This is why credit cards are, I kid you not, one of the crowning achievements of the 20th century: there is no guarantee and they still work. Even before we had constant-on connections which could phone home and verify with a database, possession of plastic which looked mostly cardlike was Good Enough (TM) to suggest that a bank trusted a bank trusted a bank trusted you to make good on your debts, and accordingly the hotel/restaurant/bookstore/etc should grant you services immediately on the assumption that you'll settle up as promised and not attempt to cheat them.

The best guarantee you get when you run a card in the US is "As of the current instant in time, that card is valid and has sufficient credit on it to cover the amount you just charged", but that is very far from a guarantee that the charge will actually be settled without incident. But it's still good enough.

(And if you're scandalized by this, ask me about checks!)

To be specific, credit card companies put the bulk of the risk on the merchant. If someone steals your card and buys a book, the credit card company will reimburse you and (most likely) not pay the bookstore. They set up the incentives this way because customers are more likely to use their card when they are protected, but stores can't afford not to accept credit cards.

The risk might be on the merchant, but the premium will of course be paid by the consumers.

Don't forget, merchants also pay a premium in their fees for every transaction.

Which is paid by everyone, even people that settle their transaction in case. I use a cash-back credit-card and effectively my fellow shoppers are subsidising my purchases, because we're all collectively paying the card fees which I'm getting a rev-share on. CCs are a deeply weird model.

Really, cash is no different. I remember when I was living in London it was really hard to pay for things with 50 pound notes because they had been subject to a lot of counterfieting.

Mr. Frank Abagnale might also have a word or two to say about checks and trust ;)

Asking about checks.

(P.S. Your thoughts and response are always very thoughtful and appreciated).

#1: well, the bookshop can dispute the chargeback (I don't know what the success rate for this is) and if the cardholders makes too many chargebacks their card will probably be cancelled. But yes, I can go to a bookshop, buy a book, and then call my bank and say the charge was fraudulent or the product I bought was never delivered, and they'll give me the money back (and not pay the bookshop). Well, I could if bookshops in my country accepted credit cards :)