[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.

[smoe]

I kind of like the aspect of cash that it doesn't run out of battery life.

[s73v3r]

Because your wallet can be stolen, but not your phone?

[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?

[mikeash]

I'm fine with discussing costs and benefits, but I draw the line when people start talking about limiting what other people are allowed to do. The moment you say "I don't think chargebacks should be allowed for" then my response is going to move to the "then don't use it" approach.

Back off from trying to stop people from using something a lot of them clearly like, and I'm happy to talk about the problems.

In any case, "take it or leave it" is a perfectly valid argument for things that aren't collective action problems. "Cars are destroying society" "so don't drive one" is a bad argument, because your individual choice doesn't make a noticeable difference. "Excessive parking hurts businesses" "so don't install excessive parking at your business" is a perfectly good argument, because you have the power to change your own circumstances there. (Ignoring, for a moment, the fact that it's common to have parking lot size dictated by local laws.) Using and accepting credit cards falls into the latter category: if credit cards hurt your business, don't accept them. That this will probably result in a failure of your business merely indicates that the benefits outweigh the costs. If you think the benefits could be preserved while reducing the costs, that would be interesting, but I don't think such a scheme would actually succeed, and not simply because the existing infrastructure is entrenched.

[s73v3r]

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