3 ms·

> In a culture that accepts widespread card fraud, costs increase to offset it. Maybe, maybe not, but this is a very simplistic way of looking at it. If credit

by np- 3y ago

> In a culture that accepts widespread card fraud, costs increase to offset it. Maybe, maybe not, but this is a very simplistic way of looking at it. If credit card fraud is responsible for X% of total charges, they can spend effort to deal with it, OR they can simply not deal with it and keeping the transactions going while eating the cost, they may be able to serve Y% more customers where Y > X and thus end up with more profit in the long run. This works for a lot of businesses in America because the sheer scale is massive (take McDonalds for example, they would probably be better off processing their lunch rush quickly due to the margins they are making rather than take even 1 second to verify there is no fraud). This may not work in Europe, but IMO you're missing an entire dimension when analyzing the true costs. If the fraud/benefit scale ever tipped away from favoring the companies, I think we would see all these major fraud prevention mechanisms kick in almost immediately in the US.

nerdawson 3y ago
I recognise that for the likes of McDonalds, the friction probably isn’t a benefit. With that said, I can’t remember the last time I saw a POS terminal that wasn’t contactless. More often than not I’ll go out with nothing more than my phone knowing that regardless of where I end up, I’ll be able to pay. Features like SCA protect consumers and businesses alike.
lxgr 3y ago
> serve Y% more customers where Y > X and thus end up with more profit in the long run. That’s the micro/local view, and any rational company in the US will do something close to that. There is no local incentive to set the “fraud/friction” to anything other than their competitors. On the macro level though, if the dial is moved for everyone (i.e. by regulation; the card schemes have tried to make this happen via incentives in the form of the liability shift, but it still wasn’t enough), there’s a chance for increased total efficiency. The cool thing is that Europe is running this experiment currently – let’s see how it goes.

by np- 3y ago

nerdawson 3y ago

I recognise that for the likes of McDonalds, the friction probably isn’t a benefit. With that said, I can’t remember the last time I saw a POS terminal that wasn’t contactless. More often than not I’ll go out with nothing more than my phone knowing that regardless of where I end up, I’ll be able to pay. Features like SCA protect consumers and businesses alike.

lxgr 3y ago

> serve Y% more customers where Y > X and thus end up with more profit in the long run. That’s the micro/local view, and any rational company in the US will do something close to that. There is no local incentive to set the “fraud/friction” to anything other than their competitors. On the macro level though, if the dial is moved for everyone (i.e. by regulation; the card schemes have tried to make this happen via incentives in the form of the liability shift, but it still wasn’t enough), there’s a chance for increased total efficiency. The cool thing is that Europe is running this experiment currently – let’s see how it goes.