4 ms·

Chargebacks are a part of doing business any time you accept credit cards, whether paypal is your merchant provider or not. The problem here is Visa/MC/Amex et

by joonix 14y ago

Chargebacks are a part of doing business any time you accept credit cards, whether paypal is your merchant provider or not. The problem here is Visa/MC/Amex etc. Since you almost have to accept credit card payments these days, you're stuck with their terms. Since the banks all provide credit through these card providers, there's very little competition. There are numerous ways to virtually eliminate CC fraud but the card providers aren't interested in taking those measures, and neither are the big retailers. They are happy to accept the ~5% loss on chargebacks, because credit card users spend something like 30-40% more per transaction than cash payers. What we need is a competitor that disrupts credit cards altogether, not just merchant processing. Eliminate VISA and MC, who are basically skimming 2.5% off our retail economy. Cards are obsolete anyways. The processing side is obsolete, we don't need terminals that dial into a central processing machine, we can use the internet. The credit side (banks provide the credit line you get on your card, not Visa/MC) will take a bit more work, but we can combine it with the rise in peer to peer lending: you seek a credit line from a crowdlending site, not Chase bank.

discountgenius 14y ago
Bitcoin enables decentralized digital wealth transfers.
- psionski 14y ago
  No chargebacks, escrow services for dispute handling, deflationary currency. Need I say more :)
  - himlion 14y ago
    all features, not bugs :)
    - psionski 14y ago
      You know what they say, some people's bugs are other people's features :) Well... actually I think noone says that, but they should start...
mcherm 14y ago
If the OP were the merchant for the credit card transaction, he would have provided the extensive documentation described and I have no doubt at all that the chargeback would NOT have gone through. (The evidence of previous fraud would probably have led to closing the card account also.) But the OP is NOT the merchant... PayPal is. I do not think that the fundamental problem in this case is the credit card system. (Although there certainly are OTHER problems with the credit card payment system that make it tempting to disrupt - but nearly impossible to disrupt because of entrenched powerful interests.)
- codenerdz 14y ago
  Exactly! Paypal is the middleman here and they are preventing me from going directly to the credit card issuer and providing them with extensive documentation proving fraud. Not only that, they are making it extremely inconvenient to have any sort of communication with them
  - 001sky 14y ago
    Something is beyond wrong if a verbal "not as described" lets them keep the object. That's such an obvious scam/abuse there should be a legal issue with it, if paypal is not pursuing actual proof. They are acting in bad faith because their contract/terms of service is not even plausibly verifiable. The CC company requires an affadivit to issue a refund; if Visa gets wind of this guy with 5 refunds to the same card/provider/etc (thats 5 perjured affadavits) it should be a verifiable problem with paperwork. Paypal should be in the business of verifying this; not denying it. Its so basic as to be beyond belief. Apologies for preaching to the choir.
    - hughw 14y ago
      If the seller accepts returns, would that solve the problem? I apologize of the OP mentioned whether his item was returnable -- I did not see him say that.
ChrisNorstrom 14y ago
What we need is a competitor that disrupts credit cards altogether http://www.dwolla.com http://www.dwolla.com
- Firehed 14y ago
  ACH chargebacks are even worse than CC chargebacks, from the perspective of being able to fight them. As soon as a payment touches any of the existing networks, it's at risk. The only way to fix it completely (or at least significantly improve the situation) is to have a system that's completely isolated and properly secured; i.e. every payment authorization requires true multi-factor authentication.
  - Silhouette 14y ago
    This is the thing that drives me crazy. It's the 21st century, so just about every major bank in my country provides two-factor authentication for their customers to use their own on-line banking facilities and numerous similar alternatives are available as well. And yet if a company sells someone something, there is still no guarantee that when the money hits their account they actually have it short of real legal action to show that they must give it back. Moreover, because someone else might get stuck with that responsibility if the merchant bails, merchants have to jump through absurd hoops and accept all kinds of crazy one-sided terms just to get into the game. I wouldn't mind so much if consumers were actually advised of their ability to use these chargeback facilities, but apart from Direct Debits it seems almost no-one gets told about this here in the UK. Certainly no bank or credit card service I used had ever told me before I started running businesses and seeing it from the merchant's side. The one time I got screwed as a consumer and a chargeback would have helped because it wasn't really worth the time/hassle of figuring out the courts' small claims procedure, I didn't know I could do that so the merchant won by default anyway. So right now, the do-I-have-it-or-don't-I question over funds is a huge burden for merchants here, yet the supposed protection it offers to consumers here is mostly illusory as well. Nobody wins from this kind of arrangement. The entire payment services industry needs to die and be replaced by something fit for the 21st century, where you simply can't transfer money electronically without robust proof of who you are, and you can't accept money electronically without robust proof of who you are, but given such proof transfers are final as soon as they are confirmed. Is this really such a crazy idea?!
thaumasiotes 14y ago
> Eliminate VISA and MC, who are basically skimming 2.5% off our retail economy. This claim doesn't make much sense. For example, an economy with RGDP 150,000 units, of which 2.5% go to Visa/MC, is not worse off than one of RGDP 130,000 units, of which 0% go to Visa/MC.
- incongruity 14y ago
  That's a false dichotomy – there's (at least) a third option – a service that doesn't skim so much off the top – 2.5% made sense when credit cards were a rarer payment method, used only for a small fraction of transactions. Now, nearly everyone has and uses multiple visa or mc branded credit or debit cards, yielding trillions in transactions, making billions for Visa/MC. In short, they've grown much more profitable due to their scale and none of that has value has been returned to businesses or consumers in via rate reductions, AFAIK.
  - thaumasiotes 14y ago
    > there's (at least) a third option – a service that doesn't skim so much off the top I don't disagree with this at all. But I don't read the comment I was responding to as having come from the thought process of "If Visa/MC charged a 1.5% cut instead of 2.5%, the economy would be 1.5% more productive than it is now, which means that, compared to that more enlightened hypothetical world, the non-Visa/MC portion of the economy is only 97.5% what it should be." If you think credit is related to the size of the economy (and I do), you need to ask, where did that 2.5% number come from? Saying that Visa's entire fee represents nothing but a drag on the economy is very much of a piece with the historical loathing of merchants and usurers, who, as anyone could see, did not create value.
  - thaumasiotes 14y ago
    I should also point out that, if the assumption you start with is "the drag on the economy (relative to potential) from credit card fees is equal to the amount of those fees", you should quickly notice that the directionality is wrong. In my example example, cutting fees to 1.5% (from any level at all, interestingly) requires the economy to expand by 1.5%. That's not a coincidence -- cutting fees to 0.1% would require the economy to expand by 0.1%, except that that's completely implausible; cutting fees further should cause the economy to expand more, not less. With that in mind, it might make sense to measure against the hypothetical where credit card companies offer their services for free, but even then there is no obvious relationship to the current level of their fees. I have to stand by my assessment that saying Visa/MC are skimming 2.5% of the economy doesn't make sense. How'd we get that number?

by joonix 14y ago

discountgenius 14y ago

Bitcoin enables decentralized digital wealth transfers.

psionski 14y ago
No chargebacks, escrow services for dispute handling, deflationary currency. Need I say more :)
- himlion 14y ago
  all features, not bugs :)
  - psionski 14y ago
    You know what they say, some people's bugs are other people's features :) Well... actually I think noone says that, but they should start...

mcherm 14y ago

If the OP were the merchant for the credit card transaction, he would have provided the extensive documentation described and I have no doubt at all that the chargeback would NOT have gone through. (The evidence of previous fraud would probably have led to closing the card account also.) But the OP is NOT the merchant... PayPal is. I do not think that the fundamental problem in this case is the credit card system. (Although there certainly are OTHER problems with the credit card payment system that make it tempting to disrupt - but nearly impossible to disrupt because of entrenched powerful interests.)

codenerdz 14y ago
Exactly! Paypal is the middleman here and they are preventing me from going directly to the credit card issuer and providing them with extensive documentation proving fraud. Not only that, they are making it extremely inconvenient to have any sort of communication with them
- 001sky 14y ago
  Something is beyond wrong if a verbal "not as described" lets them keep the object. That's such an obvious scam/abuse there should be a legal issue with it, if paypal is not pursuing actual proof. They are acting in bad faith because their contract/terms of service is not even plausibly verifiable. The CC company requires an affadivit to issue a refund; if Visa gets wind of this guy with 5 refunds to the same card/provider/etc (thats 5 perjured affadavits) it should be a verifiable problem with paperwork. Paypal should be in the business of verifying this; not denying it. Its so basic as to be beyond belief. Apologies for preaching to the choir.
  - hughw 14y ago
    If the seller accepts returns, would that solve the problem? I apologize of the OP mentioned whether his item was returnable -- I did not see him say that.

ChrisNorstrom 14y ago

What we need is a competitor that disrupts credit cards altogether http://www.dwolla.com http://www.dwolla.com

Firehed 14y ago
ACH chargebacks are even worse than CC chargebacks, from the perspective of being able to fight them. As soon as a payment touches any of the existing networks, it's at risk. The only way to fix it completely (or at least significantly improve the situation) is to have a system that's completely isolated and properly secured; i.e. every payment authorization requires true multi-factor authentication.
- Silhouette 14y ago
  This is the thing that drives me crazy. It's the 21st century, so just about every major bank in my country provides two-factor authentication for their customers to use their own on-line banking facilities and numerous similar alternatives are available as well. And yet if a company sells someone something, there is still no guarantee that when the money hits their account they actually have it short of real legal action to show that they must give it back. Moreover, because someone else might get stuck with that responsibility if the merchant bails, merchants have to jump through absurd hoops and accept all kinds of crazy one-sided terms just to get into the game. I wouldn't mind so much if consumers were actually advised of their ability to use these chargeback facilities, but apart from Direct Debits it seems almost no-one gets told about this here in the UK. Certainly no bank or credit card service I used had ever told me before I started running businesses and seeing it from the merchant's side. The one time I got screwed as a consumer and a chargeback would have helped because it wasn't really worth the time/hassle of figuring out the courts' small claims procedure, I didn't know I could do that so the merchant won by default anyway. So right now, the do-I-have-it-or-don't-I question over funds is a huge burden for merchants here, yet the supposed protection it offers to consumers here is mostly illusory as well. Nobody wins from this kind of arrangement. The entire payment services industry needs to die and be replaced by something fit for the 21st century, where you simply can't transfer money electronically without robust proof of who you are, and you can't accept money electronically without robust proof of who you are, but given such proof transfers are final as soon as they are confirmed. Is this really such a crazy idea?!

thaumasiotes 14y ago

> Eliminate VISA and MC, who are basically skimming 2.5% off our retail economy. This claim doesn't make much sense. For example, an economy with RGDP 150,000 units, of which 2.5% go to Visa/MC, is not worse off than one of RGDP 130,000 units, of which 0% go to Visa/MC.

incongruity 14y ago
That's a false dichotomy – there's (at least) a third option – a service that doesn't skim so much off the top – 2.5% made sense when credit cards were a rarer payment method, used only for a small fraction of transactions. Now, nearly everyone has and uses multiple visa or mc branded credit or debit cards, yielding trillions in transactions, making billions for Visa/MC. In short, they've grown much more profitable due to their scale and none of that has value has been returned to businesses or consumers in via rate reductions, AFAIK.
- thaumasiotes 14y ago
  > there's (at least) a third option – a service that doesn't skim so much off the top I don't disagree with this at all. But I don't read the comment I was responding to as having come from the thought process of "If Visa/MC charged a 1.5% cut instead of 2.5%, the economy would be 1.5% more productive than it is now, which means that, compared to that more enlightened hypothetical world, the non-Visa/MC portion of the economy is only 97.5% what it should be." If you think credit is related to the size of the economy (and I do), you need to ask, where did that 2.5% number come from? Saying that Visa's entire fee represents nothing but a drag on the economy is very much of a piece with the historical loathing of merchants and usurers, who, as anyone could see, did not create value.
- thaumasiotes 14y ago
  I should also point out that, if the assumption you start with is "the drag on the economy (relative to potential) from credit card fees is equal to the amount of those fees", you should quickly notice that the directionality is wrong. In my example example, cutting fees to 1.5% (from any level at all, interestingly) requires the economy to expand by 1.5%. That's not a coincidence -- cutting fees to 0.1% would require the economy to expand by 0.1%, except that that's completely implausible; cutting fees further should cause the economy to expand more, not less. With that in mind, it might make sense to measure against the hypothetical where credit card companies offer their services for free, but even then there is no obvious relationship to the current level of their fees. I have to stand by my assessment that saying Visa/MC are skimming 2.5% of the economy doesn't make sense. How'd we get that number?