how come credit card bills can be refunded, i.e if you get scammed the credit card company can reverse the transaction but a bank transaction cannot be reversed?

Question

how come credit card bills can be refunded, i.e if you get scammed the credit card company can reverse the transaction but a bank transaction cannot be reversed?

In: 154

Answer 1

Sally offers to sell you her bike for £100.

In the first scenario, your mum buys Sally’s bike and pays her for it. Your mum gives you the bike right away, and you promise to pay her back later. Then you notice that the bike is broken and you refuse to pay your Mum for it. Your mum is now £100 out of pocket so she goes round to Sally’s house and demands that Sally’s parents hand over the money from Sally’s moneybox: they see how serious your Mum is and do just that.

In the second scenario, you had your mum £100 and ask her to drop it off at Sally’s house. When you notice the bike is broken, you tell your mum who goes to speak to Sally’s parents. Your mum hasn’t got any money invested in this, and when Sally’s parents are reluctant to raid Sally’s moneybox they all decide that it’s better that you and Sally sort it out between yourselves.

In the real world, credit card payments, debit card payments, and bank transfers *can* all be reversed. However, because the bank is on the hook for credit card payments they are *far* more motivated to recover funds when there is a dispute.

There are other factors that affect this too, such as the agreements that merchants sign up to when they start accepting credit card payments that make it easier to recover money from them. But mainly it’s down the the bank’s motivation not to be the one who is left out of pocket.