Comment by Retric
2 years ago
We’re still using credit cards because they severely limit personal liability. Many CC companies give you the ability to have temporary cards with short term expiration linked to your account. However, there is minimal incentives for you to do so.
The credit card company and indirectly the vendors carry much off the cost of fraud. The credit card company spends a lot of resources on preventing this fraud. Introducing a proper solution for online payments would allow them to reduce costs and offer better deals to vendors and consumers. They also are the only participant in this who is a individual participant rather than a group. It seems like this is the ideal setup for credit card companies to introduce innovative solutions. They have the incentive and the leverage, yet it's not happening. What am I missing?
You are missing that the credit card companies want less transaction friction. If they wanted security we would have chip + pin in the US like the rest of the world. Charging volume overrides everything. Interest rates and those that carry a balance more than make up for fraud losses.
Strong authentication/payment confirmation and strong consumer liability protection are not mutually exclusive.
In the EU, card issuers and merchants are required to use 3DS for e-commerce payments and PIN verification for in-person payments in many circumstances; yet chargebacks are still possible.