Online merchants will absorb the cost of processing credit cards, as they aren't going to wait for a check in the mail. But physical merchants that can accept cash and are now allowed to recoup that 3%? I can see certain groups of people migrating away from plastic if it increases the cost of their goods/services in a meaningful way.
The way I see it Bitcoins are not stable / safe enough for large transactions and the transaction fees on small transactions are effectively meaningless.
Not possible with Bitcoin.
(they'd be pretty useless if they did, anyway- where would my refund money come from?)
Almost sounds like you're confusing escrow with insurance?
Your refund would come from the middle guy entrusted to securing your funds until your goods were delivered as promised. If your goods are not delivered, or if what you ordered was nothing like what was promised, the escrow service would simply send your bitcoins back to you, instead of sending them to the merchant who tried to defraud you.
These services would likely charge a transaction fee for the service.
Even silk road offers an escrow service that is apparently effective enough. The scammers on silk road typically try to con you into closing the transaction before delivery of any goods, so one red flag that you may be looking at a scammer is a number of early settled transactions in their history.
If someone wanted to do something like this more mainstream, they could develop a third party bitcoin escrow service that offered an order history, rating or feedback system, and transaction comments from both parties. You could even develop a rating score formula similar to a credit score, where older accounts with more history, have higher scores, which make it much harder for scammers to use throw away accounts.
BitPay's site says an incoming bitcoin transfer to bank deposit costs 1.70% for USD on their "Pricing" page: https://bitpay.com/bitcoin-direct-deposit
And this will only decrease as competition increases.
You do realise that credit cards aren't some new invention ?
The merchant costs have been factored into people's purchases for decades and there is no evidence it has caused any impact on sales. If anything the huge array of reward programs and partnerships e.g. with airlines has reinvigorated the huge of credit cards.
I just don't see anyone migrating away from credit/debit cards apart from fringe elements of society. Seems like proponents of Bitcoin live in their own world sometimes and treat the existing financial system as some competitor.