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The card networks are never on the hook for fraudulent transactions (nor for any other type of chargeback for that matter). If anything, it's the merchant's pay
by lxgr 1y ago
The card networks are never on the hook for fraudulent transactions (nor for any other type of chargeback for that matter). If anything, it's the merchant's payment service provider/card acquirer that absorbs the loss if the merchant can't pay.
- zhivota 1y agoTrue until the acquiring (merchant side) bank is insolvent. Then the network pays. Source: worked at Visa for years. It's why it's so hard to become an acquiring bank on the network.
- lxgr 1y agoTrue – I was debating whether I should mention that edge case :) I think the general idea is that acquiring banks are hopefully large enough to absorb any single merchant insolvency, but there are obviously limits to that. Airlines and event tickets are notorious example of that, since they usually take payment weeks or months ahead of providing the underlying service but want to get paid immediately.