I genuinely wonder how true this is. Does anyone know of any stats/data that have been released about it?
And the times my other half sees odd payments on my credit card, she's on the phone claiming chargebacks lickety-split because nobody she knows would pay for porn.
So I have no data to provide on this matter. None at all.
Quoting from a Finnish crime story:
"People are willing to pay a lot of money for good porn."
"Could be. Too bad nobody's ever seen such a thing."
"Honey..about that..uh..well..I..ummm.. porn is disgusting!! Thank you dear!"
Porn consumption is pretty common, but "nobody pays for porn" is a punchline for a reason.
Even if only 10% of users are paying it would still be a very high number of transactions.
Some of my friends in the biz solely got interested in btc because of this.
We have still only a few customers using them though, so it's not a success yet.
But for those who thing crypto is a solution in search for a problem: there it is.
I often hear lack of chargeback being touted as a feature for cryptocurrencies but it's more like the lack of a feature. It's obviously beneficial if you're in the shoes of the seller but if it's so great then why does chargeback exist in the first place?
Put yourselves in the shoes of a porn buyer, would you really put your billing info on bigtitties.ru if you knew that if they steal your money you have no recourse whatsoever? Also there's now a transaction on an immutable public ledger that might trivially show anybody who cares to look for it that you're buying incest porn online?
For Cryptocurrencies on the other hand, you never give you private key to somebody. You always decide yourself which amount to transfer. No chargeback is needed for this model.
I have an EC-card and chargeback is only available for pull-transactions, not for push-transactions.
I've initiated chargebacks before, but overwhelmingly it's not because I've been overcharged (that only happened once and, ironically, by a company that subsequently launched an ICO...): It's because I did not receive the product/service, or it wasn't as advertised.
And that is just as much of an issue with crypto.
Keep in mind, in many cases the standard advise to consumers is to use credit, NOT cash, purely to be able to obtain the protections of chargebacks, but cash already has all the advantages you list as meaning chargebacks aren't needed for crypto.
EDIT: Apparently chargeback may be the major issue for porn payment processing:
With a credit card, you'd do a chargeback. With crypto there no protection from dodgy sites.
So, no, not just for physical goods.
By which you mean, the solution for the high rate of people initiating chargebacks is to just use a payment method which won't let them? I think the underlying problem is that people want to make chargebacks, not that Visa lets them. And if I'm right, then you'd expect to see customers refusing to switch, since from there point of view this isn't the solution to a problem, it's taking a solution away from them.
> We have still only a few customers using them though, so it's not a success yet.
Not a surprise, really, is it?
Sites scaming customers has been solved mostly by communities organising and insta banning bad apples.
The reverse is insolved. And yes, removing a gun will make people mug less.
1) Porn (crypto, gambling, etc.) transactions are significantly riskier than other transactions.
2) CC processing involves a long chain of intermediaries.
3) At every step of the chain there's strong pressure upstream for better rates, and strong pressure downstream to ensure the blended payment stream is safer.
So, eventually, someone in the chain gets told "sure, we can give you better rates, but only if you can improve the risk profile of your payment stream". And then they crunch the numbers, and decide it's worth it, knowing they'll lose some volume but hoping they can make it up with better margins. And then the people who churn find one of the remaining partners who hasn't adopted strict policies, and this repeats until all the "dodgy" payments are going through a high-fee chain that can't possibly afford to change their policies, and everyone else is going through a low-fee chain.
If you check CCBill, their "Blue" package that allows adult content runs 10.8% to 14.5%, with a $1,000 yearly "high risk registration fee". And even their normal plan (which doesn't allow adult content) seems to be 5.9% + $0.55 per transaction? Braintree is 2.9% + $0.30; Stripe is the same.
You can see why, eg, Stripe would be happy to leave CCBill to have a virtual monopily on adult transactions: There's not that many of them, they're so risky you'll need to charge absurdly high rates just to cover your costs, and just touching them at all will potentially taint your other transactions in the eyes of your upstream partners, driving up your rates. Conversely, you can see why CCBill will never kick the adult payments off their platform; it's the only thing they have to offer.
Disruptive startups work best when they can start with a niche and then grow from there, but the logic of the financial system makes that very difficult.