Yes, they become possible at the cost of putting the counterparty risk onto the consumer, but that's better than the sale being entirely non-viable.
Yes, they become possible at the cost of putting the counterparty risk onto the consumer, but that's better than the sale being entirely non-viable.
Merchants are in a much better position to price this in than consumers. Merchants structurally execute a lot more transactions within a market vertical than consumers ever do.
If the merchant can't do that, because deals are simply too high value or aren't frequent enough, then insurance companies or intermediaries (e.g. payment processors) can pool risk across merchants, using actuarial techniques to assign a price to the insurance. For example, professional indemnity insurance for property transactions.
To counteract this negative feedback loop, assuming the increased prices don't drive away all of your real customers, you can spend the increase on transaction analysis, and turn away customers based on their likelihood of fraud, so you've added inefficiency into the system to help deal with a criminal element, and also likely turned away real sales due to false positives in your analysis.
It's no surprise that these types of merchants are looking for a disruptive technology to remove this inefficiency. Doing so would allow them to charge less and outcompete as well as capture the entire market of people marked as false positives by other merchants.
Especially when the risk of customers committing fraud is incredibly low. Why would you start with an assumption that this is something so rampant it needs to be solved in a way that harms literally all honest customers?
If you think fraud rates are extremely low, you've never tried to sell $2,000 electronics online as a boutique electronics store.
Bitcoin was the only option.
Regardless, how does Bitcoin solve this? There’s a lot of illegitimate users of crypto, how are you solving fraud with irreversible transactions?
It's difficult to find sources, but generally speaking you are going to go 'on warning' at around 1.5% and if you go too much over 2% chargeback rate you just get dropped by the credit card company as a customer. Credit card companies don't like dealing with high fraud customers and won't support you.
https://chargeback.com/average-chargeback-rates-how-does-you... https://chargebacks911.com/chargeback-rate/
Bitcoin helps in two ways. The first is that it gives you a way to accept money at all. As stated above, if your chargeback rate is above 2% for any extended period of time, all of your payment processors - including your banks - are going to drop you as a customer. You may be willing to pay 5% overheads for a higher chargeback rate, but your credit card company doesn't want that as a statistic and they just won't support you.
The other way Bitcoin helps is that once your wallet (use BTCPay) says "2 confirmations" you've got a 99.97% guarantee that the money is yours and won't be reverted. And that's true whether you are receiving $2,000 or $2,000,000. Regardless of whether that money came from "an illegitimate user", you as the merchant can be confident shipping hardware out because you know that the payment is not going to be clawed back.