As a consumer or business?
Because as a consumer, I've never had a complaint about my CC, ever. With the NFC chips built into all new CCs (at least here in Canada) I tap my card and leave.
You can't get more convenient than that. As such, I don't think credit cards are going anywhere.
Online, it's 23 digits that you don't know, and then 3-23 more fields (shipping address, billing address, name, email, etc. etc.) That sucks. Even at it's best in the Stripe Checkout model, it's less than ideal and extremely unsafe - it's so unsafe that American Express is RUNNING COMMERCIALS ADVERTISING HOW UNSAFE THEIR PROCESS IS! For your convenience, let's 2.9% and $0.30 of every transaction. That's a huge drain on the margin for a business of any size, but especially someone with checkout size about 10-50 bucks and margins of 10-40%.
So to summarize - online it's bad for consumers, bad for businesses, but it's the only way right now because hell if I know my account and routing number, and if I do the business still needs 3 days to make sure I own that account. That's the problem we've solved (I believe) but it's in its nascent stages. Bitcoin could potentially lend a lot of relief there too, which is why this is so exciting.
What are these commercials that AmEx is running? I assume they're presenting it as "convenient" rather than "unsafe" but it's obvious enough if you know what's going on?
Is my understanding flawed? How does a chargeback work when a third party does not exist and the protocol does not allow chargebacks.
Edit: Note that the merchant itself doing a refund is not equivalent. The important feature of a chargeback is that its a third party issuing it.
Shipping address, name, and email are necessary even if you use bitcoin. Billing address is usually the same as shipping address. That leaves the CC number, in which case the equivalent is your bitcoin address. So there's no real win here. And if you're using a regular online shop, then they probably have all these details saved. With Amazon, I can buy things with one click. With Newegg and other stores that I use regularly, its two. I haven't seen any bitcoin experience that matches that. Reading up on "experiences" people have with Overstock and Tiger Direct, it all seems very roundabout and inconvenient. And then you're hit with shit like no refunds to top it off.
> Even at it's best in the Stripe Checkout model, it's less than ideal and extremely unsafe - it's so unsafe that American Express is RUNNING COMMERCIALS ADVERTISING HOW UNSAFE THEIR PROCESS IS!
Pull is less safe than push, yes. Bitcoin is undoubtedly more secure than giving your CC number. But pull is more convenient for consumers, as I outlined above.
There's work-arounds for credit cards, such as virtual card numbers, but they haven't gained broader consumer penetration for the exact reason that they're inconvenient. In practice, the "unsafe but you can get the charges reversed" system works well enough that promoting a new system based on the fact that its safer isn't really enough.
> For your convenience, let's 2.9% and $0.30 of every transaction. That's a huge drain on the margin for a business of any size, but especially someone with checkout size about 10-50 bucks and margins of 10-40%.
Not every business charges 2.9%. Many get rates as low as 1% (this is what we charged large corporations, if I remember correctly). With bitcoin, you're going to get hit with transaction fees, exchange fees, and exchange spread. For small shops, its likely that will come out less than the CC fees, but for bigger stores its questionable.
Edit: Note that I hope these problems will be solved. Ideally, we see the Bitcoin protocol and ecosystem mature such that it is as convenient as a credit card and safer to boot.
Maybe I'm confused. Why is the address, name and email necessary for BTC payments? Is it a stripe requirement?
And, as you probably know, a bitcoin address is WAY more secure than a CC#. They are nowhere near "equivalent"
Its necessary in that they need a place to send your stuff. Email is often used for accounts and confirmation. This would also be stored by whatever system you are using if you are a repeat customer: Amazon, Stripe, etc. My point is that its a wash and that they are not comparing like for like in an attempt to make credit cards more complicated than they are.
> And, as you probably know, a bitcoin address is WAY more secure than a CC#. They are nowhere near "equivalent"
If you read my post beyond the first few sentences, then yes, I know that and specifically discuss it. The context of the first paragraph is discussing whether credit cards are more difficult to use in terms of inputting information. The equivalence here is that there is some number that you have to input somewhere to make the payment. Thats it. There's no other inferences beyond that.
Not for digital goods (maybe email)
> That leaves the CC number, in which case the equivalent is your bitcoin address
Most bitcoin payments are done either through mobile phone scanning a QR-code, or through uri's opening bitcoin software. I've never manually typed in a bitcoin address (worst case is copy pasting the payee address)
> I haven't seen any bitcoin experience that matches that. Reading up on "experiences" people have with Overstock and Tiger Direct, it all seems very roundabout and inconvenient.
Not sure what you've been reading, but my bitcoin purchasing experiences have all been extremely straightforward. Scan QR-code, press send, done.
> And then you're hit with shit like no refunds to top it off.
Uh...no you aren't. There's no chargebacks, not no refunds. That is, to get a refund the merchant has to agree. Basically, risk moves from merchant to customer (banks usually require the merchant to prove they delivered the goods in chargeback cases)
edit:
> With bitcoin, you're going to get hit with transaction fees, exchange fees, and exchange spread. For small shops, its likely that will come out less than the CC fees, but for bigger stores its questionable.
bitpay already offer 0% fees for a flat $30/month, and things can only get cheaper (as there get more/better exchanges and less volatility)
Yep, for one-time purchases of digital goods, Bitcoin is superior. For repeat purchases, like my Amazon Kindle purchases, you have to beat one-click.
> Most bitcoin payments are done either through mobile phone scanning a QR-code, or through uri's opening bitcoin software. I've never manually typed in a bitcoin address (worst case is copy pasting the payee address)
Ah yes, I forgot about this part. Although you can store your CC# in your auto-fill or password management software. And most stores will save it for you. The argument here is that is insecure, because you're storing your CC# and it can be stolen. But likewise, you're storing your Bitcoin private addresses on whatever device and they can be stolen as well. Except without any chance of recovery.
> Not sure what you've been reading, but my bitcoin purchasing experiences have all been extremely straightforward. Scan QR-code, press send, done.
Well I'm comparing getting an invoice, scanning a code, sending, waiting for confirmations with literally clicking a button to buy and then another button to tell Amazon where to ship my stuff. Or in some cases, just one button to buy and ship.
Then I accounted for the stories in which the invoice expired before enough confirmations, and apparently the order just evaporated despite the bitcoins being sent. And there's plenty of Coinbase horror stories from people trying to get refunds.
Broadening the use cases.. There's stuff like paying bills where I literally have to do nothing. Netflix, my electric company, Comcast, etc all just pull the funds necessary every month. I literally have to do nothing.
> Uh...no you aren't. There's no chargebacks, not no refunds. That is, to get a refund the merchant has to agree.
That was in reference to Overstock and Tiger Direct specifically. If I remember correctly, neither allow actual refunds of stuff bought with Bitcoin. They just give you store credit.
> Basically, risk moves from merchant to customer (banks usually require the merchant to prove they delivered the goods in chargeback cases)
That's a problem I have with it. Merchants are better equipped to manage risk than consumers, so pushing it back onto consumers is a bad thing.
> bitpay already offer 0% fees for a flat $30/month, and things can only get cheaper (as there get more/better exchanges and less volatility)
Didn't know that. I was going off of Coinbase's rates. Thanks for the correction.
What about the spread? The transaction fees charged by stock brokers approaches zero because they make the real bank on the spread.
Bitcoin's downfall in six words.
You're correct that there is no physical protection for the cash, but that is why most people do not carry lots of cash. Most store it in an insured bank account.
Bitcoin is very similar to cash in a lot of ways. This is both a pro and a con.
But I'll play the moving-the-goalpost game. For in-person transactions they have some similarities. They both have no chargeback or consumer protections, but we're receiving goods immediately so thats not a very large issue. Cash is instantaneous, unlike Bitcoin. Cash doesn't have exchange risk. Cash doesn't have transaction fees, while Bitcoin does. So cash is actually superior for an in-person transaction.
If I'm going to do an in-person transaction and am not going to use my card, why would I not use cash? If I don't want to carry cash, why would I not use my card? And if its an online transaction, then chargebacks are definitely something I want, even with a trusted merchant. So whats the use case for bitcoin? The OP proposed one use case; I assume that there are people who find that valid. It is not a case that interests me, personally, and that prompted my response.
Depends. Are you using a service that provides it, and are you willing to pay for it?
It's my understanding that it's explicitly against the merchant agreement with the big CC players to have different prices for different payment methods.
Of course, that's difficult to enforce in practice for every Ma and Pa operation, but if you're operating on any scale, where a significant portion of your revenue comes from CCs, that will be an issue.
Plenty of gas stations have a CC price/gal and a lower Cash price.
It was. Then there was a class action lawsuit against Visa and Mastercard brought on by Walmart, Target, Amazon, etc.
http://en.wikipedia.org/wiki/Payment_Card_Interchange_Fee_an...
A part of the settlement that allows merchants to charge fees to customers paying via credit card in order to recoup swipe fees took effect on 27 January 2013. Debit cards and transactions in the ten states that prohibit credit-card surcharges will not be affected. Many large retailers, such as Wal-Mart and Target have opted not to impose surcharges.[6] In the event of a return, surcharges are refunded along with the purchase price of the merchandise.[7] The National Association of Convenience Stores, also known as the NACS, complained that this measure "merely make[s] retailers the collection agents for the banks."[8] The National Retail Federation said, "that card company fees are the problem and the surcharge story is a volume that belongs on the fiction aisles. The real threat to retailers and their customers continues to be price-fixed hidden fees that can only be cured by transparency and competition." [9]
However, the way that gas stations got around the rules at first was they were allowed to offer a "cash discount." So CC price was the "real" price and if you paid with cash you got a discount. Same thing in the end though.
Then there are the effects of having such a thick intermediary, a duopoly. Some consumers can't get a credit card. It's hard for consumers vulnerable to overspending & borrowing to avoid the card's expensive credit component.
There's also a general brokenness (IMO) of the "pull" nature of credit cards. I want to send vendors money, not authorize them to take some themselves while reserving the right to dispute the charge. Even for recurring transactions I would rather an easy bill paying service that works like invoices & checks do, but with a 10X simpler UI.
Massive statement that I sincerely doubt is true (increased revenue off of increased liquidity drives prices down for everyone).
It's controversial that an extra cost attached to every transaction in a big wide chunk of the economy will bring up costs to consumers.
It's not very different to sales tax.
Bitcoin removes overall liquidity, by behaving like cash. The merchant may save 3% on bitcoin transactions, but they will have fewer transactions.
Aren't debit and credit cards 100% interchangeable these days? I've for sure never had my MasterCard debit card rejected.
I tried to order something online with a prepaid debit card once and it was rejected. I then put in my CC and it worked fine.
Disclaimer: My experiences don't necessarily reflect others.
However, consumer protections for a debit card are nowhere near as good. e.g. in the UK at least, if you experience fraud you have to wait for your bank to refund your account, whereas you don't experience any loss with a credit card. As such I avoid using debit unless the merchant charges for credit.
For some purchases, there is MasterCard. For everything else, there's BitCoin.
I take it you've never had your CC details stolen, or less seriously, had your CC automatically shut down when you're traveling due to "suspicious activity."
Neither take more than a few moments on the phone to resolve without the lose of any funds.
No, but I've had fraudulent charges, which required only a phone call to complain, and they were reversed.
I don't want to tap my card and leave. I wish I could turn off that "feature."
A way credit cards are bad for consumers?
Science proves that you tend to spend less money when you pay with cash, especially on unplanned and/or impulse purchases. I guess the psychology of actually handing something over then having less of it afterwards makes people think twice about if they really need to spend the money. Also getting extra cash when you over budget has an extra step (trip to bank/ATM) so you're probably more likely to stay in budget or to rethink if you really need that over budget purchase.
http://www.livescience.com/2849-study-credit-cards-spending....
http://www.investopedia.com/articles/pf/08/pay-in-cash.asp
http://seekingalpha.com/article/20333-guide-to-credit-cards-...
http://business.time.com/2013/08/08/turns-out-you-only-think...
I especially think this is interesting:
>McDonald's found that the average transaction rose from $4.50 to $7 when customers used plastic instead of cash
Then don't. No one forces you. Use signature only, or "chip and pin".
http://www.mymoneycoach.ca/credit_rating/how-to-protect-self...
"a $3 smart card reader purchased online can steal people’s credit card information if the thief can get close enough to your purse or wallet.
I know you're thinking "you're not liable for fraud." Doesn't mean I want fraud to happen, that it isn't a pain in the ass.
Especially unsettling is the RFID chips in passports.
http://www.washingtonpost.com/wp-dyn/content/article/2006/09...
http://www.emc.com/emc-plus/rsa-labs/staff-associates/epc-rf...
I did this accidentally and have been using my phone with chip and pin for about a year.
Personally I'd prefer to swipe.
I am not sure what is exactly that awful in having free credit for X days, rewards for making purchases (which effectively cancels fees) and, the most important thing, chargebacks.
I can understand Credit Card issues from seller point of view, but for clients (that is most of us), they are not that bad.
Bitcoin will have to provide the same level of consumer comfort and safety to have wider adoption.
This also touches banking system as a whole. If I make an error in my bank transfer, I will get my money back and this is up to bank to return them, I don't have to worry about this. Who will give me back my bitcoin payment done by mistake?
Chargebacks are awful. 99% of the time, the merchant is a trusted party with a reputation to uphold, and the customer is a nobody who either couldn't care less about or couldn't be held to their reputation. Established companies won't go around overtly scamming people. The only time that chargebacks are really a good thing is with the very uncommon untrusted-merchant sale (like a new seller on Ebay with little/no feedback).
Chargebacks themselves are a necessary part of the trust infrastructure you talk about. Not just for new merchants, they keep the established ones honest too.
I think I know what you mean by that statement, but I want to make claer that Bitcoin (the protocol) should never provide this. This is like wanting to build guarantee-of-delivery into the IP protocol. It's completely unnecessary and counter-productive.
We want to preserve the ability to send funds to people where chargebacks aren't required, just as we want to be able to send data to people where guarantee-of-delivery isn't required.
Stripe, BitPay, Coinbase, PayPal etc. should be the ones who choose to provide chargeback services.
1. Consumer protections are not a Credit Card thing - chargebacks and literally every single protection CC's give you are legally mandated by Regulation E - all payment processors must have them in place. It's unclear how this will relate to BTC, but other solutions (including my own) have this to the letter the same way CC's do. CC's want you to believe it's them, it's not - the US Government made those regulations.
2. Yes Billing and Shipping Address are needed in every instance - but there are better ways than typing them out, especially on a mobile phone. Sure there are services that can save that info for you, but a better solution is a network that already knows that info. Stripe could build that with their "remember me" features, I've built that by using the information your bank has. There are solutions, and we need them to move into mobile commerce where it's impossible for every app to have your info pre-saved. In a world outside the browser, we need better options.
My CC got hacked twice on the internet, every time I got my money back., it took 90 days but ultimately was credited. Can I expect it from Bitcoin?
Anyway 99.9% people do not have bitcoins to spend. I like it, however it is far from becoming a mainstream payment method., and perhaps never will sadly.
The only thing stopping this from happening today is illiquidity of the BTC<>(insert fiat currency) market. Once we see more liquidity, this dream can become a reality.
How do you think merchants are paid by VISA? Through wire transfers. Are wire transfers reversible? Nope. Yet VISA is a reversible payment system built on top of bank-to-bank wire transfers. Customers deposit funds into their bank account, they get a credit card tied to this account, they pay a merchant with this credit card, the merchant receives the money into their bank account.
Just because the lowest layer is not reversible, does not mean reversibility cannot be built on top. In fact, it's preferable that the lowest layer be irreversible, because irreversibility cannot be built on top of a reversible system.
Bitcoin is the IP Protocol of payment protocols. I'm sure that companies are busy building the TCP/IP protocl of payment protocols on top of Bitcoin right now.
But it might mean it's not a great consumer payments product on its own, which is what the BTC crowd are cheerleading for, incessantly.