If you’re an online retailer you already know that credit card companies have a better racket than the Mafia. They take a monthly “statement fee” for the privilge of getting a receipt for the services they provide. They charge a per transaction fixed fee of $0.25 - $0.35 and then tack on a 2% - 3% fee just to be nice. That’s just the merchant side. Customers get the opportunity to pay 18%+ for carrying a balance.

Credit card companies have one more trick up their sleeves… Charge-backs. A charge-back is when a customer disputes a charge on their card as fraudulent, unauthorized or just unsatisfied and the credit card company refunds the customer. Merchants can fight charge-backs but the system is designed for in-person transactions only. If the merchant has a signed receipt (even with a false signature) they can stop the charge-back. On-line sales aren’t covered. There is no way to fight a charge-back from an on-line sale. The merchant can have IP addresses, fraud scores, CVV codes, Terms and Conditions but it doesn’t make any difference.

So, the credit card company refunds the customer the full amount of the charge. This comes directly out of the merchant’s bank account. That’s right! They take the full amount back even after you’ve paid your credit card fees. So the thief that bought on-line has his goods, the customer has all their money back, the credit card company got their fees, and the merchant gets screwed.

It would be like the mafia selling you stolen goods off the truck and then robbing you as you turned the corner to leave. Even mobsters don’t screw people over that badly.