4 ms·

So, one big reason for merchants to accept bitcoins is the high fees charged by credit card processors? So, suppose they cut the fees? Does that kill bitcoin ?

pmorici 13y ago
No, there are other things about Bitcoin that are highly desirable from a merchant's perspective even ignoring fees. 1. There are no unilateral charge backs with Bitcoin and 2. You don't have to worry about keeping sensitive customer information safe. It is impossible for you as a merchant to be responsible for fraud against your customers due to stolen credit card numbers if they are using Bitcoin. It has the same properties of a Cash transaction minus the in person requirement and the potential for easy theft. In fact if you do it right it would be nearly impossible for dishonest employees to steal money from your business. Taken in isolation it's easy to say well that isn't such a great advantage but when you look at Bitcoin vs anything else on the whole the advantages are clear.
- chaz 13y ago
  But why would I want Bitcoin as a consumer? I want chargebacks if the merchant screws me over, I get a rebate/miles/points with every purchase, and some cards offer warranties and return protection. AmEx does a pretty good job at flagging fraudulent activity, and I'm off the hook for any related charges. Plus, there's still a risk of losing Bitcoin. The right bug/malware/vulnerability on my laptop or my smartphone can mean my BTC is lost or stolen. We all know that security is hard, and at best inconvenient -- and that people are lazy. If there are clear advantages to the vendor, it should be reflected in the price to the consumer. A 1% discount may get me interested, considering they'd save more than that on cc transaction fees alone.
  - Renaud 13y ago
    Not everyone has -or can have- a credit card. Bitcoin also allows anyone to accept payment which could vastly increase the range of products and services available: we can imagine that a lot of individuals and small businesses who do not have access to credit card payments will be able to offer their services and get paid.
sskates 13y ago
On any payment network the fees are a result of the risks of credit card fraud. Card processors can't cut fees without losing money. It's an efficient market as it is.
- vasilipupkin 13y ago
  Wouldn't then all the fraud risks move to those businesses which take consumer credit cards and exchange them for bitcoins. So why would the aggregate fraud cost in the system be any lower ? Also, I seriously doubt that 2.5% fee is all cost. Visa/Mastercard, etc. are massively profitable - they have plenty of room to cut those fees
  - drinkzima 13y ago
    Visa processed ~4.2T of payments last year (page 32) and earned ~5B of net income on ~11.7B of revenue (page 29). By my calculations that is ~0.1% off the top of the transaction net of costs to do business. Not much. All from the most recent 10K: http://investor.visa.com/phoenix.zhtml?c=215693&p=irol-SECText&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTkyNDQzNjMmRFNFUT0wJlNFUT0wJlNRREVTQz1TRUNUSU9OX0VOVElSRSZzdWJzaWQ9NTc%3d http://investor.visa.com/phoenix.zhtml?c=215693&p=irol-SECTe...
- SilasX 13y ago
  I thought the credit card fees were mostly to cover the escrow-like service they provide, in which you can challenge a merchant who fails to keep their end of the bargain but insists on billing you anyway?
- TomGullen 13y ago
  > It's an efficient market as it is. That's a little naive.

pmorici 13y ago

No, there are other things about Bitcoin that are highly desirable from a merchant's perspective even ignoring fees. 1. There are no unilateral charge backs with Bitcoin and 2. You don't have to worry about keeping sensitive customer information safe. It is impossible for you as a merchant to be responsible for fraud against your customers due to stolen credit card numbers if they are using Bitcoin. It has the same properties of a Cash transaction minus the in person requirement and the potential for easy theft. In fact if you do it right it would be nearly impossible for dishonest employees to steal money from your business. Taken in isolation it's easy to say well that isn't such a great advantage but when you look at Bitcoin vs anything else on the whole the advantages are clear.

chaz 13y ago
But why would I want Bitcoin as a consumer? I want chargebacks if the merchant screws me over, I get a rebate/miles/points with every purchase, and some cards offer warranties and return protection. AmEx does a pretty good job at flagging fraudulent activity, and I'm off the hook for any related charges. Plus, there's still a risk of losing Bitcoin. The right bug/malware/vulnerability on my laptop or my smartphone can mean my BTC is lost or stolen. We all know that security is hard, and at best inconvenient -- and that people are lazy. If there are clear advantages to the vendor, it should be reflected in the price to the consumer. A 1% discount may get me interested, considering they'd save more than that on cc transaction fees alone.
- Renaud 13y ago
  Not everyone has -or can have- a credit card. Bitcoin also allows anyone to accept payment which could vastly increase the range of products and services available: we can imagine that a lot of individuals and small businesses who do not have access to credit card payments will be able to offer their services and get paid.

sskates 13y ago

On any payment network the fees are a result of the risks of credit card fraud. Card processors can't cut fees without losing money. It's an efficient market as it is.

vasilipupkin 13y ago
Wouldn't then all the fraud risks move to those businesses which take consumer credit cards and exchange them for bitcoins. So why would the aggregate fraud cost in the system be any lower ? Also, I seriously doubt that 2.5% fee is all cost. Visa/Mastercard, etc. are massively profitable - they have plenty of room to cut those fees
- drinkzima 13y ago
  Visa processed ~4.2T of payments last year (page 32) and earned ~5B of net income on ~11.7B of revenue (page 29). By my calculations that is ~0.1% off the top of the transaction net of costs to do business. Not much. All from the most recent 10K: http://investor.visa.com/phoenix.zhtml?c=215693&p=irol-SECText&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTkyNDQzNjMmRFNFUT0wJlNFUT0wJlNRREVTQz1TRUNUSU9OX0VOVElSRSZzdWJzaWQ9NTc%3d http://investor.visa.com/phoenix.zhtml?c=215693&p=irol-SECTe...
SilasX 13y ago
I thought the credit card fees were mostly to cover the escrow-like service they provide, in which you can challenge a merchant who fails to keep their end of the bargain but insists on billing you anyway?
TomGullen 13y ago
> It's an efficient market as it is. That's a little naive.