Re: Paypal problems?

From: Mike Lorrey (
Date: Wed Oct 17 2001 - 18:20:15 MDT

Brian Atkins wrote:
> >
> I think it's important for people to realize that when you do this,
> your card company is not taking a loss, in fact they are most likely
> making money. The party that takes the loss when it comes to credit
> card fraud is the merchant who accepted the card. Not only do they
> lose the transaction money plus whatever service or goods the thieves
> purchased, but they also get hit with a fee by the card processing
> company/bank- who seem to actually have an incentive to keep the
> system insecure.

>From my experience in the mail order/ecommerce world, I can say that
what happens is that merchants expect x% fraud rates and adjust their
prices accordingly for credit transactions. So, in the end, we all pay.
Fraud rates generally range from 0.25 - 2.5%, depending on type and
value of product, target demographic, etc. Early on in its initial
period of widespread popularity, eBay's fraud rate once reached 6%,
which raised a ruckus with its members, resulting in better insurance
and verification practices, like the iBill 3 day inspection period.

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