I understand replace-by-fee transactions are no threat to merchants who require multiple confirmations. However many businesses still accept 0 confirmation transactions as a means of improving usability and help with marketing. I expect demand for 0 confirmation transactions to continue (at least for transactions with a value below a certain economic threshold). What is the easiest way to automatically reject all RBF transactions?
Replace-by-fee (RBF) transactions all have a sequence number that is below
MAX - 1. If the payment a merchant receives comes from a transaction that has such a sequence number, the merchant can either wait for the transaction to be included in a block, or ignore the payment altogether. Ignoring the payment is fraught with other complications, however, since the bitcoin will still go to the merchant if included in a block. The customer would have to replace the transaction, using RBF, before it is mined. It's probably easier for most merchants to simply wait for the first confirmation.