Non Reversible Transactions

Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services.

- Satoshi Nakamoto, Bitcoin Whitepaper

Because financial institutions are required to be part of each transaction that uses legacy payment systems, when there is mediation they are forced to intervene. This is a time consuming and costly process for merchants and represents a drain on commerce, where depending on industry, as many as 3% of all credit card transactions are contested, costing the merchants fees, the cost of the goods charged back, and time, stress and effort.

In turn, these costs are passed onto the consumer who pay an invisible margin on top of all goods and services to cover not just the cost of their transaction, but the cost of mediating the transactions that malicious actors make using stolen cards or through fraudulent back charging. In these systems there is no ability for a merchant selling a non-returnable good or service to receive a non-reversible payment for that good or service which is a missing link in the chain of commerce.