[jon_adler]

Not at all. There are other solutions around the world that bypass the payment gateways and credit card acquirers. In Holland they have iDEAL, in Thailand they have QR Codes, in Australia they have BPAY and in China they have WeChat Pay. There are tons more around the world. As a merchant, it can be very expensive integrating directly with all the different options, which is where these companies help - for a fee. If you want to maximise sales and minimise abandoned baskets, you’d better make it easy for your customers to pay using the method they prefer!

[solardev]

Do those services also deal with fraud, chargebacks, etc., or are they basically digital cash equivalents?

[Aachen]

I thought chargebacks were generally considered a pain: for merchants because it's used by abusive customers, and by customers because it means the merchant (or rather, their payment provider) needs to play a guessing game about whether you're going to do a chargeback and may baselessly deny you the purchase, as well as increasing the cost for everyone due to this increased risk the merchant has

Or maybe it's just me but I greatly prefer the non-algorithmic non-pay-on-credit mechanism where I simply pay for my purchase and the other party has no reason not to take my money (and the bank no reason not to issue the payment method to everyone: as an EU foreigner in Germany without pre-existing German credit score, getting a card at all was a pain, no matter if I could guarantee it with some insane deposit amount... I have the money, they just didn't want to issue a number to pay with because of algorithm magic). Now that I got that card number by co-guaranteeing with a German, purchases often fail like when I use mobile data which is from a Dutch phone number and so it looks foreign and I guess smells like non-standard situation → must be fraud, let's deny the purchase

Digital replacements for cash, like the aforementioned iDeal system, just always works and is available to everyone with a bank account in the Netherlands (iirc they're looking to start using it EU-wide because the costs are so low). No need to pre-pay either (like with paypal credit) because it just draws from your regular account. Another advantage is that it is owned by the banks collectively so you're not giving a ton of information to a third party, like most German-native payment options requiring to verify a phone number before you're allowed to pay the merchant for absolutely no reason other than tracking

[solardev]

It's probably just a cultural difference between (broadly) the US, Europe, and Asia. In the US it's increasingly uncommon to buy things with cash or cash-equivalents (Venmo, Zelle, etc.), especially high-value items.

Basically we have very few consumer protection laws compared to the EU, and it's very much a "buyer beware" culture here. If you get screwed by a merchant, most of the time it's just too bad for you, unless the merchant has a good return policy (most big box stores do, most small places don't). We don't have the regulatory protections that EU has.

So credit cards have sprung up to offer not just buy on borrowed money, but also purchase protections that live outside the legal/regulatory frameworks. When you buy something with a credit card, you get charged interest by the bank and the merchant also pays a fee. Some tiny part of those fees get pooled into these protection (and other) services that the card offers its members.

For example, depending on your credit card, some will automatically extend the warranty of things you buy by another year or two. Or price protection is that if the thing you buy goes on sale within 30 days and you find it for a cheaper price, the credit card provider (not the merchant) will issue you a partial refund. The chargeback system is often used for disputing issues (maybe you bought something from an overseas vendor who never delivered and never bothered to answer your emails, or maybe they lied about their return, or maybe provided some terrible product). You file a claim with the credit card company, not the government or the merchant, and the card issuer will mediate on your behalf. If the amount is low enough, they'll often just refund you without a full investigation (it's not worth their time). But it also serves as a sort of review & punishment system for merchants... those who get too high a volume of chargebacks will incur higher fees or be blocked altogether by the credit card issuers, meaning merchants are incentivized to fix customer issues.

Merchants not accepting credit cards here do exist, but they're relatively rare, because so much of the population uses credit cards instead of anything else. Even debit cards (that draw from your bank balance and typically have fewer protections) still have a partnership with Visa or Mastercard to allow you to pay as though it were one of their credit cards (just with a preset balance).

Of course all of this means it sucks for the merchants, but it's way better for the buyers than paying with cash (which leaves you almost always without recourse if anything happens). Our government is so captured and so weak that basically no state or federal agency will be able to help you in most consumer issues. We do have something called the "BBB" (Better Business Bureau), but it's not a government agency, just a fake third party middleman who pretends to do that function (but doesn't actually do anything)... it's basically just an old-fashioned Yelp.

So as a buyer, if you want any protections at all, it's a credit card or nothing.

[Aachen]

Thanks for providing the context

> paying with cash (which leaves you almost always without recourse if anything happens)

One remark about this though: you always have recourse in court. We often hear the USA is incredibly litigious, but it's not like we'd not (threaten to) bring action against a merchant not acting honestly

The main situation where I see chargebacks being useful is when you fell for a scam and the perpetrator cannot be located for enforcement. Which is a legitimate concern for sure, but there's more ways of dealing with that than giving everyone the option to chargeback anything on a whim with no repercussions for them

[nulbyte]

> One remark about this though: you always have recourse in court. We often hear the USA is incredibly litigious, but it's not like we'd not (threaten to) bring action against a merchant not acting honestly

It is, however, like we (in the US) wouldn't bring action in court. Ordinary consumers don't want to have to go to court to resolve a dispute with a merchant. Unless you have a substantial amount riding on the outcome, you're just going to lose, even if you win. It costs time and money to go to court. While you may legally have recourse with litigation, in practice, it doesn't usually work that way.

[Nextgrid]

Problem is that court action, even small-claims-court where lawyers don't need to be present (and may specifically be disallowed) is still significantly more effort than disputing a bank transaction.

Courts could be a useful substitute if the actual penalties were high enough that no merchant would dare even try a scam (then it doesn't matter if legal action is hard work, because the mere deterrent effect means you will never actually have to do it), but that's not the case.

[anodari]

The brazilian PIX is a digital cash transfer from bank account to account built by our central bank. It doesn't handle fraud and chargebacks which must be done by the seller or third parties.

[stickfigure]

There are countless systems and they all answer that question differently.

[Nextgrid]

If the systems are local to a specific country, they could reasonably skip the idea of chargebacks and just rely on the legal system to resolve any disputes?

[comprev]

iDEAL in the Netherlands is an instant credit from your account directly into the receivers. The KYC part has already been handled by your bank.

[solardev]

So basically, if you use that to buy something, you have no post-purchase protections from the payment provider itself (chargebacks, extended warranties, price protections, etc.?) like the kind credit cards will often provide?

[popcalc]

Blik in Poland is another example. Every single domestic bank supports it. Marketplaces like OLX (Polish ebay) will sometimes offer a moneyback guarantee for a small percentage of the transaction amount. You can use the same system to pay at the grocery store or the local doner kebab place. We’ve been using cash for far longer than credit cards.

And in the EU if you’re buying new physical goods online the merchant is required to give you a week or two to return it for free.

[garaetjjte]

Blik now supports contactless payments by, guess what? Providing virtual Mastercard card.

[Aachen]

I never needed any of these things in the EEA

When I wasn't happy with a product, I either used the warranty or (mandatory) 14-day return option depending on the reason why the product wasn't conforming expectations

Perhaps warranty extras are more relevant outside of the EU where warranty laws may be less strict? How even does a payment system do warranty, it knows nothing of the product?

And what is price protection, it sounds like merchants would draw more from the account than you authorised? How would that even work? With iDeal at least, you approve a certain amount for a certain merchant (displayed on a second-factor device so it's not impacted by phishing) and they cannot later charge you more

[popcalc]

> where warranty laws may be less strict?

These protections don’t really exist in the US. The only thing American consumers can really use as leverage to get a return is the threat of a charge back. Even a small amount of chargebacks (merchants call it friendly fraud) can land you in serious trouble with Visa or MasterCard. If you lose the ability to process cards, your business is basically poof — gone.

[solardev]

I have a longer reply in a sibling post (https://news.ycombinator.com/item?id=41276479), but basically, yeah... in the US we have very few consumer protections, so credit cards offer some of that in lieu of a functional government.

They also have much better protections against fraud (if someone steals your credit card and buys something with it, you're not liable... the bank will pay you back).

If you get scammed with a cash-equivalent (like our Zelle or Cash App or Venmo), too bad, there's no way to get your money back. I know people who've lost thousands of dollars that way, and nobody will protect you from that.

Credit cards here obviously charge high interests (and charge the merchants too) but they offer a lot of protections you otherwise wouldn't get.

[FireBeyond]

> in the US we have very few consumer protections

> If you get scammed with a cash-equivalent (like our Zelle

Fun fact: shifting a significant chunk of liability for fraud away from banks and onto consumers was in fact one of the design goals of Zelle for the banks.

[Aachen]

Getting scammed is a problem but it's not super common and the banks have a policy of refunding the money. Society bears the cost that way, and has the incentive to prevent and educate, rather than that it ruins some individual's life

[comprev]

Reducing charge-backs in another reason Chip & PIN was promoted by the banks.

With a signature the merchant is responsible for fraud. They are supposed to check the buyers signature against the one written on the back of the credit/debit card or cheque book. If the signatures don't match the merchant should decline the sale.

With Chip & PIN - a code only the card owner should know - the responsibility has been shifted away from the seller over to the buyer. The banks always say "NEVER share your PIN code with anybody. It's for you only"

Claiming a charge-back is much harder if YOU are the one who authorised the transaction by entering a code only YOU should know.

[_heimdall]

Correct, systems like iDeal intentionally don't support charge backs [1].

I believe the argument is that as long as they can ensure all transactions are secure and can only be initialized by those with access to the bank account, there shouldn't be a need for charge backs.

[1] https://www.mollie.com/growth/how-ideal-payment-method-works

[radicalbyte]

In a very limited form only. The fees are very low though. You still have all of your legal rights etc so as long as the retailer / manufacturer stays in business you get the warranty etc (EU law gives a warranty on "expected lifetime" but many try to limit that to 2 years - you have to sue to get more).