> Credit cards companies charge businesses that allow consumers to use them a fee. Business often pass this fee on to the consumer, sometimes even explicitly. For example gas stations usually publish separate prices for gas w/ or w/o credit card. That fee is the main revenue source for the credit card company, and fraud reimbursement is one of their expenses. Expenses go up? Fees go up. In this way businesses (and less directly you) are paying an insurance premium on top of the credit card company's operating costs and profit margin.

With bitcoin you have both: high fees and no fraud protection.

> Credit card companies most likely write fraud reimbursement off when filing taxes. So taxes that they would otherwise pay vanish. If the taxing entity wants a minimum tax revenue, that means increased rates elsewhere (and quite possibly for individuals).

So what you saying this is better, because when fraud happens you (an individual) can't deduct it from your taxes?

I think the arguments are very weak, much stronger would be that government can't supposedly stop you from paying or receiving payments, but they still can do it in other ways (like prevent converting the money or physically get you).

I think though that (at least for me) ability to reverse charge to stop fraud is more valuable than the above.

I'm really arguing for discourse, not one side or the other. I've used charge backs multiple times.

But after thinking about it a while I realized that I've probably paid more in this hidden premium than I've recovered from reimbursement. Until COVID hit and I had to refute multi thousand dollar plane tickets that were never able to be used. Will I have paid more for the premium or less by the end of my life? No idea.

What it ultimately comes down to is the value, role, and scope of insurance. That's a massive debate of its own.

So far in my life I haven't come close to breaking even on my car liability insurance. I haven't filed a single claim on my home insurance. I guess it's a wise decision to cancel these. Instead I should just try harder to not have my house destroyed in a storm or have an auto accident.

You absolutely should try harder to not have an at-fault auto accident for your and other people's sake. I'd also recommend having massive dying trees cut down near your house.

I've used a 2% cash back credit card for the last 5+ years. If the CC Company offered to make it 3% in exchange for reduced or inhibited fraud insurance I would seriously consider it.

I've also foregone health and home insurance in some instances.

But I appreciate that risk assessment is absolutely not for everyone.

> I'm also foregone health and home insurance in some instances.

Why do you bother with either? Just try harder to not get sick and try harder to not have your house burn down. Are you not actively trying as hard as you can to prevent your house from getting destroyed? Are you not trying to stay healthy?

Yes, it categorically is a good thing.

People make mistakes. Our society should not be an unforgiving one that heavily punishes mistakes or can’t handle basic situations like fraudulent transactions. Prevention of fraud is a cat and mouse game.

Credit card charges for businesses can be considered a marketing expense. Marketing expenses are paid to convince people to do business with you. While some consumers just use credit cards routinely for transactions, others participate in incentive programs (like getting cash back).

Even for people who don't care about the credit card incentive programs, the feeling that the credit card company will take your side in a dispute is itself an incentive to do business with companies you don't know very well.

Consider a traveller shopping in a foreign city, or someone buying things from unknown third parties via Amazon, or buying an app from an unknown vendor in an app store. The customer gets certain reassurances from the credit card / Amazon / app store vendor that certain scams are less likely, though not eliminated. And if you do get a counterfeit you might be able to get a refund just because you say you deserve one.

Yes, ultimately the money comes from consumers, but the same is true of advertising and every other business expense. As a consumer you can often get a discount if you shop places with low overhead and pay with cash, but with perhaps somewhat less assurance that you're not getting ripped off.

Fraud prevention isn't free. The police do some of it, but maybe you want more protection than that?

One way to look at credit card fees is as a form of insurance. They're a bit annoying, and most of the time you'd rather not pay them, but as with most insurances if you ever need to use it you'll be very glad you had it.

The benefit to society is that it lowers the risk of making transactions, so people actually spend their money. The inherent risk in crypto transactions has a (very slight) chilling effect on people's willingness to buy things with it. Why would you pay for something with BTC when you can use a safer payment method?

Also, let's not ignore the fact that crypto has fees too, and few people are paying taxes on the money they make from them, so there's little difference on that side of things except the benefit to the consumer is missing.

If you put more effort into prevention, thieves are going to put more effort into circumventing said protection. Without some kind of safety net, people are going to be stolen from and really get hurt.

As for net benefit to society, it's not the first thing I'm thinking of when I've had my credit card skimmed. What I'm thinking is, thank goodness there's some modicum of protection for me and I haven't been wiped out with no recourse, which could be the case with crypto.

Is it good for the consumer to have these protections? I think people would much rather have the safety net of the financial institution and maybe need to pay a passed on fee at a merchant than not pay a fee and risk being completely drained of funds.

Is it good for banks? Not really, I think? Regardless of whether they're writing it off on taxes, it's still money that's leaving their hands. That does leave the point about them being able to dodge taxes, but, if there's one thing corporations are good at, it's dodging taxes.

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Forgive typos, on my phone.

So your alternative of the fraud insurance we currently have is to just end fraud?

You sound like Gov. Abbott. Don't worry about abortion in the case of rape, we'll just get rid of rape.

Why didn't we just think of that before? Just get rid of crime, and there won't be any problems!

> So your alternative of the fraud insurance we currently have is to just end fraud?

I left that little blurb about reducing fraud at the end of that post because I was trying to anticipate the (shallow) counter-argument: "what's the alternative"? "End"ing fraud, by the way, would be a great alternative to the implicit insurance premium we pay if it was at all viable.

To give you some examples of what "more effort in to the prevention of theft/fraud" looks like cf: https://sgp.fas.org/crs/misc/R43925.pdf

And we could just eliminate rape if we tried harder, obviously. Why hasn't Abbott eliminated rape in Texas yet?!

Look, I agree we should try harder to reduce crime. But arguing having insurance against fraud is bad and we should instead just try to get rid of crime seems incredibly naive. Sure, there are things which could potentially be done to help reduce fraud, but there will still be fraud. In which case the value from the insurance is still >0 for the victims of said fraud. And a ton of Americans will still be a victim of fraud even if we try harder with technology available today. If we were to move to all Blockchain transactions, those people would have no recourse.

But it also gives the credit card companies an incentive to catch fraudulent behavior as soon as possible, and prevent it where possible.

Credit card companies often actually get the money back. They do a clawback/charge back. Which btw, some cryptocurrencies offer this too and there's also credit card like functionality, just not widely adopted because there's few places that accept cryptocurriencies.

But yeah, I do think clawbacks are a good thing.