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Use digital cash- no chargebacks, no middlemen. The best option today if you don't want chargebacks is adopting Bitcoin for payments (like how Reddit did for R

by nym 14y ago

Use digital cash- no chargebacks, no middlemen. The best option today if you don't want chargebacks is adopting Bitcoin for payments (like how Reddit did for Reddit Gold with Coinbase). http://blog.coinbase.com/post/40131065845/hosted-payment-pages-email-invoices-and-more http://blog.coinbase.com/post/40131065845/hosted-payment-pag...

jareau 14y ago
What happens if bitcoins are purchased with a credit card? Who will be responsible for the chargeback in that case? Coinbase?
- JoshTriplett 14y ago
  Yes, if a bitcoin exchange accepted credit cards, they'd be on the hook for any chargebacks. Hence why most of the existing exchanges want a bank transfer instead. In theory, a bitcoin exchange should have a near-perfect defense against chargebacks for faulty or missing products or similar, by showing via the public block chain that they delivered the purchased product as requested. However, there's no defense against chargebacks claiming that the cardholder didn't make the purchase (stolen card number, etc).
  - jareau 14y ago
    What if the buyer does a reversal of the bank transfer -- usually possible up to 60 days afterward. (I swear I'm not trolling. I'm new to bitcoin exchanges)
    - Judson 14y ago
      ACH transfers are reversible and a few bitcoin exchanges have been bitten by them since most have/do take dwolla, which is a nice service for ACH transfers. Bank wire transfers, though, are unable to be reversed. Its a pity that most US banks charge for them.
      - jareau 14y ago
        Yeah, the US banking system is pretty pitiful in general. We (Balanced) are trying to make it a little bit better by making ACH faster and easier to integrate, but we can't do much about reversals. [shameless plug] Example, checkout our ACH payouts feature: blog.balancedpayments.com/announcing-balanced-payouts/
    - nym 14y ago
      Coinbase does ACH for Bitcoin, they usually hold the funds for 6 days to prevent fraud.
- mahyarm 14y ago
  I'm guessing coinbase will be able to reverse the charge since they provided their service of giving you bitcoins properly?
  - Judson 14y ago
    Doubtful - 1) They have to explain to the credit card chargeback authority what a bitcoin is and why the entry in the block chain means they actually sent the coins. 2) Nothing to stop the Bitcoin buyer from just saying "I didn't do it" (Which is 'friendly fraud' in the article). From my experience, reversing a chargeback is only possible in a minimum of cases when sending physical items, and even harder for digital goods that you can't just send again (Bitcoins vs an Ebook).
mahmoudimus 14y ago
(I'm a Balanced employee) My personal views are my own and NOT Balanced on this topic. I agree, I think bitcoin is a great solution -- for some things. More and more I feel that it's the right strategy going forward. We actually have an open github issue to support it: https://github.com/balanced/balanced-api/issues/204 https://github.com/balanced/balanced-api/issues/204. You should take a look and read the comments there -- they're very interesting. Something I'm trying to figure out though is something along the lines of this comment: https://github.com/balanced/balanced-api/issues/204#issuecomment-10731245 https://github.com/balanced/balanced-api/issues/204#issuecom.... How can we tackle on risk in a reasonable way? Jon Matonis, CEO of Hushmail, wrote a pretty interesting article on Bitcoin for Forbes, where he mentions Balanced: http://www.forbes.com/sites/jonmatonis/2012/11/26/payments-startup-balanced-innovates-in-wrong-direction/ http://www.forbes.com/sites/jonmatonis/2012/11/26/payments-s... but he just didn't answer or ask the _right_ questions. Another reason - there just hasn't been enough demand for it.
wmf 14y ago
Realistically, the percentage of customers you lose by accepting Bitcoin is probably much higher than the cost of handling credit card fraud.
- mrb 14y ago
  Well, obviously, do accept Bitcoin in addition to credit cards, so no customers are lost, only gained.
  - JoachimSchipper 14y ago
    And no fraud would be stopped.
    - mrb 14y ago
      Not stopped, but it would decrease fraud, as the fraction of payments made in bitcoins is guaranteed to be impossible to charge back. As this fraction increases, fraud is reduced further and further. It would be interesting to have a payment platform that evaluates the trustworthiness of a customer right before payment (based on factors such as customer history, shipping address matching the billing address...), and force those deemed "risky" to pay in Bitcoins. It could even handle CC authorization failures: "credit card declined? No problem, pay in Bitcoins instead."
      - jareau 14y ago
        Based on the comments above (http://news.ycombinator.com/item?id=5259876 http://news.ycombinator.com/item?id=5259876), it seems like Bitcoin is just allowing merchants to kick the chargeback risk down the road to the Bitcoin exchanges.
        jerguismi 14y ago
        No sane exchange accepts credit cards...
      - 14y ago
Nursie 14y ago
As a customer, why would I want to do that? Other than a few big names I have a lot less than absolute trust in online vendors, so I find the chargeback facility very reassuring

by nym 14y ago

jareau 14y ago

What happens if bitcoins are purchased with a credit card? Who will be responsible for the chargeback in that case? Coinbase?

JoshTriplett 14y ago
Yes, if a bitcoin exchange accepted credit cards, they'd be on the hook for any chargebacks. Hence why most of the existing exchanges want a bank transfer instead. In theory, a bitcoin exchange should have a near-perfect defense against chargebacks for faulty or missing products or similar, by showing via the public block chain that they delivered the purchased product as requested. However, there's no defense against chargebacks claiming that the cardholder didn't make the purchase (stolen card number, etc).
- jareau 14y ago
  What if the buyer does a reversal of the bank transfer -- usually possible up to 60 days afterward. (I swear I'm not trolling. I'm new to bitcoin exchanges)
  - Judson 14y ago
    ACH transfers are reversible and a few bitcoin exchanges have been bitten by them since most have/do take dwolla, which is a nice service for ACH transfers. Bank wire transfers, though, are unable to be reversed. Its a pity that most US banks charge for them.
    - jareau 14y ago
      Yeah, the US banking system is pretty pitiful in general. We (Balanced) are trying to make it a little bit better by making ACH faster and easier to integrate, but we can't do much about reversals. [shameless plug] Example, checkout our ACH payouts feature: blog.balancedpayments.com/announcing-balanced-payouts/
  - nym 14y ago
    Coinbase does ACH for Bitcoin, they usually hold the funds for 6 days to prevent fraud.
mahyarm 14y ago
I'm guessing coinbase will be able to reverse the charge since they provided their service of giving you bitcoins properly?
- Judson 14y ago
  Doubtful - 1) They have to explain to the credit card chargeback authority what a bitcoin is and why the entry in the block chain means they actually sent the coins. 2) Nothing to stop the Bitcoin buyer from just saying "I didn't do it" (Which is 'friendly fraud' in the article). From my experience, reversing a chargeback is only possible in a minimum of cases when sending physical items, and even harder for digital goods that you can't just send again (Bitcoins vs an Ebook).

mahmoudimus 14y ago

(I'm a Balanced employee) My personal views are my own and NOT Balanced on this topic. I agree, I think bitcoin is a great solution -- for some things. More and more I feel that it's the right strategy going forward. We actually have an open github issue to support it: https://github.com/balanced/balanced-api/issues/204 https://github.com/balanced/balanced-api/issues/204. You should take a look and read the comments there -- they're very interesting. Something I'm trying to figure out though is something along the lines of this comment: https://github.com/balanced/balanced-api/issues/204#issuecomment-10731245 https://github.com/balanced/balanced-api/issues/204#issuecom.... How can we tackle on risk in a reasonable way? Jon Matonis, CEO of Hushmail, wrote a pretty interesting article on Bitcoin for Forbes, where he mentions Balanced: http://www.forbes.com/sites/jonmatonis/2012/11/26/payments-startup-balanced-innovates-in-wrong-direction/ http://www.forbes.com/sites/jonmatonis/2012/11/26/payments-s... but he just didn't answer or ask the _right_ questions. Another reason - there just hasn't been enough demand for it.

wmf 14y ago

Realistically, the percentage of customers you lose by accepting Bitcoin is probably much higher than the cost of handling credit card fraud.

mrb 14y ago
Well, obviously, do accept Bitcoin in addition to credit cards, so no customers are lost, only gained.
- JoachimSchipper 14y ago
  And no fraud would be stopped.
  - mrb 14y ago
    Not stopped, but it would decrease fraud, as the fraction of payments made in bitcoins is guaranteed to be impossible to charge back. As this fraction increases, fraud is reduced further and further. It would be interesting to have a payment platform that evaluates the trustworthiness of a customer right before payment (based on factors such as customer history, shipping address matching the billing address...), and force those deemed "risky" to pay in Bitcoins. It could even handle CC authorization failures: "credit card declined? No problem, pay in Bitcoins instead."
    - jareau 14y ago
      Based on the comments above (http://news.ycombinator.com/item?id=5259876 http://news.ycombinator.com/item?id=5259876), it seems like Bitcoin is just allowing merchants to kick the chargeback risk down the road to the Bitcoin exchanges.
      - jerguismi 14y ago
        No sane exchange accepts credit cards...
    - 14y ago

Nursie 14y ago

As a customer, why would I want to do that? Other than a few big names I have a lot less than absolute trust in online vendors, so I find the chargeback facility very reassuring