[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.