In this day and age, why isn’t there a bit or special number or code embedded in my credit-only card so the reader knows it is not a debit card?
Are there cards that can be used both as debit or credit? Would life be so bad if cards are either debit or credit but not both?
Yes, there are cards that can be used either way. I have one that is either debit or Mastercard and one that is either debit or Visa. I also have a second Mastercard that can only be used for medical expenses.
So maybe there should be three categories for these cards:
The card reader should prompt only in the third case. I can’t imagine it being that hard to reserve a range of card numbers so if my card falls within a particular range, it would never incur prompting.
Or maybe they want to allow people to add the debit feature to a previously credit-only card without changing the account number or issuing a separate card?
In fact, my understanding is that almost every debit card is, indeed, usable as a credit card.
However, a very small number of large merchants have deals set up with CC companies that work around this somehow. For instance, Wal-Mart cannot run a MasterCard debit card as a credit card … but it can run Visa debit cards as a credit card.
At gas stations and grocery stores, you can almost invariably choose at the pump whether to have a debit card run as a credit card. If you’re a day away from payday, and your checking account is close to zero, running a credit transaction typically buys you a day of float. It’s not a 100% foolproof, and it works at some businesses better than others (gas stations give that day of float consistently, grocery stores do 9 out of 10 times, Wal-Mart and Dollar Trees never do).
I can’t recall ever having seen a debit-only card. Heard of them, but I thought they were a relic of the past (like maybe the 1980s/early 1990s). Perhaps it varies state-by-state … maybe regulations are different. 
This is certainly incorrect. There are many, many very common debit networks whose card specifications are nothing like those of credit cards. I very much doubt an electronic credit card reader would recognize the magnetic stripe of, say, an Interac, EFTPOS, or Mastro card as a credit card. Likewise, most such cards will have different numbers of digits from credit cards, may lack certain information required for credit card transactions (e.g., an expiry date, security codes), and/or may have certain information required for their use which is not normally prompted for in credit card transactions (e.g., an issue number or an issue date), so it would be impossible to use these cards as credit cards in online or telephone transactions.
They’re not a relic of the past. There are a couple of current applications for debit-only cards. One is ATM cards for people who can’t get or don’t want to get credit accounts for whatever reason. Another is preloaded accounts for buying groceries - some states use these for “food stamps” recipients, so people don’t have to carry around books of vouchers that immediately say “I’m poor!” and instead, can just swipe a “dignity card” and enter a PIN like everyone else.
Another issue is the way transaction charges are made:
Credit cards typically charge a fee to the merchant of a small percent (possibly plus a flat fee of less than a dollar).
Debit cards charge the bank a flat “network” fee of about $1-$2.
Given that the merchant has to pay for CC but not for Debit, they do whatever they can to encourage use of debit cards.
I think that the merchant is also in a better legal position with debit than credit (charge back rules are different, the merchant is responsible for ensuring ID with CC, but not with debit).
This may be dated info as I have not worked in the banking industry for a while.
Dag
As mentioned by psychonaut, systems like Interacare debit/bank card only, and in the case of Interac, they are very much in regular use. This webpage indicates that payment via Interac is much more common than credit cards or cash, and cheques have all but disappeared from use (the stats are from the Interac Association itself, though). I know that I very rarely have cash on me, and that’s true for a lot of people my age (20s-30s).
Just to be clear, the card from the bank that links to your chequing/savings accounts is an Interac card, and can be effectively used at every ATM from every bank or third party in the country to get money from you account. There are very few businesses nowadays (IME) that don’t have the ability to receive an Interac payment.
Why do I have to tell the @#$#@ thing several times that it’s credit though? And why is it so tricky? Some of the stores here make me push the ‘cancel’ button if I want it be a credit transaction. And then they get annoyed if you have to ask—like it’s somehow obvious that ‘cancel’ means credit? At the stop’n’shop by me, I have to tell the machine 3 times that it’s a credit transaction.
And the machines aren’t the same at every store, so it’s not really reasonable to assume that every one knows how to work the one at your store. Why on Earth is ‘cancel’ so often used for ‘credit’?
This is true only in the Canadian market. Interac isn’t widely used elsewhere.
My WAG is that these point of sale systems can tell the difference but only after theyve started the transaction with the bank. It would be a waste of network resources to contact the bank and then ask if this number is a debit or credit card. Instead they take all your info, PIN, etc and submit it and wait for an accept or reject. That means one single transaction instead of two.
DagNation provided the answer:
The merchant wants the default transaction to be debit. If you want to use credit, you have to cancel the default.
Yeah, I meant to specify that this was the case in Canada. I just meant that the concept/technology isn’t out-dated, and it is used elsewhere a lot more than he thinks.
Reading my own post, I think I kind of gave up halfway. I got sidetracked by those stats pages, and just randomly hit submit!
I can understand that it varies between countries and between regions/states within countries. I can only speak for the states of Louisiana and Missippi, where debit-only cards issued by banks are non-existent.
I’m not even sure an ATM-only card is available at the banks around here. I had such a card in the early-90s, but it was replaced by a Debit/Credit card in 1996 IIRC. They didn’t ask me if I wanted a D/C card, mind you … they just skipped from ATM-only card to a D/C card.
As for food-stamp cards, pre-paid systems, and such … I was kind of thinking those were implicity excluded in the OP. Might have read too much into that.
Am I correct in understanding that in most of the US, if you want to use an ATM, you have to use your own bank’s machines, rather than any machine that happens to be nearby? That’s the impression that I got, and that if you wanted to use another bank’s machine, you had to use the credit system anyways. That would make sense, then, to only have mixed debit/credit cards, to give you the most possible ways of getting money.
I think Interac cards used to be separate from bank/ATM cards, but as the system became more widespread, it made sense to unify it.
Is it common in the US to have credit cards from different banks? As it happens, my Visa is from my bank, but there is nothing forcing me to have it with them. My MasterCard is with another bank entirely, even though I don’t have any accounds with them. The separation of debit from credit would, I think, encourage credit cards to be more competitive since people can go anywhere for them.
No, no … normally, you can use any ATM that happens to be nearby. Commonly, however, you will be charged a fee to use another bank’s ATM ($3 is the norm around here).
Yes. Probably not local banks, though. Someone who has a bunch of credit cards will typically have cards from national banks like Capital One, Associates, Chase, Citibank, Wachovia, Washington Mutual, etc.
I think the debit system is still very much separate from the credit system, despite the widespread presence of debit/credit cards. D/C cards really just give you alternate means of processing a given transaction – the source of the money (your account) is the same, and interest never accumulates. I think of a D/C card I get from my local bank as a much different financial instrument than a dedicated credit card I may get from a national bank.
Sort of related, I wish my bank would remember that I want english and not spanish so I don’t have to select it every single time I go to the ATM.
Isn’t the language preference coded on the card? I know that here, people with French cards will get a receipt or prompts in French even as the merchant gets one in English.
This is not the case, at least not in my neck of the woods.
–chaoticbear, Walmart employee