Debit Card vs Credit Card: Stores Can't Tell The Difference?

Discuss the Visa & MasterCard payment networks as well as cards that operate through them.
tvirk888
Platinum Member
Platinum Member
 
Posts: 72
Joined: Thu Aug 29, 2013 1:51 pm
Location: Seattle, WA

Postby tvirk888 » Sun Sep 01, 2013 7:18 pm

That depends on the store. If they have a terminal with a pin pad built in, you can pay by debit. Debit transaction's cost less for the merchant compared to a credit card.

If you go to a restaurant, they charge all cards as credit because they have no pin pad.

If you pay inside of a gas station with a debit card, the merchant is charged less because it is an inside sale. Outside sales at the pump are a higher fee compared to the inside.

Can merchants tell a difference? Not really. If you don't know the pin number, you can charge it as credit. If you run it as debit, you just enter your pin number on the pin pad.

I work for my families merchant processing company, so I know how much most merchant's are usually paying fee wise, and it is a lot. Even more so with reward cards because they are charged the highest fee they are signed up for.

And if you go to a place of business and they have a sign up saying they don't accept any card over a certain amount; that is illegal, but that merchant is being charged a very high rate (over 3% usually for qualified cards, so it is even higher for reward cards)
Amex BCE - $20K (11/2014)
Amex Everyday - $20K (04/2015)
Amex Business Gold - NPSL (09/2013)
Bank Of America Cash Rewards - $5K (11/2014)
Chase Freedom - $11,700 (10/2013)
Chase Sapphire Preferred - $18K (11/2014)
Citi Thank You Preferred - $10K (11/2014)
U.S. Bank Cash+ - $5K (03/2015)
Wells Fargo Platinum Rewards - $4700 (05/2009)


randeman
Centurion Member
Centurion Member
 
Posts: 188
Joined: Tue Jan 10, 2012 7:11 pm
Location: New York, NY

Postby randeman » Sun Sep 01, 2013 11:15 pm

tvirk888 wrote:And if you go to a place of business and they have a sign up saying they don't accept any card over a certain amount; that is illegal, but that merchant is being charged a very high rate (over 3% usually for qualified cards, so it is even higher for reward cards)


Actually, I am going to have to correct you there. According to the Dobbs-Frank Act of 2010, merchants CAN set credit card transaction fees up to $10.00.

http://www.erate.com/dodd-frank-consumer-protection-act.htm

It was my understanding that prior to Dodd-Frank, it was against the contract stipulations between the merchants and Visa/Mastercard for merchants to set credit card minimums. I once complained to Visa and Mastercard prior to Dodd-Frank about a merchant's minimum, and they basically blew me off. The issue is obviously moot now.
Cards and Credit lines Acquired:

Escape by Discover (7.75K), Barclay Holland America Visa (7K), Macy's store card (7K), Bloomingdale's store card (2.6K), Citi Custom Credit Line (3.5K), PayPal Smart Connect credit line (2.7K), Chase Freedom Visa (5K), Chase United MileagePlus Visa (5K), Chase Sapphire Preferred Visa (6K), Amazon store card (2.2K), Lord & Taylor store card (550), Nordstrom store card (1500), Gold Delta SkyMiles from American Express (3K), Discover It (6.5K), PayPal Credit Line (1K).

tvirk888
Platinum Member
Platinum Member
 
Posts: 72
Joined: Thu Aug 29, 2013 1:51 pm
Location: Seattle, WA

Postby tvirk888 » Mon Sep 02, 2013 1:29 am

randeman wrote:Actually, I am going to have to correct you there. According to the Dobbs-Frank Act of 2010, merchants CAN set credit card transaction fees up to $10.00.

http://www.erate.com/dodd-frank-consumer-protection-act.htm

It was my understanding that prior to Dodd-Frank, it was against the contract stipulations between the merchants and Visa/Mastercard for merchants to set credit card minimums. I once complained to Visa and Mastercard prior to Dodd-Frank about a merchant's minimum, and they basically blew me off. The issue is obviously moot now.


Didn't know this. Thanks! I'll tell my merchant this information. :cool:
Amex BCE - $20K (11/2014)
Amex Everyday - $20K (04/2015)
Amex Business Gold - NPSL (09/2013)
Bank Of America Cash Rewards - $5K (11/2014)
Chase Freedom - $11,700 (10/2013)
Chase Sapphire Preferred - $18K (11/2014)
Citi Thank You Preferred - $10K (11/2014)
U.S. Bank Cash+ - $5K (03/2015)
Wells Fargo Platinum Rewards - $4700 (05/2009)

User avatar
otter
Centurion Member
Centurion Member
 
Posts: 639
Joined: Sat Aug 24, 2013 8:45 pm
Location: Grand Forks, ND

Postby otter » Mon Sep 02, 2013 11:00 pm

Most of the newer POS systems are programmed so that they "try" to run the transaction as debit if they can. There are a few reasons for that: (1) It is cheaper to run a transaction as debit than it is to run it as credit (2) chargebacks with credit transactions are a lot easier than with debit- when I was an accountant at a truck stop- I NEVER had a debit transaction which was successfully disputed, but credit transaction disputes were typically successful almost half the time.

So with a lot of places with new register systems, if you have a debit card, the register will prompt you for a pin (and usually give the option to run it as credit as well). If it is a credit card, it will skip that step.

How does the register know whether it is a debit or credit card? Perhaps some might know from the magnetic strip, but I am almost 100% sure that most of the newer ones know simply by the card number. I think debit and credit cards are allocated a certain sequence of numbers.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450

Reclusive46
Centurion Member
Centurion Member
 
Posts: 222
Joined: Mon Oct 24, 2011 4:04 am
Location: UK

Postby Reclusive46 » Tue Sep 03, 2013 8:53 am

otter wrote:Most of the newer POS systems are programmed so that they "try" to run the transaction as debit if they can. There are a few reasons for that: (1) It is cheaper to run a transaction as debit than it is to run it as credit (2) chargebacks with credit transactions are a lot easier than with debit- when I was an accountant at a truck stop- I NEVER had a debit transaction which was successfully disputed, but credit transaction disputes were typically successful almost half the time.

So with a lot of places with new register systems, if you have a debit card, the register will prompt you for a pin (and usually give the option to run it as credit as well). If it is a credit card, it will skip that step.

How does the register know whether it is a debit or credit card? Perhaps some might know from the magnetic strip, but I am almost 100% sure that most of the newer ones know simply by the card number. I think debit and credit cards are allocated a certain sequence of numbers.


Thats correct. Terminals do this by using the BIN range (First 6 digits). Unfortunately this can sometimes cause problems. I had a business card that had a BIN that was previously used by Bank of America for one of its Debit MasterCards. A lot of terminals were never updated, so I often had to press cancel at many terminals for it to go through as credit.

I have to say the Debit/Credit system in Europe is much simpler. Its easier having Amex/Visa/MC running the debit networks. It means all transactions are processed the same way and the merchant automatically gets charged the appropriate rate (Debit or Credit or Premium credit). It also benefits the merchant as its more likely they will get charged debit rate rather than the credit rate.
Amex UK Platinum Charge Card
Amex Blue Cash USA
Amex US Gold Corporate Card
World MasterCard Capital One UK (Free abroad + Cashback + Free Cash Withdrawals with no interest)

SClay
Platinum Member
Platinum Member
 
Posts: 85
Joined: Fri Aug 16, 2013 8:01 pm
Location: South USA

Postby SClay » Tue Sep 03, 2013 12:04 pm

Well, I remember one time I was using my AMEX blue prepaid at a store, and the clerk asked debit or credit. Since it was a debit/prepaid card, I assumed I was supposed to run it as debit. I had the balance to cover the purchase, so I entered my PIN and it was declined. She offered to run it as credit but I thought that wouldn't work. Little did I know it would only work as credit.

Long story short, I don't think stores/clerks know. Hence the reason why a lot of times they ask you 'Credit or Debit'. Most of the time Hotels only accept Credit Cards or BANK Debit cards attached to a bank account. Anyways, I think one of the reasons stores/places only accept credit cards is because they don't have a PIN processing thing. Plus, a debit card can always be run as credit instead.
Capital One Secured AU | $1851 | 10/2013
Capital One Journey | $1000 | 03/03/2016
American Express Delta Gold | Denied | 03/13/2016
Citi Bank Double Cash | $1000 | 03/13/2016
Chase Amazon Visa | Pending | 03/13/2016

User avatar
otter
Centurion Member
Centurion Member
 
Posts: 639
Joined: Sat Aug 24, 2013 8:45 pm
Location: Grand Forks, ND

Postby otter » Tue Sep 03, 2013 6:14 pm

SClay wrote:Plus, a debit card can always be run as credit instead.


Actually, when I lived in Hampton Roads, VA... there was a bank (Monarch Bank) which did not allow their customers to use their VISA check card for credit transactions except in very limited circumstances. I knew this because their customers would ALWAYS have to enter their PIN where I worked. I had some friends who banked there who told me the bank had to once "eat" a large loss due to some fraudlent VISA activity(or alternately the bank had some sort of dispute with VISA). I would always tell these friends if my bank did that, I'd march up to the bank and demand they allow me to use my card like every other bank lets their customer use their debit card or else I'd close my account. I'd also report them to VISA because I think they HAVE to let their customers run it as credit in most circumstances otherwise they are violating their agreement with VISA.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450

takeshi
Centurion Member
Centurion Member
 
Posts: 1733
Joined: Wed Jun 05, 2013 3:12 pm
Location: US

Postby takeshi » Wed Sep 04, 2013 6:08 pm

flash007 wrote:I'm confused because when I stopped at the gas station and I paid inside, they asked if it was a debit card or a credit card. When I went to the grocery store they asked me the same thing. This got me to thinking they couldn't tell what kind of card it was.

Same thing happens at the pumps with my PenFed credit card. Other credit cards do not bring up the question.

flash007 wrote:Now you want to hear scary, I went to Wal^art with a friend and he wanted to show me something so he took the card, went to the self-checkout lane, swiped the card, signed the electronic pad "Santa Claus" and walked out with a $150 purchase. Next we stopped at a restaurant, I asked they guy at the counter if they took debit cards and he said "no" "credit cards only", I handed him the Mastercard, he ran it, I signed the slip and we walked out.

Not sure why that's scary. You can certainly sign whatever. The counter person just sounds ignorant.

flash007 wrote:What gets me is the prepaid cards don't fit the definition of a credit card or a debit card and since they are reload-able, they certainly aren't a gift card.

Right. They're prepaid. That's why they're called something different. They just use the same processing networks.

randeman
Centurion Member
Centurion Member
 
Posts: 188
Joined: Tue Jan 10, 2012 7:11 pm
Location: New York, NY

Postby randeman » Thu Sep 05, 2013 8:41 am

tvirk888 wrote:Didn't know this. Thanks! I'll tell my merchant this information. :cool:


Always happy to help.
Cards and Credit lines Acquired:

Escape by Discover (7.75K), Barclay Holland America Visa (7K), Macy's store card (7K), Bloomingdale's store card (2.6K), Citi Custom Credit Line (3.5K), PayPal Smart Connect credit line (2.7K), Chase Freedom Visa (5K), Chase United MileagePlus Visa (5K), Chase Sapphire Preferred Visa (6K), Amazon store card (2.2K), Lord & Taylor store card (550), Nordstrom store card (1500), Gold Delta SkyMiles from American Express (3K), Discover It (6.5K), PayPal Credit Line (1K).

mdl28
Centurion Member
Centurion Member
 
Posts: 211
Joined: Thu Mar 21, 2013 10:18 pm
Location: TX

Postby mdl28 » Thu Sep 12, 2013 9:28 pm

Debit cost the store a fraction percent less to have processed than a credit card does. Which means debit cards are preferred.
MDL

Amex Gold Prem'r
Amex BCP
Amex Green
Barclays Ring Platinum MasterCard
Citi Diamond Pref'd
Chase Sapphire Pref'd Visa Signature
Chase Freedom MasterCard
Discover It
New York Life Visa Signature



Return to “Visa & MasterCard”

Who is online

Users browsing this forum: No registered users and 2 guests