[Nextgrid]

The page is light on details, but is it scoped and merchant/amount/time limited? Because if not, it’s yet another “hack” that merely reduces one specific type of fraud (when a card number is leaked) without fully addressing the problem, so the need for chargeback arbitration (and thus associated costs) persists.

[martinald]

In a word yes.

You'll still get a lot of chargebacks by the way. With a lot of ecomm I've been involved with the fraud you are talking about is actually a small part of chargeback volume. Most is unhappy or demanding customers, or another type of low level fraud, claiming goods didn't arrive despite a photo of the person literally accepting them from the delivery company. This is absolutely rampant in b2c with smaller merchants (I am aware you mentioned this but not sure if you are aware of the scale of it).

[peteforde]

The alarming rise in the incident rate of inappropriate chargebacks ("my fries were cold") really pisses me off as a sane user of contemporary credit card infrastructure. That is, I think of chargebacks as an absolute last resort; essentially a bulwark/ombudsman to protect me from bad actors. It should be used incredibly conservatively, and it should have significant reprocussions if it is used inappropriately; sort of like steep fines for hitting the emergency strip on a subway because someone wont move their backpack.

If chargebacks go away and aren't replaced by something at least as effective, that means that we're losing one of the most significant advantages intrinsic to the payment mechanism: peace of mind.

[hakfoo]

Chargebacks are in many cases the outsourcing of proper consumer-protection regulation and everyday customer service.

When the merchant fails to deliver or underdelivers -- "my fries were cold" -- appropriate customer service should be meeting the customer at that point and addressing it directly.

Modern systems of unempowered on-the-ground employees and endless loop self-service support stand in the way of that. Consumers naturally respond by pulling the levers that remain, which is invoking the wrath of American Express.

[alex_lazarin]

Reasonable people can disagree. What is a customer to do if they think a merchant is not a bad actor, but mistakenly refuses to refund their purchase? A chargeback seems like the fastest and cheapest option to resolve the dispute.

[peteforde]

Only if you approach the domain with ignorance. It's very, very clear that chargebacks are not the play in most cases.

[alex_lazarin]

1. What are the alternatives? 2. Can you explain why chargebacks are not the play in most cases?

[rightbyte]

> peace of mind

Pay with cash. No risk of recurring charges, charging more than what you hand over, etc.

[kweingar]

This doesn't seem relevant to a discussion about chargebacks, a feature that cash famously does not have.

[Nextgrid]

Thing is, if you eliminate the risk of unauthorized transactions, you can then reasonably discontinue the concept of chargebacks as a whole, replacing it with a mediation/arbitration service that consumers can opt-in for an additional fee.

This would open the door to cheap or even completely fee-free transactions if the user doesn't want to opt-in to additional protection, which they reasonably may not want when the stakes are low enough (you weren't gonna chargeback a lunch anyway).

But for this to be viable, the risk of unauthorized transactions/origination fraud needs to be eliminated completely at a technical level, something I believe an oAuth-style system would do, and currently none of the many of hacks on top of the legacy system address. Otherwise, you'd still need to take some fees to refund unauthorized transactions, separate of customer-merchant conflicts.

[jkaplowitz]

How do you handle the part of chargebacks that currently validly apply to authorized non-fraudulent transactions, like services/product not delivered or not as described, or accidental double charges from vendors like random taxi drivers with whom you don't have a way to arrange a refund?

[anonzzzies]

mediation/arbitration

It already works like that here (eu) for debit cards (which most people have; very few have credit cards although they don't know the difference). Double charges from taxi drivers is not possible as it's tapping or dipping your card and you are there for that (we are assuming some system that prevents someone stealing your card like biometrics or whatnot); products not as delivered is responsibility for the seller to refund/replace and in other cases you go through a process of mediation. I had it once in my life, which is now 50 years. It sounds like Americans willy-nilly chargeback whatever because they can (fries were not hot or cold enough): seems not very good for the fees. Most people who travel have creditcards here and the most ones I know have no idea they can chargeback or ever needed it.

[Nextgrid]

Keep in mind that card disputes are a thing even for debit cards. Credit cards may have higher protections by law that force the lender to eat the disputed amount regardless of the dispute's outcome, but the actual process of disputing a transaction is applicable to all cards - I've successfully done chargebacks on debit cards here in the UK.

[anonzzzies]

I have done so too, but it is less automatic than on (some?) credit cards it seems. Lengthy processes and such.

[jkaplowitz]

> Double charges from taxi drivers is not possible as it's tapping or dipping your card and you are there for that (we are assuming some system that prevents someone stealing your card like biometrics or whatnot)

You'd be surprised - at least in the public transit context with iOS Express Mode, double Apple Pay taps by transit systems have absolutely been recorded plenty of times. I admit I haven't heard about this in the taxi situation, but unless the technical problem is specific to Express Mode and not general to tap-to-pay, I don't know why it wouldn't ever happen.

> products not as delivered is responsibility for the seller to refund/replace and in other cases you go through a process of mediation.

This assumes the seller is willing to do their job or go through the process of mediation, and/or that the buyer has sufficient legal insurance or available cash to cover the up-front cost of lawyers plus any related expenses plus the possible attorney's fees of the other side if the court decides against them.

Even in the EU, this is far from always true, especially for low-price purchases or when dealing with foreign online merchants who are more likely to ignore EU lawsuits or mediation attempts than to cooperate.

Of course, trying to resolve things with the seller is always the right first step, and that's the usual approach even in the US. It's just great to be able to have the leverage of the chargeback option as extra incentive for the merchant to be reasonable. (By the way - the chargeback right is not unconditional even when the reason claimed is one of the allowed reasons. The merchant can dispute it and can sometimes win depending on the circumstances, the evidence, and the bank.)

> It sounds like Americans willy-nilly chargeback whatever because they can (fries were not hot or cold enough)

To be honest, no, the idea that chargebacks are something Americans rush to do is a stereotype and not true. They're pretty rare when neither the buyer nor the seller is doing something shady, but having the option to charge back is pretty important in order to make US single-factor (no-pin / no app-based verification / no meaningful signature verification) credit cards secure enough for customers to rely on, especially for online purchases from random small merchants who can't be relied upon.

And "fries were not hot or cold enough" would pretty much never be a valid reason for a chargeback, since usually a specific temperature isn't promised before purchase.

> seems not very good for the fees

It definitely affects the fees, but honestly, a bigger impact is that the US does not cap what fees credit card issuers can charge the merchants, so the fees are much higher than the typical EU consumer card regardless of chargebacks. Some of that is of course kept by the banks as profit, but much of it is returned to customers as reward points, cash back, or other perks. It's among the reasons why I continue to use my US credit card as my primary form of payment even here in Germany. Zero foreign transaction or currency conversion fees, great perks. (This card does require a decent US credit history and has an annual transaction fee, but I get enough value out of it to outweigh that fee.)

How many chargebacks have I done in my entire life for a reason other than actual fraudulent / unauthorized transactions? Probably under 5, maybe 1-2 at most. Plus most of the fraudulent transactions were noticed proactively by the bank rather than me having to bring it up to them. Because it's a true credit card and not a debit card, I never had to pay for those fraudulent transactions.

[anonzzzies]

> To be honest, no, the idea that chargebacks are common in the US is a stereotype and not true.

The thing is, even here on HN (where I expect, maybe not warranted, the level to be higher), people seem to absolutely proud and entitled to chargeback whatever for whatever reason. Those are almost 100% Americans (I check) and that is where I got the idea; this sentiment is much higher on tiktok, youtube, reddit etc. I even saw some shorts of people screwing merchants with chargeback like it is some batch of honour.

[anonzzzies]

> You'd be surprised - at least in the public transit context with iOS Express Mode, double Apple Pay taps by transit systems have absolutely been recorded plenty of times.

Where? I heard it many years ago a few times but not for a very long time? Maybe it was a bug which got fixed?

[Nextgrid]

My point is that this would become optional and the cardholder chooses whether to opt-in (and pay an extra fee) at the time of payment.

If the cardholder doesn't opt-in then the payment is as good as cash (with the same recourse available as if you paid cash).

This could allow low/no-fee transactions for low-stakes situations where the chargeback protection wasn't going to be used anyway.

[jkaplowitz]

Ah, you're proposing to remove US credit card customers' statutory right to those chargebacks except if they opt into a surcharge on a per-transaction basis.

[Nextgrid]

Yes, essentially moving the transaction fee the merchant pays to the consumer. This means they can choose whether they want the additional protections those fees currently pay for.

[ADent]

Zelle did that, but then the news had stories about Granny sent money to a scammer and the bank won’t give back her money.