There are valid use cases for both types of transactions: those that require an option for chargeback as well as those that must be settled with finality.
The difference is that while crypto can do both, the legacy finance system cannot.
The difference is that while crypto can do both, the legacy finance system cannot.
Nothing in banking is un-undoable. Some just require more effort to undo.
As opposed to ACH which could bounce or you could issue a stop payment.
And for fraudulent transfers, Zelle’s trying to pin them on the customer is them hoping you’d give up rather than remind them that regulation E governs it as well, and they used to acknowledge that on their web site.
If you want to have a third party mediate the exchange, you can use a multi-signature transaction (https://monerodocs.org/multisignature/). For example you send the cryptocurrency to a 2-of-3 address where the mediator, the vendor, and the customer each hold a key and two of them are needed to move the funds (the mediator sides with either vendor or customer, or the vendor and customer both side against the mediator). Or you can send the cryptocurrency to a 2-of-2 address, which allows the customer to permanently withhold the funds from the vendor at the cost of withholding some funds from themself that they put down ahead of time, like an escrow that is locked in case of dispute.
If you wanted something more like that, you could pay via a smart contract that holds the funds in escrow for a while, with the arbitrator key able to refund the money to you.
Most don't do because convenience wins for the user and increases the value.
The user knows if something is wrong (like stolen funds, accounts etc) they will get their money back, and trusts the system so spends more.
İf you don't provide this trust system, they won't spend as much as they do.
You will get less volume.
There is an asymmetry here because anyone can be a customer but not everyone can be a vendor- that requires a certain level of reputation and upfront investment. So it is more risky for a vendor to scam a customer than the other way around.
Cryptocurrency transactions require high trust in the sense that they cannot be refunded, but they also require low trust in the sense that the vendor cannot possibly steal any more money than what you sign them.
With an open season of friendly / chargeback fraud, customer lies, refund tricks, etc which customers keep doing every day and so on which too many of that and Amazon will ban your account and they should.
My guess is that if I had no option to do a chargeback, it would have been harder to get a refund then.
There is a narrow sense in which the merchant "always prefers finality" but it isn't the relevant sense.
There are, for instance, no longer many mainstream online merchants who accept only irreversible transactions. There once was a time when online transactions were primarily paid via money order, but PayPal and credit card processing has made that obsolete.
This was also normal for eBay payments at the time.
There were, of course, a few that did accept credit cards, but many people were weary about using those features because very little of the web used HTTPS at the time. Even Amazon accepted money orders (and personal checks!) for this reason.
I think most customers pay with credit cards more because of convenience (or rewards, where applicable).
There's a myriad of QR payment systems popping up around the world (e.g. WeChat, UPI, PayNow) that are getting considerable adoption — and those aren't reversible. They're popular because customers don't have to worry about carrying enough cash with them.
> if customers demand
Rather than
> customers demand
The landscape of trust online is varied. Someone is likely to have lower trust for random website you’ve never heard of (which was most stuff in the early days) than an established business or one with a physical presence.
Now that online retail is mature and trust is high, credit cards are more for convenience, but this wasn’t the case in the early days… and still isn’t the case for lesser established sellers or marketplaces.
A physical merchant usually has a storefront in a public place that they can't abandon on a whim, a reputation to lose etc, whereas the customer is usually anonymous and mobile. This is why customers are generally ok with paying using a (to them) irreversible/final payment method, and merchants will insist on it.
In e-commerce, the risk lies almost exclusively with the customer: An online store's reputation is not easy to judge (and brand impersonation is its own risk), and even at reputable merchants, the time between order and delivery is much longer, goods can usually not be inspected ahead of time etc.
Not coincidentally, the various card schemes' rules reflect this circumstance by assigning default liability for online payments to the merchant (or their acquiring bank, in case of a fraudulent or bankrupt merchant), whereas for in-person payments it lies with the cardholder (or in case of fraud with their issuer, in some circumstances).
In the early days of eBay, it wasn’t unheard of to send out a money order in the mail, wait a month, and never get the item.
But in all seriousness, if you are a vendor then any purchase by a customer that is not associated with a legally accountable entity must be settled with finality, because you have no way of preventing charge-back fraud yourself.
In cryptocurrency marketplaces, the customers vet the vendors, not the other way around. This is because the vendors have a higher upfront investment in their business and reputation. The customers are not expected to maintain a reputation (for sake of their privacy) or an investment (outside of an multisig escrow) so any attempt to vet them is prone to sybil attack.
The process of vetting customers is usually assumed by some monopolistic intermediary like PayPal. These companies are able to vet customers by implementing a mass surveillance system.
Both parties to this kind of transaction understand why finality is required, and don't have a problem with it. It's a second hand "sold as seen" transaction. The buyer knows where the seller likely lives. The seller doesn't know anything about the buyer. Neither party typically carry that kind of cash around, so there are two trips to the bank (with their own risks) that could be saved if there were some sort of easier digital equivalent.
Maybe, but since I also wouldn't be too happy if they reversed the transaction after taking the car, we both agree in advance that the sale will not be reversible. For the payment, that's done by using cash (and the possession of it), and for the car, also just possession. I give the buyer the opportunity to inspect the car before committing to the sale, and then it is "sold as seen". Unless I committed fraud, the engine falling out from underneath the car will be the buyer's problem, including in law.
It is always possible to seek redress through the courts whether the financial transaction itself was reversible or not, so that's not relevant here. Neither is the fact that to do that knowledge of identity and evidence is required; those concerns also exist regardless of transaction reversibility.
Which is exactly the point of the finality of the transaction. Private party car sales in the US typically are not warranted. The risk of maintenance on a used car is non-zero, and the buyer accepts this risk when buying a vehicle with no warranty.