>A wad of cash or a check in envelopes isn't the most scalable or amazingly convenient payment solution on Earth, but it is more equitable and irreversible than the current system.

Cash gets counterfeited. Checks bounce. Invoices go unpaid. Debtors go bankrupt. Packages get pilfered. The world is full of shoplifters, skimmers, change raisers, rip dealers, embezzlers, commercial burglars and opportunists.

It didn't "get this bad" - it used to be much worse. Shrinkage is a cost of doing business and it's priced in to margins. If your business venture can't withstand a normal level of shrinkage that all your competitors deal with, then you didn't have a business to begin with.

Shrinkage isn’t the problem; being locked out of using a payment processor because of your shrinkage (which you’re eating) is the problem. Ever asked a small retailer how they feel about chargebacks? I’ll give you a hint: it’s not that they care one whit about losing money on the individual transactions.

It used to be that your storefront getting robbed—because that’s essentially what this is—was a temporary setback. As long as you had also made enough profit to afford to restock, and had taken appropriate precautions to deposit your revenue in the bank regularly, such losses cold be considered just a cost of “doing business in a bad neighbourhood.”

Nowadays, though, a business that might regularly get robbed—digitally—is untenable, because even if you want to restock and continue on, and even if your business is profitable enough to always be able to afford to eat such losses, your payment processors will still “fire” you as a customer. (Or see the “neighbourhood” you’re in and never take you on as a customer at all.)

thus, one strong clear use for cryptocurrency. a payment system that people cant get locked out of by the whims of the fiat middlemen

You place an order for an item from me. If you send me counterfeit cash or a bounced check, I'm not sending you the item.

I don't do invoices. I don't do credit.

And if the package is stolen from the mailing service I choose, then hopefully I purchased some type of tracking service for it to fulfill an insurance claim from the post office.

There is no justification for the new "chargeback culture" that exists in our society. Only the most centralized sellers can eat these costs. This is a temporary win for consumers-- just wait until friendly indie sellers are pinched out of existence.

>There is no justification for the new "chargeback culture" that exists in our society.

Customer protection. A lot of those "friendly indie sellers" are selling substandard goods, failing to ship products or engaged in outright fraud. Chargebacks exist as a dispute resolution mechanism of last resort.

If you can't eat those costs, you don't have a business. If your chargeback rate is over 1%, you're doing something seriously wrong and your merchant will eventually close your account. If you can't comfortably absorb the shrinkage from a chargeback rate of below 1%, your margins are far too small.

There's nothing stopping you from running a mail-order business that only accepts cash, but customers will quite reasonably baulk at the risk and inconvenience. If you don't trust your customers enough to accept credit cards, why should they trust you enough to send you an envelope full of greenbacks?

>If you can't eat those costs, you don't have a business.

Everyone agrees on this point.

>If your chargeback rate is over 1%, you're doing something seriously wrong

Not everyone agrees on this point.

The point the gp is making is that the chargeback rates are too high due to circumstances beyond his control.

He can't stop people from taking advantage of the system as it currently operates and basically committing fraud against him at a higher rate. There's no policy he can implement to prevent this. Because he's not in control.

The original flavor of “chargebacks” is the “defective” or “return” allowance charged to vendors of retail chains.

It still boggles my mind that in most major US retail chains, if you return a high value item, e.g. a TV or appliance, you can get a refund without the store clerk checking the merchandise.

It’s an unfortunate reality that in the US, consumers have been conditioned to expect lengthy return periods, and then still game the return system with various tricks. Need a tent for a camping trip? Great, use it for camping season, and return it within the 60 day return window for a full refund, no questions asked!

In my personal experience, when my company receives shipping containers with returned “defective” products, anywhere from 25-50% of the returns are working just fine.

In contrast, in Canada, Mexico, or many European countries, return periods rarely extend beyond 30 days.

With online sales, the same issues seem to have cropped up in a different form. Amazon can’t be bothered to actually verify whether returned merchandise is actually defective, or if the returned box actually has an item in it. If you ask to see the merchandise that triggered a chargeback, be prepared to shell out for freight, and wait weeks for your shipment to arrive. When it does arrive, and you find out that the merchandise is perfectly functional, or the customer kept the merchandise and sent back an empty box, good luck trying to find an Amazon rep who can adjust your account balance in a timely manner.

The return system on Amazon for consumers seems designed to encourage bad behavior. If you’re returning an item, and select your reason for return as “I didn’t like it”, you’ll be charged the cost of return shipping. If you claim that the listing was “inaccurate” or that there was a vague “quality problem”, Amazon will immediately let you download a prepaid shipping label. Better yet, you can test the different options for yourself, since Amazon doesn’t prevent users who selected one reason and have seen the return shipping cost from selecting another that has no return shipping cost.

All this is to say, I deeply empathize with the original comment and the child comment. If you’re selling low-volume, high-value goods, a bad string of chargebacks can easily threaten your business. If I’m selling 100 $50 dollar items a month on Amazon, and I suddenly get 3 chargebacks, that money is immediately deducted from my balance. To contest the chargebacks, you’ll have to go through the whole rigmarole I described before. Stripe’s underwriters are doing what makes financial sense for them, but that’s small consolation to the entrepreneur.

It’s awfully easy to say that any business with more than 1% chargebacks is doing something wrong, but if you’re a low volume seller trying to grow your business organically, a bad month or two (“variance”) can seriously crimp your cash flow and the threaten the survival of your business.

Agreed. It was much worse before. Items were sold on craiglist or gumtree. They are completely filled with scams, send cash by mail and never receive the item. Noone sane would buy an item online.

> Noone sane would buy an item online.

I buy almost everything online (normally eBay, because I like the convenient price comparison between different vendors, and the consistent search and checkout interfaces). I almost never have any issue.

I believe he was saying that it used to be much worse, not that it is like that now.

I, along with many thousands, regularly buy stuff on OLX (local equivalent of those sites) and pay by bank transfer (which is not reversible) or even cash-equivalents.

Guess you'll be even more surprised to learn that Venmo absolutely does chargebacks! Go read their user agreement:

https://venmo.com/legal/us-user-agreement/

Ahhh, interesting! I literally only googled the problem earlier today. It seems venmo's site lied to me then. It quite literally said

"It is not possible to cancel a payment without the consent of the payee".

Aka, if i give you money and you say you don't want it, you can cancel the payment.

But on Amazon or Ebay, you pay me for an Xbox, I ship it, and 3 days later "IT'S BROKEN" and I lose all my profit + shipping fees

When I was selling hundreds of items per month, I would hold any Spanish name for 48 hours. The majority of Spanish named buyers were committing fraud.

Funny story is the first time my credit card number was stolen following the Target hack, it was used in a grocery store and a convenience store near Madrid.

The "trust the buyer" thing seems to work reasonably well in practice, especially if on say eBay you limit buyers to ones with positive feedback and not living in iffy countries. Trust the seller is vulnerable to people offering say bargain laptops, selling 100s then running off.

I don't see why it would be fairer to put the burden of potential fraud on the buyer.

My identity as a seller is a business asset. If you don't trust my reputation, you are free to search for an item/service elsewhere from a seller you trust more.

However, I am not able to trust you as a buyer on Ebay or Amazon. No matter what I do to cover my bases, there is a risk that Amazon and Ebay will reverse the transaction, and I will lose my money, time, and even my item.

Conversely, when you send me cash or a cash equivalent by mail, I am now 100% fulfilled, and any failure to deliver on my end should become public knowledge quite quickly. However, caveat emptor.

I don't buy into the libertarian idea that your reputation is a sufficient substitute for proper regulation of commercial activities.

I'm sure you have used reputation a thousand times in your life to decide whether or not to dine in a restaurant, take a class from a professor, or stay in a hotel.

In my college experience, many courses that came highly recommended by the student population were garbage. Students don't have the experience to judge the worth of all courses, and the same information and knowledge asymmetry extends to many other fields of human activity.

Mostly highly rated classes tend to be blow-off classes, rather than informative and engaging ones.

All of those things are subject to substantial regulation, meaning that it's not that much of a risk to eat at a restaurant I've never heard of before. And even with those lower stakes, plenty of highly-rated restaurants I've been to turned out not to be so good.