[yc1010]

I like how the reason for "chargebacks" is often touted as "consumer protection" when the real reason it to line the pockets of the credit card duopoly and ensure the merchant always gets screwed.

In many developed countries there are consumer protection laws which entitle the buyer to Replacement, Repair, Refund (in that order usually), so a merchant not adhering to these laws could endup in serious legal trouble as is.

Bitcoin at least gives a choice to both buyers and sellers just like plain old cash does

Bitcoin, Cash and Traditional Banking (SEPA etc) provide an alternative for commerce where one is free from Visa/Mastecard stupidities and ensure that the Visa/Mastercard duopoly is actually forced to compete and not grow into a more dominant and more abusive entities than they already are. They provide an alternative to being tracked and data-mined and having personal information sold to god knows who :( People do not value their privacy until they lose it, and by then its too late.

* Cash allows me to pay (quite anonymously and without fear of being an entry in some datamine) for things locally

* SEPA bank transfer allows me to pay EUwide for goods and services reasonably quickly and for no fees (thank you EU! credit card duopoly must hate SEPA)

* Bitcoin allows me to instantly pay world wide with ultralow fees, its basically electronic Cash (credit card duopoly do hate bitcoin with a passion, just yesterday they prevented neteller from bridging bitcoin and credit card worlds which IMHO is anticompetitive! http://blog.neteller.com/2015/04/new-deposit-option-bitcoin/)

I forgot the last time I had to use a credit card (or paypal and their "consumer protection") in the last year, and my life both personal and business is easier and better for it.

[bduerst]

Insurance (and chargebacks) is one of those things you don't care about until you need it.

When someone stole my debit card number (probably through a compromised reader) and began using it fraudulently, my bank contact me, shut down the card, and eventually gave me my money back. How many people at Mt. Gox were insured?

You can make contrived hypotheticals about the "benefits" of not having these services, but they get harder to explain away when you do need them.

[yc1010]

Bitcoin != Mt Gox

The people using Mt Gox knew it was not an insured service and for most part ignored all warning signs for a long time that it was basically a scam.

They CHOSE to trust a shady service with a ridiculous name for the storage of their bitcoins when they could have stored them locally in a quite a secure manner. They CHOSE to send bitcoins and fiat to service that had warning lights flashing above it for months and months on end. The people who lost money in Mt Gox knew exactly what they were getting into and got burned for it.

Their stupidity is not the fault of bitcoin protocol/platform yet you and many others equate bitcoin to MtGox unfortunately.

BTW > http://blog.ycombinator.com/coinbase-yc-s12-is-becoming-the-... There are services being build around bitcoin including Ycombinator funded ones that build on bitcoin and start to offer things such as insurance and good professional trading tools and api's etc etc on top.

Bitcoin is a technology which gives users more options and choice (including choice to spend their money on scams such as MtGox if they so wish)

[bduerst]

Mt. Gox used bitcoin, just as my bank uses USD and has FDIC insurance. Stop splitting hairs.

Any number of the fraudulant/hacked bitcoin exchanges or marketplaces could be used in place of Mt. Gox as an example of when you need insurance: https://bitcointalk.org/index.php?topic=83794.0

You can't claim that no insurance/chargebacks is a competitive benefit and then say the ensuing consequences aren't a problem because of "expectations". People on a daily basis do not expect accidents or fraud, but when it does happen it is needed.

[yc1010]

You got it backwards it is the person I replied to earlier who claims that credit cards are superior because they have the "chargeback" feature.

Most of the worlds commerce is done in cash, Bitcoin is very much like electronic cash and it does this very very well. Like any other well designed protocol it does not attempt to do more than it was designed to do.

Things like insurance and chargebacks etc etc will be provided (already are!) by startups in the bitcoin space, and thats great.

In my opinion the credit card "chargeback" process is not a feature it gives too much control to the consumer while shafting them merchant (which in turns leads to higher prices for the consumer) all while making money for the credit card duopoly. If anything it makes fraud (against the merchant) more possible and likely this once again results in the consumers being indirectly harmed when merchants have to price in credit card fraud and chargebacks into their prices.

[bduerst]

The spotted insurance being provided for bitcoin is through private for-profit organizations, which unlike FDIC, has margins that come at a cost to the consumer.

There are "chargeback" solutions, which involve multi-sig escrow, but are not unique to bitcoin and thus not competitive.

This is why bitcoin can't be competitive - because consumers make the decision on what type of payment method to use and opt for the method that empowers them in case of fraud and accidents. Bitcoin isn't competitive by design, and no amount of proselytizing will change that.

[yc1010]

You see a problem I see opportunities for banks to have regular (insured) current account linked to bitcoin payment system giving the consumer the option to pay using bitcoin direct from their current account if they so wish.

Imagine a consumer instead of withdrawing €50 at an ATM with their debit card and then going for a drink in the pub. Instead settling their tab at the pub (or paying by waving their phone) using their phone with a bitcoin app

[Nursie]

>. I like how the reason for "chargebacks" is often touted as "consumer protection" when the real reason it to line the pockets of the credit card duopoly and ensure the merchant always gets screwed.

No, it's consumer protection.

Without chargeback being available many people wouldn't shop online, ever. I might not go that far but I would certainly only ever shop at stores whose names I already know. There's no way in hell I'd send money to some unknown vendor that may never fulfil my order without the ability to get the money back.

[wongarsu]

I have different observations. In Germany most people don't own a credit card, yet online shopping is alive and well. From my observation, when people don't fully trust a store they even prefer wire transfers (which are common, easy, and free, but offer no way to get your money back).

People simply trust the law to protect them. Doing a chargeback already implies that one of both sides is committing fraud. If an online shop is committing fraud we trust the police to get our money back.

[Nursie]

Chargebacks are quicker and easier than trying to drag a vendor through the courts, especially when your only relationship to the vendor is online, the vendor may be in another country and they may have just packed up and disappeared, or for whatever reason it is they just don't have the money.

Further, under UK law, the credit card issuer is a party to the debt and acts as a guarantor - they're on the hook if the merchant does somehow manage to get away with the cash.

>> Doing a chargeback already implies that one of both sides is committing fraud.

Yes, and we have thousands of years of 'Caveat Emptor' shenanigans to point out just how necessary consumer protections are in this space.

>> If an online shop is committing fraud we trust the police to get our money back.

Then you must be prepared to wait a long time and frequently be disappointed.

[chimeracoder]

> to line the pockets of the credit card duopoly and ensure the merchant always gets screwed.

First, in the US there are four companies, not two (or three, if you don't want to count Discover). And chargebacks aren't the reason that there are so few players - they're far from the biggest barrier to entry for an upstart, aspiring credit card provider.

> In many developed countries there are consumer protection laws which entitle the buyer to Replacement, Repair, Refund (in that order usually), so a merchant not adhering to these laws could endup in serious legal trouble as is.

That's not what chargebacks are generally for, and in fact using a chargeback for any of those three things is oftentimes considered misuse of the chargeback system. Chargebacks are for handling disputes regarding the actual goods or services promised or rendered.

Furthermore, having laws in place means nothing if it's prohibitively expensive for consumers to actually get them to be enforced in all but the largest disputes. Chargebacks are a tool that consumers can (and do) use to ensure that merchants adhere to these agreements. No individual is going to go to court with a merchant over a few hundred dollars on a disputed credit card charge. The consumer delegates this authority to the credit card company, who is more than happy to aggregate this risk across multiple customers, in exchange for a cut[0]. This is not a problem; it is the system working as intended!

I'm saying this both as a consumer and as a merchant who has gotten screwed over by one of the four (not two) major credit card companies[1] - chargebacks suck, but they provide an essential protection for consumers that the judicial system cannot.

(All of this is separate from fraud, which is a different matter entirely.)

> I forgot the last time I had to use a credit card (or paypal and their "consumer protection") in the last year, and my life both personal and business is easier and better for it.

I've had to make a few chargebacks in my life. The largest was for almost $2000. Even though the vendor was clearly in the wrong (and I had the written contract to prove it), it would have been way too expensive to actually try and get our money back through the judicial system. Fortunately, my credit card company was more than happy to settle the matter for us.

[0] The consumer doesn't pay for this service directly, but they do indirectly (which isn't fundamentally different from many other products and services, in which the actual cashflow is invisible to the end consumer - this can be problematic in its own right, but that's a separate matter of discussion).

[1] I have plenty of chargeback horror stories as a merchant, but that's the topic of another post. And that doesn't mean I don't see the value in chargebacks in general.

[curun1r]

> First, in the US there are four companies, not two (or three, if you don't want to count Discover). And chargebacks aren't the reason that there are so few players - they're far from the biggest barrier to entry for an upstart, aspiring credit card provider.

Regardless of how many players there are, it's hard to deny that they behave like a cartel, which I think was the point of GP's use of duopoly.

I don't really see chargebacks as an anti-competitive practice, but I do see them as shifting the burden for their shockingly-bad security practices to merchants and consumers and focusing on ease of use (even for criminals) to increase the amount of credit card spending and profits for the payment networks. Europe has had chip and pin for decades now (it was already well established on my first trip there in 1998) and we're just getting it now after a ton of major breaches that should have been easily prevented. But merchants are forced to take credit cards because consumers love the convenience of paying that way and they're prevented from knowing the added cost that it imposes. That's where the cartel behavior comes into play...the policies that prevent merchants from advertising different prices for credit card transactions to reflect that added cost of accepting credit cards adds a silent ~5% tax onto everything we buy. Even for informed consumers, it creates tragedy of the commons situation because you'd be foolish to buy with cash when you can pay the same price and get 1% cash back.

All of this follows from the chargeback system that places all the burden for fraud on merchants. If the payment networks bore the burden for fraud out of their cut, we would have seen credible security features long ago. And somehow, when breaches like Target and Home Depot come to light, we blame those companies rather than the payment networks who should have been responsible for solving these issues many years ago.

[chimeracoder]

> Europe has had chip and pin for decades now (it was already well established on my first trip there in 1998) and we're just getting it now after a ton of major breaches that should have been easily prevented.

There's a lot of misinformation about chip-and-pin (which is not surprising, because a lot of well-funded companies currently have a financial interest not to clarify the misinformation). This has been explained in more detail on the threads about the breaches by others who work on payment systems, but chip-and-pin would not actually have prevented several of the breaches that have happened recently in the US.

Furthermore, the main benefit to chip-and-pin has to do with the liability, not actual security. I'm not talking about the liability shift onto merchants who don't accept chip-and-pin; I'm talking about the situation in which fraud or suspected fraud occurs using a chip-and-pin system. In this case, though, the benefit is entirely for Mastercard/Visa/etc., and not for the consumer.

[yc1010]

Mass use of credit cards must be an American thing, here in Europe we actually do have descent consumer friendly payment methods (beside cash) in most countries and also fairly efficient Small Claims Courts.

Visa/Mastercard must absolute hate the EU and its consumer friendly policies that actually focus on making lives easier and cheaper for people here.

[TTPrograms]

Even going to a "fairly efficient" small claims court is infinitely less convenient than not going at all.

I think the consumer wins on this one.

[yc1010]

The consumer doesn't win, the consumer pays 1-3% more for everything than they should for good/services and the merchants ALWAYS endsup being shafted which leads them to raise prices more to account for fraud and chargebacks.

The only who actually wins is the credit card cartel.

[tallanvor]

You've already decided that the increased costs associated with credit/debit cards aren't worth the increased protections and convenience you get as a consumer.

Personally, I find it much easier to be able to carry a credit or debit card rather than having to worry about carrying cash for everything. And knowing that I can get my money back pretty quickly if there's a breach or if a merchant doesn't provide the services they were supposed to is worth paying a bit more.

[yc1010]

You know whats even better than having a wallet full of cash and credit cards (which can be stolen, cloned etc and having to spend hours on the phone trying to convince your bank that no you really didnt go on a trip to eastern europe paying for hookers with your card)

Having a phone with a Bitcoin app where I tap on the payment terminal and pay by confirming the amount and entering my pin.

Or scanning a Bitcoin QR code and paying online instead of typing long string of numbers, expiry codes, cvv etc etc and then going thru the anal probing that Verified by Visa or mastercard secure code is.

[cookiecaper]

Chargebacks remove all responsibility from the buyer. Perhaps we'd be better off if the consumer did have to put some thought into the quality of the goods and services they're purchasing and the vendor they're purchasing from? In particular I don't think chargebacks should be allowed for sales under (at least) $50. In many cases where the sum is below that amount, the chargeback fee and man-time cost asssociated with filing a dispute makes it an automatic loss of money for the vendor, even if he/she wins the dispute.

[mikeash]

It's not like merchants are required to accept credit cards, or customers are required to use them. If you don't like using credit cards, don't. If you don't like merchants who accept them, patronize those who don't.

Of course, that last bit is pretty hard, but only because merchants have mostly decided that the cost and hassle of accepting credit cards is well worth it.

[yc1010]

If you want to sell anything over the internet your choice is either credit cards (and wallets such as paypal build on credit cards) or bank transfer or bitcoin

Once the again the keyword here is "choice" Bitcoin gives yet another option for eCommerce at ultralow fees. and thats great.

[mikeash]

Or money orders or mailing cash or checks or barter or....

My point is, you have a choice, so if you don't like how credit cards do things, don't use them.

[cookiecaper]

The "choice" to accept credit cards is kind of like the "choice" to have adequate parking -- if you don't do it, no matter how good you are, you're not going to be able to compete (in most parts of the country). Consumers expect to be able to use cards these days, many people don't carry any cash anymore. Every typical storefront is expected to accept cards and your shop won't get traffic if you don't, just like it won't get traffic (again, in most parts of the country) if you expect your customers to park a mile away and walk.

This whole line of argument is kind of a red herring anyway. It's OK to discuss things we do or don't like about something without it becoming a "take it or leave it" situation. "Take it or leave it" is meant to shut down an discussion that the party pushing that line doesn't want to happen. I never asserted that the force of law compelled anyone to accept credit cards, so it should be obvious that it's "optional", right? Why can't we talk about the problems, real or perceived, with chargeoffs, mikeash?

[s73v3r]

If the vendor has screwed me, why should it only count if it's above a certain amount?