3 ms·

The payment processors say the reason is high fraud and charge-back rates in those industries that make it unprofitable to service. I don't know if this is true

The payment processors say the reason is high fraud and charge-back rates in those industries that make it unprofitable to service. I don't know if this is true or an excuse. Either way, its an excellent reason why this critical infrastructure shouldn't be under corporate control.

codedokode 5mo ago
Well that is fair point, but cannot they just increase the commission to cover them? Also I think it is weird that when someone steals a bank card, they use it to buy adult games instead of buying an iPhone or MacBook and shipping it to the third world country.
- quux 5mo ago
  It's not people using stolen cards, it's people feeling shame or regret after making an intentional purchase and using chargebacks to "undo" the purchase
  - chimeracoder 5mo ago
    > It's not people using stolen cards, it's people feeling shame or regret after making an intentional purchase and using chargebacks to "undo" the purchase If this problem were as pervasive as people keep saying it is, it would put the merchants out of business long before it would have any noticeable impact on the card brands (Visa, Mastercard) who are typically the ones actually pushing bans like these[0]. Even if the merchant is successful in winning the chargeback, they are the ones who have to pay the fees for it, which means that any business with a predictable and consistently high enough chargeback rate will just stop collecting payments long before the upstream providers care. A lot of people here don't actually understand how payment processing, risk underwriting, and chargebacks work - which is fair, because it's an arcane area of knowledge that most people don't interact with! But it means that a lot of things which sound like simple and easy explanations are actually completely off base and nonsensical. [0] I do not have knowledge of the Kickstarter situation specifically, and the article is light on primary-source details, so I am explicitly not commenting on this specific case.
- Aurornis 5mo ago
  They do! It's called a high risk merchant account. Their payment processor would do it: https://stripe.com/ie/resources/more/high-risk-merchant-accounts-explained https://stripe.com/ie/resources/more/high-risk-merchant-acco... > Also I think it is weird that when someone steals a bank card, they use it to buy adult games instead of buying an iPhone or MacBook and shipping it to the third world country. iPhone or MacBook purchases are expensive enough to trigger fraud detection reliably. A $19.99 adult content purchase less likely to. It's not just stolen credit cards, though. Adult content purchases have another problem where purchasers often deny having made the purchase when their significant other finds it on the credit card statement. Shaggy's "It wasn't me" defense.
  - codedokode 5mo ago
    > Adult content purchases have another problem where purchasers often deny having made the purchase when their significant other finds it on the credit card statement. Shaggy's "It wasn't me" defense. Ridiculous. People who consume adult content could at least behave like adults.
    - gowld 5mo ago
      They could, as soon as people who police the consumptino of adult content behave like adults.
    - Aurornis 5mo ago
      Most of them do. It's a math problem: If a credit card processor takes 3% of the purchase price and the average purchase is small like a $10 item or a $5 monthly commitment, it doesn't take many disputes to blow up their business model. Disputes are costly because you have to pay humans to deal with paperwork and phone calls.
      - mrguyorama 5mo ago
        Why do you believe this? They charge you a large fee for every chargeback. They get the full purchase price of the transaction back without any effort. It's automatic. Meanwhile your merchant fee per transaction is directly tied to how many chargebacks you produce. Chargebacks do not cost the payment network any money at all. All cost is borne by the merchants. That's the whole point. That's why chargebacks are effective: Because the payment network is an all powerful authority in the matter and has no incentive to deny chargebacks.
- numpad0 5mo ago
  I see random offhand unsubstantiated online comments here and there including here on HN, that 1) chargeback rates of porn, games, and digital contents are significantly lower than anything else, and 2) credit card companies already charge higher fees for porn despite that. Combined with prevalence of the suspiciously well standardized "because porn users and gamers chargeback Steam purchases way too often" canned responses, I think it's just an excuse, if not "the" excuse somewhere - like the basis for using incorrect data for internal risk modeling or something like that.
  - Scaled 5mo ago
    I've seen the chargeback rates, they are low. Consider that most adult consumers are repeat purchasers (subscribing to their favorite artist/dev/performer). They do not want to get banned for a chargeback and lose out on content! Most adult content creators also have friendly voluntary refund policy when requested. So chargeback rates are very low in adult. Meanwhile other industries like travel have crazy high chargeback rates. This is because it is notorious for a no refund policy / locking customers into purchases months in advance... and then people just chargeback instead of accepting a consumer hostile no refund policy. So travel ends up having high chargebacks... and yet has minimal trouble getting processing.
    - habinero 5mo ago
      > So travel ends up having high chargebacks... and yet has minimal trouble getting processing. Nope, not true. They're #2 on Stripe's high risk business list, after porn: https://stripe.com/resources/more/high-risk-merchant-accounts-explained#common-high-risk-industries https://stripe.com/resources/more/high-risk-merchant-account...
ufewwetbcxs 5mo ago
[dead]
coredog64 5mo ago
Ask the Canadian truckers how well government control of banking worked out ;) Seriously though, I think the fix here is not who controls it but legislation that codifies when this type of payment deplatforming can (or cannot) be done. Make some carve-outs for smaller processors (e.g. if your church group wants to set up a pr0n-free version of Stripe, go to town)
- swat535 5mo ago
  Crypto didn’t help the truckers either.. Trudeau banned it, which is ironic considering the whole point of it was being government resistant.

codedokode 5mo ago

Well that is fair point, but cannot they just increase the commission to cover them? Also I think it is weird that when someone steals a bank card, they use it to buy adult games instead of buying an iPhone or MacBook and shipping it to the third world country.

quux 5mo ago
It's not people using stolen cards, it's people feeling shame or regret after making an intentional purchase and using chargebacks to "undo" the purchase
- chimeracoder 5mo ago
  > It's not people using stolen cards, it's people feeling shame or regret after making an intentional purchase and using chargebacks to "undo" the purchase If this problem were as pervasive as people keep saying it is, it would put the merchants out of business long before it would have any noticeable impact on the card brands (Visa, Mastercard) who are typically the ones actually pushing bans like these[0]. Even if the merchant is successful in winning the chargeback, they are the ones who have to pay the fees for it, which means that any business with a predictable and consistently high enough chargeback rate will just stop collecting payments long before the upstream providers care. A lot of people here don't actually understand how payment processing, risk underwriting, and chargebacks work - which is fair, because it's an arcane area of knowledge that most people don't interact with! But it means that a lot of things which sound like simple and easy explanations are actually completely off base and nonsensical. [0] I do not have knowledge of the Kickstarter situation specifically, and the article is light on primary-source details, so I am explicitly not commenting on this specific case.
Aurornis 5mo ago
They do! It's called a high risk merchant account. Their payment processor would do it: https://stripe.com/ie/resources/more/high-risk-merchant-accounts-explained https://stripe.com/ie/resources/more/high-risk-merchant-acco... > Also I think it is weird that when someone steals a bank card, they use it to buy adult games instead of buying an iPhone or MacBook and shipping it to the third world country. iPhone or MacBook purchases are expensive enough to trigger fraud detection reliably. A $19.99 adult content purchase less likely to. It's not just stolen credit cards, though. Adult content purchases have another problem where purchasers often deny having made the purchase when their significant other finds it on the credit card statement. Shaggy's "It wasn't me" defense.
- codedokode 5mo ago
  > Adult content purchases have another problem where purchasers often deny having made the purchase when their significant other finds it on the credit card statement. Shaggy's "It wasn't me" defense. Ridiculous. People who consume adult content could at least behave like adults.
  - gowld 5mo ago
    They could, as soon as people who police the consumptino of adult content behave like adults.
  - Aurornis 5mo ago
    Most of them do. It's a math problem: If a credit card processor takes 3% of the purchase price and the average purchase is small like a $10 item or a $5 monthly commitment, it doesn't take many disputes to blow up their business model. Disputes are costly because you have to pay humans to deal with paperwork and phone calls.
    - mrguyorama 5mo ago
      Why do you believe this? They charge you a large fee for every chargeback. They get the full purchase price of the transaction back without any effort. It's automatic. Meanwhile your merchant fee per transaction is directly tied to how many chargebacks you produce. Chargebacks do not cost the payment network any money at all. All cost is borne by the merchants. That's the whole point. That's why chargebacks are effective: Because the payment network is an all powerful authority in the matter and has no incentive to deny chargebacks.
numpad0 5mo ago
I see random offhand unsubstantiated online comments here and there including here on HN, that 1) chargeback rates of porn, games, and digital contents are significantly lower than anything else, and 2) credit card companies already charge higher fees for porn despite that. Combined with prevalence of the suspiciously well standardized "because porn users and gamers chargeback Steam purchases way too often" canned responses, I think it's just an excuse, if not "the" excuse somewhere - like the basis for using incorrect data for internal risk modeling or something like that.
- Scaled 5mo ago
  I've seen the chargeback rates, they are low. Consider that most adult consumers are repeat purchasers (subscribing to their favorite artist/dev/performer). They do not want to get banned for a chargeback and lose out on content! Most adult content creators also have friendly voluntary refund policy when requested. So chargeback rates are very low in adult. Meanwhile other industries like travel have crazy high chargeback rates. This is because it is notorious for a no refund policy / locking customers into purchases months in advance... and then people just chargeback instead of accepting a consumer hostile no refund policy. So travel ends up having high chargebacks... and yet has minimal trouble getting processing.
  - habinero 5mo ago
    > So travel ends up having high chargebacks... and yet has minimal trouble getting processing. Nope, not true. They're #2 on Stripe's high risk business list, after porn: https://stripe.com/resources/more/high-risk-merchant-accounts-explained#common-high-risk-industries https://stripe.com/resources/more/high-risk-merchant-account...

ufewwetbcxs 5mo ago

[dead]

coredog64 5mo ago

Ask the Canadian truckers how well government control of banking worked out ;) Seriously though, I think the fix here is not who controls it but legislation that codifies when this type of payment deplatforming can (or cannot) be done. Make some carve-outs for smaller processors (e.g. if your church group wants to set up a pr0n-free version of Stripe, go to town)

swat535 5mo ago
Crypto didn’t help the truckers either.. Trudeau banned it, which is ironic considering the whole point of it was being government resistant.