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Comment by malgorithms | Hacker News Reader

The problem with this is that, from the buyer's perspective, the price is almost always the same when using a credit card or alternative. And with a credit card, the buyer gets rewards back, typically 1% or so. So, sadly, using a credit card continues to have more protections, costs less, and has deferred payment. I don't think this is a good thing, just saying. I hold some bitcoins, but I never buy anything with them. It costs more.

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What you said is 100% correct, which is why companies accepting bitcoin need to give the entire ~2-3% discount to customers. Very few credit cards will match 2-3% rewards, and from the sellers perspective bitcoin is better than credit cards payments.

To name a few benefits:

- There are no chargebacks

- Funds are available immediately (though transferring from BTC to USD may take a day)

- You can accept payment from anyone anywhere in the world (harder with CC atm)

- Fraud detection isn't as important w/out chargebacks. Granted this is a concern for consumers, which is why they need solid security for their wallets. I think of it like cash transactions. You don't have to worry about someone coming into a store and claiming that someone spent their $5 bill with serial code 123-xyz after stealing it.

Is it legal to pass the discount onto customers? The only businesses I've seen giving a discount for paying in cash are (some) gas stations.

I assume it would depend on where you live but it is in the US.

Semantically if it's a surcharge for paying by CC it's illegal in several states, but not if it's stated as a discount for non-CC transactions.

http://www.ncsl.org/research/financial-services-and-commerce...

IIRC, it is now. There was a lawsuit about that in I think 2011 where merchants settled with credit card companies and payment processors that they are allowed to charge less for cash transactions. That had previously been prohibited, which was circumvented to a degree by the pervasive "minimum purchase" sign.

I'm pressed for time at the moment, so I can't provide a link.

"pass the discount"

You can say "if you are dressed like a clown today we will give you a 10% discount". Point being that there is nothing to prevent you from giving someone a discount as long as it doesn't break any laws and as long as you are offering it to everyone that falls into the same category (or the discount has been negotiated).

It was illegal until recently.

Nothing but your merchant agreement. I worked a register in a small store when I was 16, and in a slow moment I ended up reading some of the stuff VISA sent along with their booklet of invalid credit card numbers. (Yes, this was a while ago.)

In in the fine print it was clear that offering your customers a cash discount was grounds for immediately canceling your ability to take credit cards. If I recall rightly, I noticed because the store I was at did indeed offer a discount. In practice, I'm sure the store was small enough that VISA didn't care. But for larger operations I'm sure it was a serious threat.

I believe they were eventually sued and lost, but since I rarely see discounts like that, I imagine they have some sort of not-quite-illegal trick, like offering merchants advertising credits based on charged card volume.

Yes it is legal:

"Beginning January 27, 2013, merchants in the United States and U.S. Territories will be permitted to impose a surcharge on consumers when they use a credit card." http://usa.visa.com/personal/get-help/checkout-fees.jsp

> Historically Visa has not permitted retailer surcharging, but allowing surcharging was a key provision required by merchants to settle long-standing litigation brought by a class of retailers in 2005.

It's good that governments still have a bigger stick they can use to beat some sense into corporations.

In Australia its common to have a surchage when paying by credit card.

Even too much. Taxis at Sydney airport sometimes charge you 10% more for using a credit card. That's legalized theft, in my view.

What rationale is there to have a law specifically about this?

It seems to me like there's three contracts involved: The agreement between merchant/CC, consumer/CC, and consumer/merchant. Since these are all private parties, why does the government even care what contractual arrangements they make among themselves regarding how the form of payment affects how much needs to be paid?

- There are no chargebacks

This is a huge negative for the customer, though

Bingo. Chargebacks are my way of making sure I have a fallback if the merchant fails to live up to their end of the bargain. I use them as an option of absolute last resort, but the few times I have, I've been very glad that I had the option, and that the credit card companies bent over backwards to shield me from the headaches of the issue.

I also had a lot of headache when a seller charged me twice and tried to send me another product because I had to charge back several transactions while explaining "yes, the FIRST one was legitimate and I got he product, but the later ones are not".

I had to charge back twice because the seller kept on charging me on the same credit card number! At least with Bitcoin you're only in for whatever you pay.

companies who fail to live up to their end of the bargin in a bitcoin world won't survive long. I've been shopping on the internet since the 90's and not once have I had to place a chargeback.. Chargebacks are mostly fraud and people wanting shit for free.. In turn goods become higher priced and that cost is passed onto all the other customers.. Anytime I have been unhappy with an internet purchase the company has always given me a refund. The need for chargebacks is truly minimal. Any company that wants to keep their customers is going to issue a refund. Companies that won't are shady and need to go out of business anyway.

>companies who fail to live up to their end of the bargin in a bitcoin world won't survive long.

Yes, just long enough, like Butterfly Labs. (Credit card purchasers: could do a chargeback. Bitcoin purchasers: SOL.)

Chargebacks and reversibility in general are essential to consumers. If shit goes wrong, it's gotta be fixable.

(This is also why nobody actually wants smart contracts. They know that the plot of Dr Strangelove is literally an irreversible smart contract going wrong. Consumers want fixability, business-to-business wants the option of lawyering out of a bad deal. The only people who want smart contracts are the businesses who currently screw over their customers with mandatory arbitration clauses.)

No idea why this was down voted. This is a very legitimate comment. When I'm wrongfully charged or sent goods that aren't what's advertised and support doesn't help or reply. A charge back offers the protection a buyer needs.

If you insist on keeping the risk on the seller side then what's wrong with good old Charge On Delivery?

You increase the number of non-payers by not only having the fraudulent ones but also the lazy ones who delay payment, the forgetful ones who keep forgetting to pay and the ones that don't get your bills. Then you add on the cost of trying to collect from all those people. Cheaper to just charge up front and accept that some tiny percentage will be fraudulent.

Which is why a 2-3% discount for Bitcoin purchases is appropriate. With reputable merchants, I would be willing to give up the ability to charge back for an additional 1-2% discount.

In addition: When you implement 3D Secure (Mastercard's Mastercode or VISA's VBV), you are also not liable for chargeback. In Asia, most payment gateways implement 3D secure.

Which is why multi-signature transactions eliminate this negative.

What percentage of transactions, in the real (if small) world of buying things with Bitcoin, are multisig?

Not sure, but you might be able to gain some insight due to the fact that multisig addresses all start with a "3".

That's why the seller has to give the money to the consumer. The seller avoids the customers who scam which is a non-0% amount of the time, so if the seller is trusted this would be a good thing to do. I'm talking Amazon-level trust.

I mentioned this in another comment, but this is why I would encourage consumers to only take a discount like this from reputable sellers.

eg I would gladly take a 2% discount with Amazon, as it would save me hundreds over time.

On the other hand, if I were trying out a new SaaS product I would start with a credit card and opt to use BTC once I trusted the company and their product, much like I wouldn't buy a 1 year subscription for a 10% discount without first using the product for a month or two.

Ok imagine next time you buy flights or concert tickets, instead of invariably paying some $6 credit card surcharge per booking, you are offered the option of booking with bitcoin for a $2 or even no surcharge. I will definately at that stage start looking at paying with bitcoin.

Then as a significant proportion of the population (say 20%) starts paying with bitcoin, other online shops like amazon will start seeing that they are saving a LOT by not paying 2% interchange fees to cover bullshit credit card reward programs and fees. And then the number of stores charging an additional credit card levy will increase as shops are not automatically building the credit card fee into the price, and then the number of people being pushed into bitcoin will increase.

The only thing that can stop this is credit card companies effectively lobbying that shops cannot charge more for credit card payments. this has happened historically in some juristictions, but is really pretty hard to justify for any sane reason so will be unlikely to stick.

This will either really marginalise credit card companies significantly, or really force them to put the screws on their interchange fees (and greatly reduce their rewards programs).

The other thing that can stop this is a bidding war, where credit card companies restructure their business model and lower their fees to the point where the inherent advantages of credit cards (such as chargebacks and lower inherent overhead due to lack of currency volatility and mining) stop the advancement of Bitcoin.

In either case, Bitcoin isn't going to take over the world, but whoever can figure out a good way to deal with the problem of how regular people could easily obtain Bitcoin in the first place has a chance to skim some profit in the interim.

> the buyer gets rewards back, typically 1% or so

This might be a US-centric perspective. In France, to my knowledge, there are no such rewards, and no chargebacks. Still, there are transaction fees, so merchants would have everything to gain by proposing Bitcoin payment and sharing the savings with the customer.

This is correct. The only businesses I've ever seen pass the CC fees onto the user are very small mom and pop shops ($5 min) and gas stations.

Government, education and law firms also pass fees on to the consumer.

Norwegian Air (budget airline) adds a fee for bookings made with a credit card.

Swiss Air charges $11 for a credit card transaction. The annoying thing is their other supported methods of payments don't work for me, even though I live in Switzerland and have a Swiss bank account.

Last time I booked a flight, I did it with Bitcoin via btctrip.com. It worked out a little bit cheaper.

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