Non-fraud chargebacks cost businesses millions every year. Bitcoin eliminates credit card fraud and chargebacks!
Non-fraud chargebacks cost businesses millions every year. Bitcoin eliminates card fraud and chargebacks! Merchants Bear a Heavy Cost from Non-Fraud Chargebacks
There are shortcomings in prevailing chargeback procedures that are costing merchants billions of dollars each year.
There are a number of systems in place to protect the consumer from fraud-related chargebacks, with Visa’s TC-40 and MasterCard’s SAFE working pretty well in instances of outright fraud. However, the information in these lists is not very well suited for preventingchargebacks in the situations that may not involve fraud, such as buyer’s remorse, damaged merchandise, wrong items, etc.
This is because the information contained in the TC-40 and SAFE lists can be difficult for merchants to acquire in a timely manner, meaning merchants are hit with chargebacks before they even know there is a problem.
Even worse, if a merchant is unlucky enough to get too many fraud and non fraud chargebacks or fraud reports, that could trigger an association’s chargeback monitoring process or adversely affect the merchant’s billing authorization success. Outside of being expensive and time consuming, the most extreme instance could even lead to expulsion from the Visa or MasterCard network entirely. Unable to accept bankcard payments is the kiss of death for many merchants, especially online and recurring merchants.
Here’s a common scenario: Alice notices a charge on her bill from Bob’s Comics that she did not make. She calls the issuing bank for her credit or debit card and denies making that purchase. Most likely, her bank will issue a provisional credit to her account and charge back the amount to Bob’s acquiring bank. Now that bank will investigate the disputed charge and if it’s valid, the amount is deducted from Bob’s account and he is notified of the chargeback. (Along with any fines, fees and penalties from the card association and the acquiring bank.)
Chargebacks can occur for a number of reasons: fraud, returns, dissatisfaction, even authorization and processing errors. Consumers might also engage in “friendly fraud,” in which they make a purchase but dispute the transaction to avoid paying for it.
Making it worse, Bob may have to wait days, weeks or even months before he is notified of the dispute and chargeback. This is because the issuing bank has to notify the card associations first and then in turn, the association then aggregate the data for all the issuers and share it back out to all issuing banks. The lag time in chargebacks from the sale date can also be very long, upwards of 180 days from the sale date. The merchant is the last to know. It is a slow process and the merchant pays the price.
For Bob, chargebacks cost time, money and headaches in dealing with a dispute that could usually be more easily handled between Alice and Bob. (Most consumers contact their issuing bank directly, rather than approach the merchant first.) Moreover, reports indicate that for every $100 in chargebacks, it costs merchants $308 in wasted time, expensive fees, penalties or additional losses of goods and services. In many cases, it simply is not worth the expense of to dispute the chargeback through the representment process.
The way forward is a collaborative dispute resolution network that closes the loop before chargebacks occur. In our experience, using a dispute resolution network could reduce chargebacks by up to 40% and give merchants and issuing banks another tool to keep customers happy and save money. Or you could just use Bitcoin!
Bitcoin does not support transaction reversal; it is the digital form of cash money. The payment processors are currently very rudimentary and work mostly as a direct gateway to the bare protocol. In the future, for Bitcoin to succeed, someone will have to do for Bitcoin what credit cards did for cash– that is, among other things, centralise the risk of handling fraud in return for a per-transaction fee.
If you begin taking Bitcoin right now using Coinbase or BitPay, it will be almost exactly like accepting cash. It will be up to the ethical integrity of your operation to decide the fate of refund requests.
Dealing with fraud in the Bitcoin world?
Bitcoin is the same as cash and has the same solution… Google wallet, Bitpay, PayPal and the likes… These are services and can offer chargeback for customer protection. They charge a fee given it’s their service offering on top of cash/bitcoin.
Best thing is it provides a layer of safety to these services as there’s no chargeback/chargeback like you have with bank accounts 😉
So why bitcoin and not cash? My view is it’s a global tradable commodity, fiat currencies need to be exchanged via 3rd parties first and they’ll charge a fee. Also you need a bank account for those sorts of transactions. Finally it’s now optional to use paypal and the likes for digital trades. I.e. You can now decide if you want to pay their fee for that service.