Re: Dear Linkedin,

[Owen DeLong <owen () delong com>]

On Jun 10, 2012, at 3:06 PM, Brett Frankenberger wrote:

> On Sun, Jun 10, 2012 at 04:34:55PM -0400, valdis.kletnieks () vt edu wrote:
> > On Sun, 10 Jun 2012 12:29:46 -0700, Owen DeLong said:
> > > It is far preferable for the merchant to request ID and verify that the
> > > signature matches the ID _AND_ the picture in the ID matches the customer.
> >
> > Maybe from the anti-fraud standpoint, but not necessarily from the merchant's viewpoint.
> >
> > It's only better if nobody's standing in line.  If matching the ID
> > and signature and picture reduces fraud from 4% to 3%, but increases
> > the time to serve the customer by 5%, you're losing money due to
> > fewer sales/hour.
>
> For the most part, fraud in a card present transaction isn't eaten by
> the merchant.
>
> But the same reasoning still applies.  The card issuers don't want you
> have to show ID, becuase you might decide it's too much trouble, and
> just use some other method to pay.
>
> Eliminating fraud isn't an objective of card issuers.  Making money is.
> Fraud reduction is only done when the savings from the reduced fraud
> exceeds both the cost of the fraud preventing measure and any revenue
> that is lost because of inconveniencing customers.  And, sometimes,
> they'll choose to accept a higher rate of fraud if it will generate
> enough revenue to offset it ... consider how many places you can now
> avoid signing for small dollar purchases.  The cost of accepting the
> additional fraud was considered worth it in comparison to the revenue
> generated from getting people to use their cards for small
> transactions.
>
>     -- Brett

Right, but eliminating fraud should be an objective of consumers because
ultimately, we are the ones paying for it regardless of who "eats it" on the
actual transaction.

If the merchant eats it, the merchant has to make up for it with increased
prices.

If the card processing company eats it, they have to use high discount rates
or other fees to cover it.

If the card issuing company eats it, they have to use fees and/or interest rates
to make up for it.

If the bank eats it, they have to make up for it in other fees, reduced services,
reduced interest on accounts, increased interest rates, etc.

Ultimately, no matter who eats it, it gets passed along to the consumer.

So, any card company that starts getting their merchants to decline transactions
based on my anti-fraud efforts will find that I consider their product too risky and
will use an alternate form of payment.

Owen