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

by jareau 14y ago

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).

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

by 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).