensive, and arduous. Also, modern B2C SaaS is built on credit card subscriptions. The ability for a merchant to pull payments on a recurring basis from a credit card requires an incredible amount of trust. If consumers had to push payment every month or year to continue subscriptions (instead of having it automatically debited), then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it. So, I'm sure online merchants are happy to keep paying their ~3% fees as long as sales continue. Nobody wants to go back to "Cash on Delivery", and nobody wants to hire workers to knock on doors asking for bills to be paid.

arcticbull 4y ago
The fees are 3% only in the US and the bulk of that is returned to buyers as cash back or loyalty points, and to offset the cost of loan origination and warranties. The EU has capped debit interchange at .2% and credit at .3%, Australia in the low 1s if I recall correctly. They just don’t really have rewards.
- jen729w 4y ago
  Yeah typically around 1.5% in Australia. Which is often passed on to the consumer at the point of sale. We do have a non-Visa/MC payment system here in 'eftpos', which is ubiquitous. AFAIK this is exclusively debit not credit, but this isn't my area, I'm just a consumer. https://www.eftposaustralia.com.au https://www.eftposaustralia.com.au
  - _carbyau_ 4y ago
    EFTPOS got kicked to the curb when paywave-with-no-pin started. And then the pandemic reinforced that idea for a lot of people. I don't know when I last used EFTPOS.
    - jen729w 4y ago
      Aah so am I not actually using it? Like I said, no idea. Most consumers don't. There's a terminal, I wave my [phone|watch|card] at it, it beeps, I walk away. Happy days. In that case if it's a Visa card, is Visa the processing entity?
      - _carbyau_ 4y ago
        I am wishywashy on details too sorry. There is a combination of your card (debit/credit[visa/mastercard]) and the merchants setup. I am not sure who processes the payment on the merchant/supplier side for EFTPOS vs credit. So, if you have a Visa credit card, and the money comes from your credit account, like many, then it is clearly using Visa Paywave. But historically, it was Visa and Mastercard that started it with "no pin required" as an opt-out thing(IE it was enabled for you by default), and their main market is credit. Most people just rolled with it. Using the phone NFC however should give you more control I would think. But I honestly have never set it up.
      - throwaheyy 4y ago
        EFTPOS started in the 1980s as a full-electronic network when Visa/MC transactions still used a manual imprinter and paper slips with carbon copies. Visa/MC have also gone full electronic since then, so EFTPOS has kind of served its purpose.
- holistio 4y ago
  Nobody really has rewards. We don't have them in Europe, and some people in the USA think they have them. What they have is crazy high credit card fees and the need to juggle a bunch around to get a few things credit card companies decided to buy for you en masse. When I buy a $5 latte, I give Visa $0.01. When you do the same, you pay $0.15. Come the hell on. "REWARDS". Smh.
  - lotsofpulp 4y ago
    I get a minimum 2.6% cash back on everything I purchase, but most things I get 3.5% to 5.25% cash back. There are a bunch of free 2% cash back credit cards, so people would at least break even if they wanted to.
    - dcolkitt 4y ago
      Generally those types of deals require either parking six figures out liquid assets at the issuing bank and/or paying high annual fees (which of course favor the biggest spenders who amortize the cost over lots of volume). Either way the current system definitely favors the rich over the middle class.
      - lotsofpulp 4y ago
        In my case, it does not have to be liquid. Any investments count, including IRA/529 and other accounts. The 2% cash back cards generally have no requirements. I am going to have those same investments anyway in VOO at one brokerage or another, so there is no opportunity cost. You are correct that it is sort of a wealth transfer from poorer to richer. But merchants are free to offer discounts for non credit card purchases, and they do many times.
      - JumpCrisscross 4y ago
        > system definitely favors the rich over the middle class This is correct. But it's a far cry from "nobody really has rewards." Framed a bit differently, our credit card system is a regressive tax on consumption.
    - 4y ago
- TrueGeek 4y ago
  Interesting. How much money is lost by banks giving out cash back rewards to Americans using credit cards in Europe?
  - philip1209 4y ago
    I'm not sure, but note that many banks make money on currency conversion, such as by offering non-market conversion rates.
    - jkaplowitz 4y ago
      Some of the best traveler-focused US rewards cards, like the Chase Sapphire Reserve cards, have no foreign transaction fees, even zeroing out what Visa charges them. And these cards are okay not only with frequent travel but even foreign residential addresses (only for customers who relocate - US address required at initial signup). I have one of those, used it while living in Canada, and soon expect to use it while living in Europe. They do of course make money by charging a high annual fee, but another commenter already explained how the rewards offered by this card can still give more in value than the annual fee costs. This is absolutely true in my case.
  - supertrope 4y ago
    None. When an American uses a rewards card the merchant pays 3% interchange so the customer can pocket 1%. These are high fees compared with a local using a card with the fee capped at 0.3%.
- jasonwatkinspdx 4y ago
  It's worth noting there's some real economic disparity in just who can get rewards cards with significant incentives in the US.
  - arcticbull 4y ago
    Yep, but also, those vanilla no-rewards Visa cards only have interchange rates as low as like 1.5% whereas those high-end cards like an Amex Platinum can cost as much as 3.5%. [1] [1] https://www.bankrate.com/finance/credit-cards/why-american-express-isnt-universally-accepted/ https://www.bankrate.com/finance/credit-cards/why-american-e...
    - ShroudedNight 4y ago
      Yet the price the purchaser pays doesn't change, so the less fortunate end up subsidizing the rich. Credit card rewards are egregiously regressive.
dcolkitt 4y ago
The Achilles heel of this setup is that not all transactions are equal risk. Very low risk transactions are paying near identical fees to very high risk transactions, despite orders of magnitude differences in fraud rates. How long will Apple selling in-store products to 800 FICO score consumers be willing to subsidize eBay vendors and gift card resellers?
- arcticbull 4y ago
  They’re not. The 3% is a blended average. The rate varies by the specific card kind, the card brand, the specific vendor in Apples case when they have leverage - or the merchant category code when they don’t have leverage. Even chargeback history matters. Apple likely has a deal that borderline costs merchant acquirers money and that gift card vendor is probably paying 10%.
- kube-system 4y ago
  Merchants pay different fees depending on their risk category. High risk merchants can pay 15% or more.
jrvarela56 4y ago
This. My company does payment processing for small merchants and all the complexity of credit cards is rooted in this dynamic. - Consumers can pay stuff on credit - Consumers can 'chargeback' if they feel something went wrong These two mechanisms are the lubricant that provides a +% in online commerce greater than the % charged for processing payments.
- geph2021 4y ago
  Yep. Also one of the reasons crypto will never work (as-is) for online, digital currency/payments. Customers don't want irreversible transactions.
  - leesalminen 4y ago
    I think it depends on the scenario. If you’re buying $0.50 worth of bananas at a farmer's market, then maybe irreversibility doesn’t matter. Could be even a $20 lunch bill, I've never done a chargeback at a restaurant before.
    - moffkalast 4y ago
      So what you're saying is that it's only useful for meaningless amounts? Sounds pretty pointless.
      - leesalminen 4y ago
        Something that is a meaningless amount for you surely isn’t meaningless for the person receiving it. To extrapolate the idea some, I’d be comfortable using an irreversible payment method for various B2B SaaS subscriptions. Those can reach perhaps more meaningful amounts to you. It seems that you’re rather dismissive of this conversation, so I’ll wish you a pleasant day/evening.
        geph2021 4y ago
        I think you make an interesting point about micro payments. Micro payments could be an avenue for crypto to actually achieve some legitimacy and usefulness. Not only is the irreversibility less important, but potentially some of the usability/security issues for users (hacked/stolen wallets etc...) become less important as well (assuming users keep only smallish balances in crypto wallets).
mc32 4y ago
CoD. How did that even work? I mean how was fraud prevented? Did money get counted and balanced every night? How did they prevent drivers from getting robbed or inadvertently losing money (miscounting etc?$
- Domenic_S 4y ago
  I bought things CoD in the days when eBay still did that (90s). The postman would come to your door with the CoD bill and you'd hand over a cashier's check to them, then they'd give you the package.
- O__________O 4y ago
  Yes, payment for “cash/collect on delivery” is made on delivery rather than in advance. If the goods are not paid for, they are returned to the retailer. American page: https://faq.usps.com/s/article/Collect-on-Delivery https://faq.usps.com/s/article/Collect-on-Delivery Canadian page: https://www.canadapost-postescanada.ca/cpc/en/support/kb/sending/general-information/how-to-send-and-receive-collect-on-delivery https://www.canadapost-postescanada.ca/cpc/en/support/kb/sen...
- jon-wood 4y ago
  Most of this isn’t that mysterious in practice. Apply whatever you know about how supermarkets, bars, and other cash accepting businesses operate. Then add in the fact that yes, drivers would occasionally get robbed, it was a risk of the business and priced in much like shoplifting is for a supermarket.
- mcv 4y ago
  These days of course you pay electronically on delivery. No actual cash involved. My grocery delivery does that, because the final cost depends on the weight of certain items as well as if I have any old crates or bottles to return. So on delivery I pay either contactless by NFC or by QR code. Super easy, barely an inconvenience.
makeitdouble 4y ago
To note, all of these work on PayPal, with a bank account. PayPal are a dick on fraudulent merchant account detection and it’s well know assets can be frozen on a whim, but at this point it’s the one of the few other options.
- philip1209 4y ago
  Lower fees matter most for low-margin businesses. If your business has 5% margins, then taking your payment processing fees from 3% to 1% is transformative for your profits. The reality is that most low-margin B2C businesses are brick and mortar service-based businesses, such as restaurants. And, therein lies the problem for Paypal and for crypto payments: The low-margin businesses that care about CC fees are not early-adopters of payment networks. Restaurants can't conceivably introduce a non-traditional payment network as their exclusive provider.
  - makeitdouble 4y ago
    Yes. There is a huge divide between online and offline. For online your choice is to poney up the fee or not get paid at all. You’ll also probably target a wider audience and region restricted payment networks become less viable. Offline credit cards processing currently has super low fees, but it’s also a field where there is already way more competition than VISA/Mastercard, in particular there will be national card networks, and prepaid NFC that rise up as an alternative. > Restaurants can't conceivably introduce a non-traditional payment network as their exclusive provider. In my experience they do. They always have cash as the fallback, so they can pick and choose more freely than other businesses (think of all the restaurants that won’t accept anything other than cash)
    - philip1209 4y ago
      Yeah, but the danger is that cash-only businesses will have smaller check sizes, and at the end of the day that probably translates to less in alcohol sales. So, if sales decreases because of unfavorable payment methods (such as cash), then it's the high-margin item (alcohol) that probably gets affected most.
cycomanic 4y ago
As your post illustrates credit cards are really a solution developped for the deficiencies in the US banking system which have been exported to the rest of the world due to the dominance of the US market. 20 years when I was still living in Germany, hardly anyone had a credit card, while everyone was using automatic payments and electronic wiretransfers. I was very surprised when later (about 13 years ago) a US friend told me that they were still using cheques for most things. I had only touched a cheque maybe 2 or 3 times in my life. Even today many people in Germany still don't have a credit card or if they have one largely use it for travel. Of the people (in Germany) I know, they also never use charge backs on the cards (I suspect many don't even know that you can do it) and instead rely on the court system to get refunds etc..
- nixass 4y ago
  Why would I use credit card at all? Sure it does help when traveling but not much use for it otherwise
  - philip1209 4y ago
    For consumers in the USA, there's a negative take rate. You get cash back if you pay with a card.
  - PaulDavisThe1st 4y ago
    Don't think of it as a credit card. Think of it as payment mechanism. It comes with certains costs (to some users, and to all merchants) and also with certain benefits. It also comes with a certain aggregate cost to the whole of society, since essentially prices are increased to cover fees, and then some fraction of the fees are refunded to the wealthiest users (redistribution, just more subtle than taxes).
  - JumpCrisscross 4y ago
    > Why would I use credit card at all? Float. If I charge $10k to a card, I get an interest-free loan until the balance has to be paid off. In a zero-rate environment that's meaningless. But even at the 30-day's 2.22% [1], that's almost twenty bucks. I'm probably paying about 1% more for the CC fees, but I can use my card that gives me 1.5% back on everything. [1] https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202208 https://home.treasury.gov/resource-center/data-chart-center/...
hn_throwaway_99 4y ago
I don't think anyone disagrees with you in terms of the value of credit cards, the issue is whether their fees are worth it. Their huge profit margins, as well as how they previously fought tooth and nail against, for example, allowing merchants to levy a credit card surcharge, suggest that their duopoly position is allowing them to charge exorbitant amounts for their services.
- moffkalast 4y ago
  Well 3% fees on every purchase on the planet is a pretty astounding amount of fucking money. Explains why so many real world shops are still cash only.
  - philip1209 4y ago
    Also, taxes. Card networks issue 1099-K forms in the USA and report earnings to tax agencies. That's a major reason Argentina is taking steps to mandate acceptance of debit cards - so that income is accurately reported for tax purposes: https://www.bcra.gob.ar/MediosPago/Politica_Pagos-i.asp https://www.bcra.gob.ar/MediosPago/Politica_Pagos-i.asp
  - Nursie 4y ago
    In many countries the fees are capped much lower than 3%. In these countries you see the opposite - small shops and restaurants now don't want the expense of dealing with cash, which has to be stored securely, counted, reconciled and banked. All of these things take time and money. Cash isn't some 'free' panacea for a business.
  - physicsguy 4y ago
    Transaction fees are much lower in Europe, there are some laws about it. That means that credit card rewards are nowhere near as generous.
- chrismcb 4y ago
  Worth it to whom? It costs money to deal with transactions. Whether that is cash or credit. 3% can actually be easier and cheaper than dealing with large sums of cash
JumpCrisscross 4y ago
> I'm sure online merchants are happy to keep paying their ~3% fees as long as sales continue There might be an opening in subscriptions. Those merchants know their customers, and may be willing to take on fraud risk for material bump in revenue.
- philip1209 4y ago
  I think the opportunity is for platforms that can manage risk. Consumers are more likely to give direct bank account access to platforms that they trust. For example, Apple's App Store is well-positioned to run subscriptions over ACH, and they have the consumer trust to get some adoptoin. But, then you're trading one evil for another - because Apple will want their cut, too. At the end of the day - it's a battle between value centers and cost centers. Businesses would generally rather make more money than save money.
  - JumpCrisscross 4y ago
    > Apple's App Store is well-positioned to run subscriptions over ACH, and they have the consumer trust to get some adoptoin You have to get one side to trust it. Visa and MasterCard succeeded by making it easy for consumers. The counterpunch is likely in winning over merchants. If Netflix or Spotify gave me a small discount for running over alternate payment rails, I don't need to trust the intermediary, I trust Netflix or Spotify to not screw a decade-long customer over pennies.
konschubert 4y ago
But I am sure they would prefer paying 1% fees for exactly the same service. Or a 0.1% fee.
einpoklum 4y ago
> Also, modern B2C SaaS is built on credit card subscriptions. That seems like circular logic. If there were alternatives to credit card and CC companies, SaaS would use that. In fact, in some countries, there are and it does. > The ability for a merchant to pull payments on a recurring basis from a credit card requires an incredible amount of trust. Why? If the merchant can't pull this month's payment, then services stop. Perhaps you mean making a large payment in arrears?
- PaulsWallet 4y ago
  > In fact, in some countries, there are Such as?
  - crote 4y ago
    How about we start with: Andorra, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom, Vatican City They all use the same system, namely SEPA Direct Debit. It has only been around for 13 years or so. The Stripe website has a decent introduction: https://stripe.com/docs/payments/sepa-debit https://stripe.com/docs/payments/sepa-debit So yeah, as a Dutch person all of my subscriptions use this. In fact, I get a bit annoyed when someone does not offer it, because I do not own a credit card.
atombender 4y ago
...In the US. Outside the US, credit cards are much less common outside the US. The alternative to credit cards isn't CoD, it's debit cards, which are connected directly to a bank account. Merchants love debit cards because they have near-zero transaction fees. You don't need credit card for chargebacks, just strong consumer protection laws that permit the bank to claw the money back from the merchant. As for fraud, I don't have any data, and I'm sure there's plenty, but we have had chip-and-PIN in Europe for decades, and for more than a decade cards have been protected with 3D Secure and similar types of mandatory 2FA, so having the card number is not enough to complete a transaction. People seem more wary of accruing debt in Europe; it's easy to lose control over your personal finances with a credit card. But we have middlemen like Klarna now that offer credit-card-like payment deferral. Klarna appears as just another payment processor, but takes on all the risk, similar to a credit card company. The only thing I miss from US credit cards are cash back rewards.
- moffkalast 4y ago
  The thing about debit cards though, it's a different system and they don't work for online payments which makes them effectively useless. > People seem more wary of accruing debt in Europe; it's easy to lose control over your personal finances with a credit card. Well using credit means you're taking a loan, and subsequently paying interest on that loan even if it's just a month. Why would you pay interest on a loan that you don't need and pay an exorbitant amount in monthly fees just to have the card? Seems like absolute lunacy. And here it doesn't tie into the credit score system much so there isn't a reason to do it solely because of that. Luckily these days there are fee-less prepaid cards that work like debit cards, but function as credit cards. That's my go-to.
  - crote 4y ago
    Ehhh, no? Our debit cards are used for in-store payments, and literally every single bank allows you to use them for online payments too. We just developed systems which don't depend on handing random people a bunch of "secret" numbers and hoping they don't defraud you. For example, in The Netherlands *everyone* uses iDeal. Basically, the store does a 302 redirect on checkout to your bank, sending along the money owed and the destination account. The bank authenticates the user, confirms that they indeed want to pay it, and redirects back to the store. It... just works!
rowanG077 4y ago
> Visa and Mastercard are the privatized court systems of the internet. You make it sound like that is a good thing. They are loose cannons that time and time again have shown they shouldn't be trusted.
- kube-system 4y ago
  It's better than flying to China and hiring a Chinese lawyer to dispute some aliexpress purchase.
mchusma 4y ago
I am an online merchant. The visa Mastercard fees are enormously high, so not. We are not "happy to pay it". The 3% is not to cover any consumer protection, that cost is born by the merchants. When a dispute is made by a customer, the merchant is assessed a fee, and almost always loses the dispute. The fees are so high that credit card companies give extremely high rewards back, which is in effect a regressive tax. In addition, visa Mastercard can cut off any business from doing commerce, and often do for political reasons. A much better system is one with: - extreme low fees (like 0.1%) - consumers can dispute anything within x days and merchants have to issue a refund. No administration. - any merchant with a bank account can use it (or similarly broadly available)
- scarface74 4y ago
  Every study shows that consumers are willing to spend more on a credit card than when they are using cash. Taxi cabs drivers for instance were against being forced to use credit cards until they realized they got larger tips.
  - nobody9999 4y ago
    >Taxi cabs drivers for instance were against being forced to use credit cards until they realized they got larger tips. I only have anecdata about this, but every taxi driver (50+) I've ever discussed CC vs. cash (this is in NYC and limited to medallion taxis) has said they prefer cash every single time. That's mostly because of the 5% CC processing fees on every transaction, as well as delays in receiving their money from CC transactions. I imagine it's different elsewhere, but not (at least AFAICT) where I live.
    - scarface74 4y ago
      https://www.nytimes.com/2009/11/08/nyregion/08taxi.html https://www.nytimes.com/2009/11/08/nyregion/08taxi.html
    - deznu 4y ago
      You're forgetting about taxes though. A lot of cash-based transactions are not declared. Edit: rather, it's easier to not declare cash income, than income from credit cards. Also keep in mind that the taxi company may take a cut of the revenue too.
treeman79 4y ago
Of course then there is Google and Apple where if you dispute any charge they will erase you .
thathndude 4y ago
Just for the record, as an attorney who somewhat specializes in this field, or at least has a concentrate and practice in this field, reversing a bank transfer is actually quite easy. You don’t have the same dispute rights as credit, but there is a dispute mechanism.
- musicale 4y ago
  I was under the impression that the non-reversible nature of wire transfers, especially to banks in other countries, is why they are a preferred payment method for scammers.
redditmigrant 4y ago
Given how large ecommerce has gotten in China, it begs the question, are credit cards truly the necessary pillar? ECommerce even in the US is extremely top heavy, with Amazon having ~40% share, so while the allure of a random ecommerce site is an interesting example, thats not the pre-dominant usage pattern.
pdntspa 4y ago
> If consumers had to push payment every month or year to continue subscriptions (instead of having it automatically debited), then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it. Reeeeally now. You don't say? What a wonderful world that would be.
musicale 4y ago
> If consumers had to push payment every month or year to continue subscriptions (instead of having it automatically debited), then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it. Disliking wallet-draining, hard-to-cancel subscriptions, I'm not entirely opposed to this scenario.
Schroedingersat 4y ago
> then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it. That sounds amazing. Let's do that.
deepGem 4y ago
The fraud protection aspect is spot on, but I think most people are not risky buyers. Like most of my purchases happen on Amazon or other high trust merchants. I have never ever raised a dispute and the only time I did it was when I accidentally bought a powerball ticket online with recurring option. So for most single time purchases, the fraud protection on a CC is an overkill IMO. The recurring option, yes I wouldn't give out a bank account or a debit card for recurring payments even with high trust SaaS merchants, even if they accepted one ( most don't ).
chrismcb 4y ago
People are happy to pay 3% fees because it can be cheaper and easier than using cash. Freaking with large sums of cash can be time consuming and expensive.
benj111 4y ago
> Visa and Mastercard are the privatized court systems of the internet. My issue is that that they should be regulated as such. They shouldn't be allowed to unilaterally withdraw access (eg wikileaks).
ballenf 4y ago
> And, suing a merchant is prohibitively slow, expensive, and arduous. Is that true because credit cards mean there's no incentive to make the court process more efficient? That is, without credit cards playing that role courts would become more efficient and less expensive.
LatteLazy 4y ago
FYI, in the UK we have a scheme called Direct Debits where you authorise companies to take recurring payments from your bank account directly (including of variable amounts eg for utilities). So you don't "need" credit cards for that. You can cancel them immediately via the bank and you're fully protected against bad charges.
rkagerer 4y ago
In some ways, Visa and Mastercard are the privatized court systems of the internet. Agreed. A dispute resolution mechanism baked-in would go a long way toward making crypto a more viable alternative, especially if it delivered more effective justice than the credit card companies' stale policies and their opaque decision makers who don't really give a crap.
- zzzeek 4y ago
  some arbitrary "justice algorithm" OTOH would "give a crap" ? I mean you are indicating an algorithmic system towards dispute resolution that just takes the bits from one party or the other, right? having "people" do it means you have authoritarian figures involved which I thought not having that was the whole point of crypto.
  - rkagerer 4y ago
    No, I'm not envisioning an algorithmic approach. Systems of justice are probably the earliest institutions of civilization, and have evolved over millenia. There's lots of runway to learn from what's worked and what hasn't. A potential starting point might be an arbitration approach where multiple parties are selected at random from a pool of candidates who gradually build reputation as fair and impartial adjudicators. They'd review evidence and arguments independantly and issue their vote for the verdict. Commerce, including crypto, is as much about people as it is anything else.
chrischen 4y ago
Credit cards don't do jack shit for fraud protection. They simply market it as 0-fraud liability and the rest of the participating parties eat the costs (at least for online transactions and pre-chip days). Before there were chips, guess who got hit with the loss if fraud happened on a card? It was the merchant. For online transactions, merchants are still hit with the loss since the chip is not used. If you want actual fraud protection features you have to pay extra for products like Stripe radar or Siftscience. With chip finally some fraud liability shifted to the merchants, but partially because it's pretty much impossible to clone a chip card.
- npkarnik 4y ago
  Think he meant that they protect the consumer
account42 4y ago
> If consumers had to push payment every month or year to continue subscriptions (instead of having it automatically debited), then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it. Recurring bank transfers are not that hard to setup and would probably be even easier by now if credit cards weren't available. If your argument is that this would give users better oversight of their recurring payments and the ability to cancel ahead of time without restrictions then I fail to see how this is an argument for the current credit card system.
varispeed 4y ago
> reversing that purchase would be incredibly difficult The institutions (at least in my country - UK) are not interested in dealing with that. Police will not view it as fraud (unless they get a massive number of enquiries, but still they may be ignoring for a long time before it comes on their radar), the Trading Standards will say talk to your bank, bank will say I should have done more due diligence. Then you won't be able to take the seller to court if they used fake address. Police will not be interested in finding it for you. You can hire a private detective to locate the seller, which will cost probably many times over the loss. Now even if they locate them, they may not have a permanent residence, which again makes it difficult to lodge the case in court and before it happens you have to first try to mediate. Good luck with that. Basically the current system is created for fraudsters to thrive.

arcticbull 4y ago

The fees are 3% only in the US and the bulk of that is returned to buyers as cash back or loyalty points, and to offset the cost of loan origination and warranties. The EU has capped debit interchange at .2% and credit at .3%, Australia in the low 1s if I recall correctly. They just don’t really have rewards.

jen729w 4y ago
Yeah typically around 1.5% in Australia. Which is often passed on to the consumer at the point of sale. We do have a non-Visa/MC payment system here in 'eftpos', which is ubiquitous. AFAIK this is exclusively debit not credit, but this isn't my area, I'm just a consumer. https://www.eftposaustralia.com.au https://www.eftposaustralia.com.au
- _carbyau_ 4y ago
  EFTPOS got kicked to the curb when paywave-with-no-pin started. And then the pandemic reinforced that idea for a lot of people. I don't know when I last used EFTPOS.
  - jen729w 4y ago
    Aah so am I not actually using it? Like I said, no idea. Most consumers don't. There's a terminal, I wave my [phone|watch|card] at it, it beeps, I walk away. Happy days. In that case if it's a Visa card, is Visa the processing entity?
    - _carbyau_ 4y ago
      I am wishywashy on details too sorry. There is a combination of your card (debit/credit[visa/mastercard]) and the merchants setup. I am not sure who processes the payment on the merchant/supplier side for EFTPOS vs credit. So, if you have a Visa credit card, and the money comes from your credit account, like many, then it is clearly using Visa Paywave. But historically, it was Visa and Mastercard that started it with "no pin required" as an opt-out thing(IE it was enabled for you by default), and their main market is credit. Most people just rolled with it. Using the phone NFC however should give you more control I would think. But I honestly have never set it up.
    - throwaheyy 4y ago
      EFTPOS started in the 1980s as a full-electronic network when Visa/MC transactions still used a manual imprinter and paper slips with carbon copies. Visa/MC have also gone full electronic since then, so EFTPOS has kind of served its purpose.
holistio 4y ago
Nobody really has rewards. We don't have them in Europe, and some people in the USA think they have them. What they have is crazy high credit card fees and the need to juggle a bunch around to get a few things credit card companies decided to buy for you en masse. When I buy a $5 latte, I give Visa $0.01. When you do the same, you pay $0.15. Come the hell on. "REWARDS". Smh.
- lotsofpulp 4y ago
  I get a minimum 2.6% cash back on everything I purchase, but most things I get 3.5% to 5.25% cash back. There are a bunch of free 2% cash back credit cards, so people would at least break even if they wanted to.
  - dcolkitt 4y ago
    Generally those types of deals require either parking six figures out liquid assets at the issuing bank and/or paying high annual fees (which of course favor the biggest spenders who amortize the cost over lots of volume). Either way the current system definitely favors the rich over the middle class.
    - lotsofpulp 4y ago
      In my case, it does not have to be liquid. Any investments count, including IRA/529 and other accounts. The 2% cash back cards generally have no requirements. I am going to have those same investments anyway in VOO at one brokerage or another, so there is no opportunity cost. You are correct that it is sort of a wealth transfer from poorer to richer. But merchants are free to offer discounts for non credit card purchases, and they do many times.
    - JumpCrisscross 4y ago
      > system definitely favors the rich over the middle class This is correct. But it's a far cry from "nobody really has rewards." Framed a bit differently, our credit card system is a regressive tax on consumption.
  - 4y ago
TrueGeek 4y ago
Interesting. How much money is lost by banks giving out cash back rewards to Americans using credit cards in Europe?
- philip1209 4y ago
  I'm not sure, but note that many banks make money on currency conversion, such as by offering non-market conversion rates.
  - jkaplowitz 4y ago
    Some of the best traveler-focused US rewards cards, like the Chase Sapphire Reserve cards, have no foreign transaction fees, even zeroing out what Visa charges them. And these cards are okay not only with frequent travel but even foreign residential addresses (only for customers who relocate - US address required at initial signup). I have one of those, used it while living in Canada, and soon expect to use it while living in Europe. They do of course make money by charging a high annual fee, but another commenter already explained how the rewards offered by this card can still give more in value than the annual fee costs. This is absolutely true in my case.
- supertrope 4y ago
  None. When an American uses a rewards card the merchant pays 3% interchange so the customer can pocket 1%. These are high fees compared with a local using a card with the fee capped at 0.3%.
jasonwatkinspdx 4y ago
It's worth noting there's some real economic disparity in just who can get rewards cards with significant incentives in the US.
- arcticbull 4y ago
  Yep, but also, those vanilla no-rewards Visa cards only have interchange rates as low as like 1.5% whereas those high-end cards like an Amex Platinum can cost as much as 3.5%. [1] [1] https://www.bankrate.com/finance/credit-cards/why-american-express-isnt-universally-accepted/ https://www.bankrate.com/finance/credit-cards/why-american-e...
  - ShroudedNight 4y ago
    Yet the price the purchaser pays doesn't change, so the less fortunate end up subsidizing the rich. Credit card rewards are egregiously regressive.

dcolkitt 4y ago

The Achilles heel of this setup is that not all transactions are equal risk. Very low risk transactions are paying near identical fees to very high risk transactions, despite orders of magnitude differences in fraud rates. How long will Apple selling in-store products to 800 FICO score consumers be willing to subsidize eBay vendors and gift card resellers?

arcticbull 4y ago
They’re not. The 3% is a blended average. The rate varies by the specific card kind, the card brand, the specific vendor in Apples case when they have leverage - or the merchant category code when they don’t have leverage. Even chargeback history matters. Apple likely has a deal that borderline costs merchant acquirers money and that gift card vendor is probably paying 10%.
kube-system 4y ago
Merchants pay different fees depending on their risk category. High risk merchants can pay 15% or more.

jrvarela56 4y ago

This. My company does payment processing for small merchants and all the complexity of credit cards is rooted in this dynamic. - Consumers can pay stuff on credit - Consumers can 'chargeback' if they feel something went wrong These two mechanisms are the lubricant that provides a +% in online commerce greater than the % charged for processing payments.

geph2021 4y ago
Yep. Also one of the reasons crypto will never work (as-is) for online, digital currency/payments. Customers don't want irreversible transactions.
- leesalminen 4y ago
  I think it depends on the scenario. If you’re buying $0.50 worth of bananas at a farmer's market, then maybe irreversibility doesn’t matter. Could be even a $20 lunch bill, I've never done a chargeback at a restaurant before.
  - moffkalast 4y ago
    So what you're saying is that it's only useful for meaningless amounts? Sounds pretty pointless.
    - leesalminen 4y ago
      Something that is a meaningless amount for you surely isn’t meaningless for the person receiving it. To extrapolate the idea some, I’d be comfortable using an irreversible payment method for various B2B SaaS subscriptions. Those can reach perhaps more meaningful amounts to you. It seems that you’re rather dismissive of this conversation, so I’ll wish you a pleasant day/evening.
      - geph2021 4y ago
        I think you make an interesting point about micro payments. Micro payments could be an avenue for crypto to actually achieve some legitimacy and usefulness. Not only is the irreversibility less important, but potentially some of the usability/security issues for users (hacked/stolen wallets etc...) become less important as well (assuming users keep only smallish balances in crypto wallets).

mc32 4y ago

CoD. How did that even work? I mean how was fraud prevented? Did money get counted and balanced every night? How did they prevent drivers from getting robbed or inadvertently losing money (miscounting etc?$

Domenic_S 4y ago
I bought things CoD in the days when eBay still did that (90s). The postman would come to your door with the CoD bill and you'd hand over a cashier's check to them, then they'd give you the package.
O__________O 4y ago
Yes, payment for “cash/collect on delivery” is made on delivery rather than in advance. If the goods are not paid for, they are returned to the retailer. American page: https://faq.usps.com/s/article/Collect-on-Delivery https://faq.usps.com/s/article/Collect-on-Delivery Canadian page: https://www.canadapost-postescanada.ca/cpc/en/support/kb/sending/general-information/how-to-send-and-receive-collect-on-delivery https://www.canadapost-postescanada.ca/cpc/en/support/kb/sen...
jon-wood 4y ago
Most of this isn’t that mysterious in practice. Apply whatever you know about how supermarkets, bars, and other cash accepting businesses operate. Then add in the fact that yes, drivers would occasionally get robbed, it was a risk of the business and priced in much like shoplifting is for a supermarket.
mcv 4y ago
These days of course you pay electronically on delivery. No actual cash involved. My grocery delivery does that, because the final cost depends on the weight of certain items as well as if I have any old crates or bottles to return. So on delivery I pay either contactless by NFC or by QR code. Super easy, barely an inconvenience.

makeitdouble 4y ago

To note, all of these work on PayPal, with a bank account. PayPal are a dick on fraudulent merchant account detection and it’s well know assets can be frozen on a whim, but at this point it’s the one of the few other options.

philip1209 4y ago
Lower fees matter most for low-margin businesses. If your business has 5% margins, then taking your payment processing fees from 3% to 1% is transformative for your profits. The reality is that most low-margin B2C businesses are brick and mortar service-based businesses, such as restaurants. And, therein lies the problem for Paypal and for crypto payments: The low-margin businesses that care about CC fees are not early-adopters of payment networks. Restaurants can't conceivably introduce a non-traditional payment network as their exclusive provider.
- makeitdouble 4y ago
  Yes. There is a huge divide between online and offline. For online your choice is to poney up the fee or not get paid at all. You’ll also probably target a wider audience and region restricted payment networks become less viable. Offline credit cards processing currently has super low fees, but it’s also a field where there is already way more competition than VISA/Mastercard, in particular there will be national card networks, and prepaid NFC that rise up as an alternative. > Restaurants can't conceivably introduce a non-traditional payment network as their exclusive provider. In my experience they do. They always have cash as the fallback, so they can pick and choose more freely than other businesses (think of all the restaurants that won’t accept anything other than cash)
  - philip1209 4y ago
    Yeah, but the danger is that cash-only businesses will have smaller check sizes, and at the end of the day that probably translates to less in alcohol sales. So, if sales decreases because of unfavorable payment methods (such as cash), then it's the high-margin item (alcohol) that probably gets affected most.

cycomanic 4y ago

As your post illustrates credit cards are really a solution developped for the deficiencies in the US banking system which have been exported to the rest of the world due to the dominance of the US market. 20 years when I was still living in Germany, hardly anyone had a credit card, while everyone was using automatic payments and electronic wiretransfers. I was very surprised when later (about 13 years ago) a US friend told me that they were still using cheques for most things. I had only touched a cheque maybe 2 or 3 times in my life. Even today many people in Germany still don't have a credit card or if they have one largely use it for travel. Of the people (in Germany) I know, they also never use charge backs on the cards (I suspect many don't even know that you can do it) and instead rely on the court system to get refunds etc..

nixass 4y ago
Why would I use credit card at all? Sure it does help when traveling but not much use for it otherwise
- philip1209 4y ago
  For consumers in the USA, there's a negative take rate. You get cash back if you pay with a card.
- PaulDavisThe1st 4y ago
  Don't think of it as a credit card. Think of it as payment mechanism. It comes with certains costs (to some users, and to all merchants) and also with certain benefits. It also comes with a certain aggregate cost to the whole of society, since essentially prices are increased to cover fees, and then some fraction of the fees are refunded to the wealthiest users (redistribution, just more subtle than taxes).
- JumpCrisscross 4y ago
  > Why would I use credit card at all? Float. If I charge $10k to a card, I get an interest-free loan until the balance has to be paid off. In a zero-rate environment that's meaningless. But even at the 30-day's 2.22% [1], that's almost twenty bucks. I'm probably paying about 1% more for the CC fees, but I can use my card that gives me 1.5% back on everything. [1] https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202208 https://home.treasury.gov/resource-center/data-chart-center/...

hn_throwaway_99 4y ago

I don't think anyone disagrees with you in terms of the value of credit cards, the issue is whether their fees are worth it. Their huge profit margins, as well as how they previously fought tooth and nail against, for example, allowing merchants to levy a credit card surcharge, suggest that their duopoly position is allowing them to charge exorbitant amounts for their services.

moffkalast 4y ago
Well 3% fees on every purchase on the planet is a pretty astounding amount of fucking money. Explains why so many real world shops are still cash only.
- philip1209 4y ago
  Also, taxes. Card networks issue 1099-K forms in the USA and report earnings to tax agencies. That's a major reason Argentina is taking steps to mandate acceptance of debit cards - so that income is accurately reported for tax purposes: https://www.bcra.gob.ar/MediosPago/Politica_Pagos-i.asp https://www.bcra.gob.ar/MediosPago/Politica_Pagos-i.asp
- Nursie 4y ago
  In many countries the fees are capped much lower than 3%. In these countries you see the opposite - small shops and restaurants now don't want the expense of dealing with cash, which has to be stored securely, counted, reconciled and banked. All of these things take time and money. Cash isn't some 'free' panacea for a business.
- physicsguy 4y ago
  Transaction fees are much lower in Europe, there are some laws about it. That means that credit card rewards are nowhere near as generous.
chrismcb 4y ago
Worth it to whom? It costs money to deal with transactions. Whether that is cash or credit. 3% can actually be easier and cheaper than dealing with large sums of cash

JumpCrisscross 4y ago

> I'm sure online merchants are happy to keep paying their ~3% fees as long as sales continue There might be an opening in subscriptions. Those merchants know their customers, and may be willing to take on fraud risk for material bump in revenue.

philip1209 4y ago
I think the opportunity is for platforms that can manage risk. Consumers are more likely to give direct bank account access to platforms that they trust. For example, Apple's App Store is well-positioned to run subscriptions over ACH, and they have the consumer trust to get some adoptoin. But, then you're trading one evil for another - because Apple will want their cut, too. At the end of the day - it's a battle between value centers and cost centers. Businesses would generally rather make more money than save money.
- JumpCrisscross 4y ago
  > Apple's App Store is well-positioned to run subscriptions over ACH, and they have the consumer trust to get some adoptoin You have to get one side to trust it. Visa and MasterCard succeeded by making it easy for consumers. The counterpunch is likely in winning over merchants. If Netflix or Spotify gave me a small discount for running over alternate payment rails, I don't need to trust the intermediary, I trust Netflix or Spotify to not screw a decade-long customer over pennies.

konschubert 4y ago

But I am sure they would prefer paying 1% fees for exactly the same service. Or a 0.1% fee.

einpoklum 4y ago

> Also, modern B2C SaaS is built on credit card subscriptions. That seems like circular logic. If there were alternatives to credit card and CC companies, SaaS would use that. In fact, in some countries, there are and it does. > The ability for a merchant to pull payments on a recurring basis from a credit card requires an incredible amount of trust. Why? If the merchant can't pull this month's payment, then services stop. Perhaps you mean making a large payment in arrears?

PaulsWallet 4y ago
> In fact, in some countries, there are Such as?
- crote 4y ago
  How about we start with: Andorra, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom, Vatican City They all use the same system, namely SEPA Direct Debit. It has only been around for 13 years or so. The Stripe website has a decent introduction: https://stripe.com/docs/payments/sepa-debit https://stripe.com/docs/payments/sepa-debit So yeah, as a Dutch person all of my subscriptions use this. In fact, I get a bit annoyed when someone does not offer it, because I do not own a credit card.

atombender 4y ago

...In the US. Outside the US, credit cards are much less common outside the US. The alternative to credit cards isn't CoD, it's debit cards, which are connected directly to a bank account. Merchants love debit cards because they have near-zero transaction fees. You don't need credit card for chargebacks, just strong consumer protection laws that permit the bank to claw the money back from the merchant. As for fraud, I don't have any data, and I'm sure there's plenty, but we have had chip-and-PIN in Europe for decades, and for more than a decade cards have been protected with 3D Secure and similar types of mandatory 2FA, so having the card number is not enough to complete a transaction. People seem more wary of accruing debt in Europe; it's easy to lose control over your personal finances with a credit card. But we have middlemen like Klarna now that offer credit-card-like payment deferral. Klarna appears as just another payment processor, but takes on all the risk, similar to a credit card company. The only thing I miss from US credit cards are cash back rewards.

moffkalast 4y ago
The thing about debit cards though, it's a different system and they don't work for online payments which makes them effectively useless. > People seem more wary of accruing debt in Europe; it's easy to lose control over your personal finances with a credit card. Well using credit means you're taking a loan, and subsequently paying interest on that loan even if it's just a month. Why would you pay interest on a loan that you don't need and pay an exorbitant amount in monthly fees just to have the card? Seems like absolute lunacy. And here it doesn't tie into the credit score system much so there isn't a reason to do it solely because of that. Luckily these days there are fee-less prepaid cards that work like debit cards, but function as credit cards. That's my go-to.
- crote 4y ago
  Ehhh, no? Our debit cards are used for in-store payments, and literally every single bank allows you to use them for online payments too. We just developed systems which don't depend on handing random people a bunch of "secret" numbers and hoping they don't defraud you. For example, in The Netherlands *everyone* uses iDeal. Basically, the store does a 302 redirect on checkout to your bank, sending along the money owed and the destination account. The bank authenticates the user, confirms that they indeed want to pay it, and redirects back to the store. It... just works!

rowanG077 4y ago

> Visa and Mastercard are the privatized court systems of the internet. You make it sound like that is a good thing. They are loose cannons that time and time again have shown they shouldn't be trusted.

kube-system 4y ago
It's better than flying to China and hiring a Chinese lawyer to dispute some aliexpress purchase.

mchusma 4y ago

I am an online merchant. The visa Mastercard fees are enormously high, so not. We are not "happy to pay it". The 3% is not to cover any consumer protection, that cost is born by the merchants. When a dispute is made by a customer, the merchant is assessed a fee, and almost always loses the dispute. The fees are so high that credit card companies give extremely high rewards back, which is in effect a regressive tax. In addition, visa Mastercard can cut off any business from doing commerce, and often do for political reasons. A much better system is one with: - extreme low fees (like 0.1%) - consumers can dispute anything within x days and merchants have to issue a refund. No administration. - any merchant with a bank account can use it (or similarly broadly available)

scarface74 4y ago
Every study shows that consumers are willing to spend more on a credit card than when they are using cash. Taxi cabs drivers for instance were against being forced to use credit cards until they realized they got larger tips.
- nobody9999 4y ago
  >Taxi cabs drivers for instance were against being forced to use credit cards until they realized they got larger tips. I only have anecdata about this, but every taxi driver (50+) I've ever discussed CC vs. cash (this is in NYC and limited to medallion taxis) has said they prefer cash every single time. That's mostly because of the 5% CC processing fees on every transaction, as well as delays in receiving their money from CC transactions. I imagine it's different elsewhere, but not (at least AFAICT) where I live.
  - scarface74 4y ago
    https://www.nytimes.com/2009/11/08/nyregion/08taxi.html https://www.nytimes.com/2009/11/08/nyregion/08taxi.html
  - deznu 4y ago
    You're forgetting about taxes though. A lot of cash-based transactions are not declared. Edit: rather, it's easier to not declare cash income, than income from credit cards. Also keep in mind that the taxi company may take a cut of the revenue too.

treeman79 4y ago

Of course then there is Google and Apple where if you dispute any charge they will erase you .

thathndude 4y ago

Just for the record, as an attorney who somewhat specializes in this field, or at least has a concentrate and practice in this field, reversing a bank transfer is actually quite easy. You don’t have the same dispute rights as credit, but there is a dispute mechanism.

musicale 4y ago
I was under the impression that the non-reversible nature of wire transfers, especially to banks in other countries, is why they are a preferred payment method for scammers.

redditmigrant 4y ago

Given how large ecommerce has gotten in China, it begs the question, are credit cards truly the necessary pillar? ECommerce even in the US is extremely top heavy, with Amazon having ~40% share, so while the allure of a random ecommerce site is an interesting example, thats not the pre-dominant usage pattern.

pdntspa 4y ago

musicale 4y ago

> If consumers had to push payment every month or year to continue subscriptions (instead of having it automatically debited), then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it. Disliking wallet-draining, hard-to-cancel subscriptions, I'm not entirely opposed to this scenario.

Schroedingersat 4y ago

> then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it. That sounds amazing. Let's do that.

deepGem 4y ago

The fraud protection aspect is spot on, but I think most people are not risky buyers. Like most of my purchases happen on Amazon or other high trust merchants. I have never ever raised a dispute and the only time I did it was when I accidentally bought a powerball ticket online with recurring option. So for most single time purchases, the fraud protection on a CC is an overkill IMO. The recurring option, yes I wouldn't give out a bank account or a debit card for recurring payments even with high trust SaaS merchants, even if they accepted one ( most don't ).

chrismcb 4y ago

People are happy to pay 3% fees because it can be cheaper and easier than using cash. Freaking with large sums of cash can be time consuming and expensive.

benj111 4y ago

> Visa and Mastercard are the privatized court systems of the internet. My issue is that that they should be regulated as such. They shouldn't be allowed to unilaterally withdraw access (eg wikileaks).

ballenf 4y ago

> And, suing a merchant is prohibitively slow, expensive, and arduous. Is that true because credit cards mean there's no incentive to make the court process more efficient? That is, without credit cards playing that role courts would become more efficient and less expensive.

LatteLazy 4y ago

FYI, in the UK we have a scheme called Direct Debits where you authorise companies to take recurring payments from your bank account directly (including of variable amounts eg for utilities). So you don't "need" credit cards for that. You can cancel them immediately via the bank and you're fully protected against bad charges.

rkagerer 4y ago

In some ways, Visa and Mastercard are the privatized court systems of the internet. Agreed. A dispute resolution mechanism baked-in would go a long way toward making crypto a more viable alternative, especially if it delivered more effective justice than the credit card companies' stale policies and their opaque decision makers who don't really give a crap.

zzzeek 4y ago
some arbitrary "justice algorithm" OTOH would "give a crap" ? I mean you are indicating an algorithmic system towards dispute resolution that just takes the bits from one party or the other, right? having "people" do it means you have authoritarian figures involved which I thought not having that was the whole point of crypto.
- rkagerer 4y ago
  No, I'm not envisioning an algorithmic approach. Systems of justice are probably the earliest institutions of civilization, and have evolved over millenia. There's lots of runway to learn from what's worked and what hasn't. A potential starting point might be an arbitration approach where multiple parties are selected at random from a pool of candidates who gradually build reputation as fair and impartial adjudicators. They'd review evidence and arguments independantly and issue their vote for the verdict. Commerce, including crypto, is as much about people as it is anything else.

chrischen 4y ago

Credit cards don't do jack shit for fraud protection. They simply market it as 0-fraud liability and the rest of the participating parties eat the costs (at least for online transactions and pre-chip days). Before there were chips, guess who got hit with the loss if fraud happened on a card? It was the merchant. For online transactions, merchants are still hit with the loss since the chip is not used. If you want actual fraud protection features you have to pay extra for products like Stripe radar or Siftscience. With chip finally some fraud liability shifted to the merchants, but partially because it's pretty much impossible to clone a chip card.

npkarnik 4y ago
Think he meant that they protect the consumer

account42 4y ago

> If consumers had to push payment every month or year to continue subscriptions (instead of having it automatically debited), then churn rates would skyrocket and modern SaaS multiples would crash - taking company valuations with it. Recurring bank transfers are not that hard to setup and would probably be even easier by now if credit cards weren't available. If your argument is that this would give users better oversight of their recurring payments and the ability to cancel ahead of time without restrictions then I fail to see how this is an argument for the current credit card system.

varispeed 4y ago

> reversing that purchase would be incredibly difficult The institutions (at least in my country - UK) are not interested in dealing with that. Police will not view it as fraud (unless they get a massive number of enquiries, but still they may be ignoring for a long time before it comes on their radar), the Trading Standards will say talk to your bank, bank will say I should have done more due diligence. Then you won't be able to take the seller to court if they used fake address. Police will not be interested in finding it for you. You can hire a private detective to locate the seller, which will cost probably many times over the loss. Now even if they locate them, they may not have a permanent residence, which again makes it difficult to lodge the case in court and before it happens you have to first try to mediate. Good luck with that. Basically the current system is created for fraudsters to thrive.