I disagree. It's definitely a trade-off, and there are downsides to it (this security breach being a good example), but there are also advantages.
With normal ACH and credit card transactions, the payment never really settles, and can be reverted due to fraud for months. That means I have to slurp up lots of data (privacy?) about my users in order to increase my confidence that they won't try to scam me. And even with that, I end up losing significant amounts of money due to payments with stolen card numbers, etc.
With crypto, I know that any payment I receive is final, and I don't have to build privacy violating systems to avoid losing $$$.
Not saying this is necessarily "better", but there are advantages to it. As a user, I'd be happy to pay with crypto if the merchant passed some of the savings on to me.
It's safer than a credit card, since payments happen by sending currency (like cash) rather than forking over bank or credit card credentials to a website (the equivalent of forking over private keys)
Why should it be safer than paying by credit card? If a payment is fraudulent it's not my problem and I get refunded. If the service I paid for isn't received or is not as advertised I have the means of a charge back. With crypto no matter how turn it it's gone. And looking at customer service at tech companies I put exactly zero stock that I get help from them. So I think you have that backwards.
Transaction fees are far lower
Says who? We don't know that yet, do we?
Edited to add: I think the comparison between handing over my credit card number to a website with handing over my private keys is beyond ludicrous.
I view it as paying by cash, so the same type of pitfalls exist. I'm not really pushing crypto as the best payment method, just giving the OP possible alternative payment methods they could use. There is a learning curve to using crypto, which I believe reduces the potential of consumers not fully understating the risk of sending payments. Consumers who want the protections should use a credit card to get those.
Crypto is not a better alternative for customers. Crypto is a better alternative for merchants, but primarily because it generally protects merchants against fraud. There are other reasons, but mostly it's a result of credit card companies, banks, and regulations, rather than PayPal itself.
No one wants to actually be responsible for credit card processing, but they want to reap the rewards of it. So PayPal is what you get.
As a consumer though, until crypto offers a compelling reason for me to use, it's nothing but risk for me.
That depends how you look at it. Crypto also has other advantages that payment systems haven't: any arbritary amount from 0.00001 to millions in 1 go, instant (especially advantage for the large numbers, since banks cannot do that), smart contracts etc.
Dispute handling and chargebacks are also very disputable for wire transfers. I have to give my ID to the bank every few years, yet people get scammed with wire transfers all the time and get a "sorry can't do anything about your lost money" from the bank.
Crypto is way less secure than a credit card of course, since with a credit card I'm not liable for any fraud, loss or theft. I don't even have to front the charge until the issuer resolves it. As the issuer itself is liable (not me) they are incentivized to detect and stop as much fraud as possible.
I can even take advantage of chargebacks to ensure merchants give me what I paid for. Chargebacks are incredibly customer-friendly - but of course they're good for businesses too as it affords folks a degree of confidence at unfamiliar merchants. And I get various kinds of insurance - they'll even reimburse me if I drop and smash what I bought 90 days after I bought it.
Absolutely true. I'm not advocating for crypto to replace credit card transactions, as that would be insanely impractical and wasteful. I wanted to draw some attention to how badly merchants are treated when they accept card payments.
Crypto offers zero protection from fraud, as transactions are non reversible however if you pay by credit card goods are not delivered or if your card is used fraudulently, the credit card issuer can and will reverse the transactions. Also due to PCI standards almost all online transactions are done via a third party, PCI compliant payment processor.
I don't see the value crypto is adding here. If you did have misplaced worries about being a victim to CC fraud, seems like it would be easier to use a prepaid credit card, debit card that you only transfer funds to when making purchases or a service like paypal.
One big difference is that if i send someone Crypto they can't spend any more than i have sent them. If i give them my credit card (and they possibly even leak/loose it) i have a far bigger risk for fraud.
It also doesn't add value in the first place. If you're a citizen in the USA for example, you probably have a credit card that you can use to instantly make payments either in person or online. If someone hacks your CC info, they don't get to immediately drain your bank account, and in fact usually you lose nothing after contesting it. The fees are generally avoidable, depending on the card.
The only significant benefit that cryptos offer is a scheme that allows you to make payments without handing over your credit card number in case you're not sure some sketchy site is legit. So really, the big appeal of crypto was being the new Paypal. Personally, I would like an open source or federated replacement for Paypal that makes it easy to pay everywhere online without entering a CC, but I would rather not try and create and buy into a new currency in the process of doing so.
Maybe something like GNU Taler can fix the credit card problem, but I'm not holding my breath on bitcoin.
It needn't provide an advantage in day-to-day usage, just some niche advantage that works at least once.
For instance, buying metal bullion from a major online vendor such as APMEX, you can avoid credit card fees or long wait for a check/ACH/wire(faster than previous two but still takes hours) to clear by paying in crypto. It's basically <30min clearing for any arbitrary large amount. The closest you can get to that without crypto through most major bullion vendors is a wire, which depending on your bank is anywhere from free (rare) to $25+. Sometimes the crypto fees are waived, other times they're merely much closer to check price than credit price.
Sure, but I think the risk is overrated. Almost all online shops outsource payment processing to a third party payment gateway, which you can validate pretty easily. They never get access to your details in order to abuse them.
Third party payment processor breaches where CC data is lost are quite rare I don't think I've read about one in a very long time.
Sure, I guess you can't get phished out of secrets with crypto like you could with a credit card, but that's never happened to me, and probably won't happen to you unless you aren't very good at detecting dodgy websites. Also, if you fall for those kinds of scams, I have some monkey jpgs I want to sell you.
The real benefit to crypto here is that you can send money, to anyone, anywhere in the world.
For normal, legal payments, cash/credit card is much easier and you also don't reveal how much money you own.
On top of that, with credit card you get a significant number of protections.
Like I said, there are no legitimate use cases I could think of for cryptocurrency where cryptocurrency is easier than using normal methods of payment.
One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact (with the only exception being costly forks of the entire ledger), and there's no additional human oversight (like I'd get when sending a large amount of money through a bank) to protect me.
If someone steals my credit card, I have my credit card company to give me some level of protection. They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases.
If I purchase something and don't get what I paid for, I can contest it with customer service or my credit card company.
With crypto, a software flaw used to steal crypto can kill an entire company. They're largely powerless to stop it once the transaction has gone through.
With crypto, a xss attack or a misplaced password can cost me all of my coins.
With crypto, I have to triple check the address I'm sending coins to because I can't undo it.
With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete.
I think there's a future in crypto but we're in the dotcom boom days of it where most of the value is in speculation (and I suppose illegal purchases on the darknet). I'll wait for crypto 2.0.
I still haven't seen a situation where cryptocurrency is going to work better for me than cash, credit, or bill pay would. I'd have to pay a commission to buy crypto currency, I'd have pay a commission to cash out again, how is that better than just using cash/credit?
«If I pay with a credit card I have level of protection. When I put my money in a bank the money is insured. Crypto is simply too risky as a way of storing money and trading.»
As always, the reality is not as black and white as you present it. Credit cards and fiat money certainly have advantages but they also have many drawbacks. Just to name a few: credit card fraud eats into merchants' profits, international money transfers are slow and crippled with high fees, bank accounts or cash can be frozen or seized by authoritarian governments, hyperinflation destroys savings, etc.
There are use cases where crypto adequately solves some of these problems that neither credit cards nor fiat money can solve. And, yes, crypto comes with a different set of drawbacks but that doesn't mean crypto is "too risky" for anyone to do anything with it.
No one is using crypto for payments yet because the infrastructure is still expensive and not a viable alternative.
There are plenty of use-cases where using crypto can be a better alternative for merchants (no risk of fraud and chargebacks) and consumers (micropayments where the cost of CC processing is higher than the cost of fraud, or purchases where the payee values privacy above all else - think "Ashley Madison" subscribers who'd rather not have their names on the site)
Amid all the hype on cryptocurrency, I think in consumer (espcially in micro payment), credit card is better than cryptocurrency because:
1) it has cash back;
2) it has no fee in most cases (still some website/service will charge you though, but even for cryptocurrency if you buy on coinbase, say, you still have to pay some fee), but nowadays it is very hard to let the payment to go through without adding some transaction fee;
3) the payment is instant for the user, meanwhile bitcoin is much slower. Many altcoins are fast but still the credit card payment is just fast.
I am not saying cryptocurrency cannot be backing the credit card company to do the transactions transparent to users. That is possible. Because for that use case, all my argument above for credit card can still hold for cryptocurrency.
I wonder what you guys think if consumer using cryptocurrency directly for micro payments can be a reality, and why?
Absolutely not. I gues I'm one of those weirdos that want privacy and to be able to pay the money that I earned for things without being tracked.
They re-coup this by overcharging businesses as well as having some VERY valuable data. I don't want to play the stupid credit card game either and try to guess which card I should get to get the most "deals".
All I want is a convenient way to pay that doesn't invade privacy. The only two payment methods that satisfy this that I know of are cash and cryptocurrency. I'm not a fan of cryptocurrency for many reasons so cash is my only option.
I don't use cryptocurrency as a replacement for a credit card, I use it as a replacement for cash. Banks aren't risk-free either, it's a lower probability of problems for a much more devastating impact.
Compare a frozen bank account to a fraudulent transaction you can't revert. Sure, the latter is more frequent, but the former is devastating.
With normal ACH and credit card transactions, the payment never really settles, and can be reverted due to fraud for months. That means I have to slurp up lots of data (privacy?) about my users in order to increase my confidence that they won't try to scam me. And even with that, I end up losing significant amounts of money due to payments with stolen card numbers, etc.
With crypto, I know that any payment I receive is final, and I don't have to build privacy violating systems to avoid losing $$$.
Not saying this is necessarily "better", but there are advantages to it. As a user, I'd be happy to pay with crypto if the merchant passed some of the savings on to me.
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