Comment by ApolloFortyNine
17 days ago
The problem with these is always who pays for fraud.
With credit cards, they actually claw that money back from the merchant, and then if the merchant can't pay they just eat it themselves.
So the merchant has to work in fraud rates into their pricing, and the credit card company has to work in fraud rates that the merchant can't cover into their rates.
It always seemed toxic it to me that the merchants are the one's responsible, despite the fact that they easily have the least power to do anything about it. But the ease of payment processing, and the number of people who just won't buy it if they can't use a card, outweighs dealing with fraud I guess.
In theory merchants can notice some fraud signs so shifting fraud losses onto them gives an incentive to take action on those signs. In practice banks have a better overall view of fraud and this is just externalizing bank fraud losses onto stores.
Given that visa and mastercard just dump the liability on the merchant, The EU could hardly do worse.
It would be an economic boon to the bloc if they assumed more of the risk.
> The problem with these is always who pays for fraud.
I'm curious how India's UPI handles fraud/refunds, as the system seems to have garnered near-universal praise.
India’s UPI is national service so fraud is “relatively easy” to combat but it depends on banks’ responsiveness.
However, i heard from my Indian friends is that UPI fraud is on the raise and becoming a big challenge.
Edit: UPI fraud rate is similar to CC fraud rate but only about ~6 % of the money lost to UPI fraud has been recovered. If this trend continues (fraud pct continues to grow and recovery rate does not improve) UPI system might get into trouble.
Btw, the stats say that the UPI fraud rate is doubling every year for past few years.
Could you describe what is the "fraud" you are talking about ?
Like, if someone stole a credit card and use it to buy stuff ?
Yes, that's considered the merchant's fault by the credit card companies.