30 Dec 2013 / Washington Post – My wife and I are planning a trip to Asia in January, and so I’ve been making hotel and airplane reservations. In the process, I’ve had first-hand experience with the dysfunctional state of international credit card payments. I’ve had three transactions declined on spurious security concerns, and each incident has required a call to my bank to correct the problem.
A common criticism of Bitcoin holds that the Internet-based payment network isn’t actually useful. Sure, Bitcoin allows people to transmit value electronically, they say, but conventional payment networks like MasterCard already do that.
But the clumsiness of international credit card transactions, not to mention Target’s recent security woes, provide good illustrations of how better payment technologies could be beneficial. As we’ll see, a Bitcoin-based alternative to conventional credit card networks could be significantly more secure and, as a result, more convenient and affordable for everyone.
But getting there would be tricky. Fees in the credit card network are paid by merchants, whereas the Bitcoin-based payment scheme I describe here would have consumers paying by default. The Bitcoin community will have to figure out how to shift fees back onto merchants if it wants to attract enough users to make Bitcoin-based payments mainstream.
A 20th-century payment network
My efforts to buy Asian plane tickets went like this: I went to an airline’s Web site to make a purchase. The bank that issued my credit card flagged the transaction as suspicious and refused to honor it, leading to a cryptic error message on the airline’s Web site….. Read more
