The reason customers are eager to use credit cards online is because they actually can do chargebacks, so they don't really have to verify if every merchant is trustworthy.

The only place where irreversible transactions (i.e. bitcoin without escrow) make sense are those services that have almost no risk of needing a chargeback.

There are many businesses that I trust to pay them with bitcoin, but if chargebacks are a problem for a particular type of business, if they're getting a significant amount of chargebacks then those are the exact businesses for which the protection that chargebacks give me is useful, those are the businesses whom I would pay only with a creditcard but not with bitcoin, because paying them with an irreversible instrument and no easy dispute resolution likely to end in my favor means I'm likely to be taken for a ride.

Competitive merchants with good reputation will accept credit cards (because for them chargebacks aren't as big a problem), and if a merchant is explicitly telling that they won't accept credit cards because they don't like chargebacks, then they're de facto admitting that they're likely to screw their customers, that their other customers are not satisfied and request chargebacks.

I own a small web hosting company, and I'd like to tell you that it's more complicated than that. Nearly all of our chargebacks are the result of criminals paying with stolen credit cards, and then using the accounts as a platform for illegal activity. My company is the victim here, it has nothing to do with unsatisfied customers, but we're still punished by the payment processing industry.

We, like much of the hosting industry, fight back by denying new accounts to certain high-risk countries -- like most of Eastern Europe. The fraud rate from some of those countries is probably 75% or more! But that sucks, too -- it's not fair to honest people in Latvia that they're banned from the services of many small online businesses. That's where Bitcoin comes in, and it's actually been a Godsend to us!

Hmm, there are also some pretty sophisticated fraud detection tools available. Have you explored them at all?

It's not that simple.

Many (most?) chargebacks on porn and gambling sites are fraudulent. The wife sees porn charges and the husband pretends his card was stolen or the gambler loses his bet and pretends his card was stolen, etc.

Then there are sites that sell things which are easily fencable, say gold coins or foreign cash. Most of the chargebacks there are not because the merchant is fraudulent, but because the cards were stolen. Without an irreversible payment method, this whole class of product cannot be sold online.