[sshanky]

I sold an iPhone on eBay once. More than three months later, I received an email from PayPal stating that I'd been charged back because the buyer was disputing her credit card transaction ("Buyer stated that they did not authorize the purchase"). Although I always pull any balance out of PayPal, I owed them the balance. I was required to find proof that I had received the order (right there on eBay), and that I had shipped it (shipping label had been created, and was also visible on eBay). They ended up reversing the chargeback, but the strange thing was how much work I had to do, when it was all systematically available to them.

[woah]

I once did a chargeback against an eBay merchant who never delivered. PayPal was no help, and they strongly advised me against the chargeback. Ultimately, charge backs are part and parcel of receiving credit card payment, and as a consumer I am glad they exist.

[colechristensen]

The real core business competence of a payment processor isn't handling or distributing money, it's dispute arbitration.

[pjc50]

Yes, absolutely; and this is one of the things that Bitcoin advocacy ignores. It goes in the other direction: all transfers are final, legitimate or otherwise.

[MertsA]

The problem I have with just about every payment processor out there is something that Bitcoin does well with from a protocol perspective. Right now you can copy a credit card with a mag reader in seconds, compromising some website that accepts credit cards means no limits to how much you can spend with other merchants, even having your credit card number stored in an RFID tag that can be read from a few feet away inconspicuously!

The status quo might mean that money can be clawed back after it's sent but identity fraud (or using someone else's credentials) should not be a problem in 2015, we've had SIM cards that can provide a secure method for identifying a physical device since the 90s. Why can't any payment processor come up with a decent alternative to having a magic number that you have to give out all the time that can be used to authorize arbitrary transactions? Maybe eventually every citizen will get a smart card of some kind and we can just use that.

[pjc50]

ApplePay potentially meets that description. Also, chip-and-pin cards.

[geomark]

Estimates are that ApplePay is experiencing fraud rates as high as 6% at some banks.

http://money.cnn.com/2015/03/18/technology/apple-pay-fraud/

[colechristensen]

You maybe should have noticed already, but this already exists and the transition is in progress.

http://blogs.wsj.com/corporate-intelligence/2014/02/06/octob...

You should have already (or very soon be) getting new credit cards in the mail with a SIM chip in them.

After October 15, 2015 credit card companies (instead of merchants) will be liable for financial losses due to credit card fraud where the consumer is forced to use the mag stripe. (In the US of course)

[tluyben2]

We have been working on a solution for exactly that and it works well. Launching soon with actual product.

[nadaviv]

There are solutions that can be built on top of Bitcoin. See https://www.bitrated.com/ (full disclosure: I'm the founder).

[bduerst]

Reputation systems and multi-sig escrows are not substitutions for chargebacks.

There are plenty of instances where you need to refund something the day after you received it, by which point the escrow money is long gone. Then the solution becomes "Hold transactions in escrow for 30 days" which isn't a solution.

And reputation systems don't work on the internet, especially when purchasing is involved. How do you competitively solve this problem?

[ikeboy]

If you want, you can use third parties with chargeback support, or escrow with multisig. Bitcoin gives you the option to choose exactly what level of security you want.

[Rmilb]

The thing with Bitcoin is that within the Bitcoin protocol the seller and buyer can choose an arbiter for disputes.

[stephengillie]

This sounds like cash.

[dirkdk]

for a marketplace like Ebay? yes! for a payment processor? I'd say no.