I’ve been seeing more and more stores push for debit card-style point-of-sale (POS) transactions over credit card-style, in the cases where a customer’s card is capable of either. Since most bank-issued debit cards are aalso ccepted as credit cards, usage of debit cards at POS is pretty much ubuquitous now.
Debit works much better for the stores, theoretically, because:
[ul]
[li]they get their money faster, since a debit-style transaction takes the money out of the checking account at the time of the transaction[/li][li]it’s slightly faster for a customer to key in a PIN than it is to sign a slip of paper or a touchscreen[/li][li]the customer gets the fees rather than the store paying them[/li][/ul]
Credit is better for the customer (IMHO) than debit, theoretically, because:
[ul]
[li]there is more financial protection with a credit card than with a debit card[/li][li]in case of a dispute over the payment it’s slightly more difficult to forge a signature than a PIN[/li][li]the stores get the fees[/li][li]credit is accepted at more locations[/li][/ul]
In practice, it’s pretty much a wash. The fees get passed onto the customer no matter what, the store will get the customer’s money, banks are generally willing to protect your debit transactions nearly the same as they would credit, and so on. So this question is largely academic, I suppose.
Anyway, leading up to my question…
Given all of the following:
[ul]
[li]you, as a customer, make a purchase in a store using a debit/credit card[/li][li]when a store gives you the option of choosing debit or credit, and you choose credit[/li][li]the cashier or payment terminal asks if you would like to use your PIN[/li][li]you key in your PIN instead of signing the receipt[/li][/ul]
…is the transaction still a credit-style transaction, or did the store just bamboozle you into a debit-style transaction?
You got bamboozled, and if that was a actually CC not a DC with a CC logo you may be charged a cash advance fee. If I were charged such a fee after that I would never shop at that store again.
Some other advantages of CC transactions:
Rewards programs
protection against mistake in amounts (I have been charged about $2000 for a $20 item, I really didn’t pay attention till I got home, and quickly corrected it via telephone, but with a debit transaction that would have taken (or held) that money and caused other transaction to bounce incuring fees, both by the bank and by the payees).
Also I would argue that signature is just as fast as a pin if not more so due to people don’t always enter the pin right away, and have to be told by the casher when to do it, then look and process how the keyboard is layed out.
I had the impression the debit card fees are rolled into the customer’s bank fees. As in, the customer doesn’t necessarily pay more per transaction at the counter, but rather the bank pays them. If the fees go higher than what the bank is getting from the customer’s checking account fees, then those fees go up.
Either way, the customer is paying the fees for using the plastic. (I think.)
I don’t pay any fees on debit POS transactions, and my checking account (which is tied to the debit card) is free as long as I maintain a $200 minimum balance (which I do).
Perhaps the OP is thinking about debit card withdrawals on ATMs that are not owned by the bank and charge a fee to non-cusomers. But that’s a different animal, not a point-of-sale transaction.
I work for a credit card processor.[ul][li]PIN debit or credit card, the merchant pays fees on all ‘plastic’ transactions[/li][li]Typically those fees are a bit less for PIN debit transactions than for credit*[/li][li]PIN debit or credit, the money’s in the merchant’s account in the same time frame**[/li][li]Whether the cardholders get dinged for a fee on a PIN debit transaction is up to their bank. Mine does not.[/li][/ul]Ultimately, of course, the consumer is paying any fees involved, since it’s part of the cost of business and added into the price of the goods.
This makes me a bit grumbly when I see those ‘99-cent fee for debit’ notices some places have.
** We shoot for within three working days. For PIN debit we’ve collected the money from the cardholder’s bank already. For credit we are in effect loaning the money to the merchant. Some weeks later, after the cardholder’s bank has sent out the credit card statement, and the cardholder has paid for the charge, we get the money back and erase the loan.