If customers demand reversible transactions, you will choose reversible transactions or you will not have customers.

There are, for instance, no longer many mainstream online merchants who accept only irreversible transactions. There once was a time when online transactions were primarily paid via money order, but PayPal and credit card processing has made that obsolete.

> If customers demand reversible transactions, you will choose reversible transactions or you will not have customers.

I think most customers pay with credit cards more because of convenience (or rewards, where applicable).

There's a myriad of QR payment systems popping up around the world (e.g. WeChat, UPI, PayNow) that are getting considerable adoption — and those aren't reversible. They're popular because customers don't have to worry about carrying enough cash with them.

You can't compare in-person and e-commerce payments in that way. The risk for the merchant and the customer is completely different:

A physical merchant usually has a storefront in a public place that they can't abandon on a whim, a reputation to lose etc, whereas the customer is usually anonymous and mobile. This is why customers are generally ok with paying using a (to them) irreversible/final payment method, and merchants will insist on it.

In e-commerce, the risk lies almost exclusively with the customer: An online store's reputation is not easy to judge (and brand impersonation is its own risk), and even at reputable merchants, the time between order and delivery is much longer, goods can usually not be inspected ahead of time etc.

Not coincidentally, the various card schemes' rules reflect this circumstance by assigning default liability for online payments to the merchant (or their acquiring bank, in case of a fraudulent or bankrupt merchant), whereas for in-person payments it lies with the cardholder (or in case of fraud with their issuer, in some circumstances).

And you typically get your product immediately when purchasing at a physical storefront.

In the early days of eBay, it wasn’t unheard of to send out a money order in the mail, wait a month, and never get the item.

That’s why I said

> if customers demand

Rather than

> customers demand

The landscape of trust online is varied. Someone is likely to have lower trust for random website you’ve never heard of (which was most stuff in the early days) than an established business or one with a physical presence.

Now that online retail is mature and trust is high, credit cards are more for convenience, but this wasn’t the case in the early days… and still isn’t the case for lesser established sellers or marketplaces.

When was this time that online payments were done with money orders? Some of the earliest online merchants that were associated with AOL and Prodigy accepted credit cards. Amazon definitely accepted credit cards from day one.

In the mid to late 90s many retailers online operated like mail-order catalogs with catalogs delivered via http. Many of them were mail-order businesses first, and so they accepted payments for online purchases the same way they did for their majority of their customers.

This was also normal for eBay payments at the time.

There were, of course, a few that did accept credit cards, but many people were weary about using those features because very little of the web used HTTPS at the time. Even Amazon accepted money orders (and personal checks!) for this reason.

Not always. If customer fraud is low and customer wariness is high, you might well find that providing customers the safety of the option to reverse the charge gets you enough more money that it nets you more overall. Even more so if "finality" of the technology means that users instead turn to the courts to dispute your charges.

There is a narrow sense in which the merchant "always prefers finality" but it isn't the relevant sense.