How Do “Zero-Confirmation” Transactions Pose a Risk to Merchants?

A zero-confirmation transaction is one that has been broadcast to the network and received by a merchant but has not yet been included in a confirmed block. The risk to the merchant is that the sender could attempt a "double-spend" attack.

By broadcasting a conflicting transaction with a higher fee, the sender could incentivize a miner to include the new transaction instead, effectively reversing the original payment and leaving the merchant with an unconfirmed, invalid transaction.