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.
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flash007
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Debit Card vs Credit Card: Stores Can't Tell The Difference?

Postby flash007 » Fri Nov 19, 2010 3:53 am

Can a merchant tell if I have a debit card or credit card? Is it coded on the magnetic strip? 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.

Please don't shoot me but I decided to try out a Capital One prepaid Mastercard to try out my theory. I tried a debit card on with my local bank, but they only wanted to give me a $200 daily spend limit and there's a $35 fee if I go $.01 over plus there's a minimum deposit of $1,000. There's a $5 service charge for going under $1,000. Not worth it to make the change for that debit card. I don't recommend Capital One over any other card, I just closed my eyes and picked one. I funded the card with $500 ACH from my checking account.

I made a Hotel reservation using the card, but when I got there to check in, I was told I couldn't check in with that card, I needed to use a Credit Card. They said they only accept CC to check in, but I could pay the final bill with the debit card. When I called ahead to make a reservation at the next place they asked if I had a credit card to reserve the room and I just gave them the debit card number, then checked in with the debit card no problem.

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.

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. It says right in the documentation that comes with the card, this in NOT a checking account and you can't overdraft. Since there's no overdraft fee, it's not a checking account. Because there's no checking account, it doesn't fit the definition of a debit card. To be a real credit card, it would have to loan you the money that you will pay back later, since there's no loan, there's no credit. The card has the word "debit" on the face, but it's hard to see. Capital One refers to it as a "Prepaid Mastercard" with no mention of the word "debit" vs "credit".

Why do their need to be better regulations? Why not just nobody get the cards? Because more employers are doing direct deposit of paychecks. If you don't have a bank account and you currently get a paper check at my employer, you will be getting a prepaid card of the employer's choice and all future checks will be deposited to your card. I work with several people who for various reasons do not have a checking account and if they don't open a checking account or get their own prepaid card, my employer will provide them with one of his choosing. I could see someone loosing their whole paycheck and not being able to get the money back. I didn't feel comfortable with having more than $500 on the card a one time.

So does this card show on the system as a debit card, credit card or can't the system tell which it is?


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Mogul of Pineapples
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Postby Mogul of Pineapples » Sat Nov 20, 2010 5:50 pm

hey said they only accept CC to check in, but I could pay the final bill with the debit card.


This was probably because the card was identified as a debit somewhere on it. If you had a debit card that was indistinguishable from a credit card it probably would work, don't you think? When a trasction is processed as credit there is nothing that identifies to the type of card to the merchant from what I know.

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


I always draw a line for my signature and no one questions it. The reason I do it though is I don't like touching a stylus that thousands of other people have so drawing a line is the fastest. Because a signature is your personal creativity I believe you are allowed to sign any which way you want.

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.


My guess is he thought a debit card was an ATM transaction with a pin number.

You make some excellent points about the defintion for card types. What Cap One does is probably smart because by not classifying it as debit or credit and that may exclude them from complying with some regulations. I do know gift cards were part of the credit card reform. I would say a prepaid card more closely matches the definition of a gift card, wouldn't you say so?
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Postby BLD » Mon Nov 22, 2010 12:57 am

Rental car companies must have some method of telling a debit from a credit card because years ago I had tried using one that made no mention of what it was on the card and the person came back to tell me it can be accepted because it is a debit card.

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Merchants know

Postby creditkid » Wed Nov 24, 2010 2:54 pm

We can tell at least at the store i work at what type of card. We say debit or credit bc u can run it as both. if u run your debit card as credit then we pay a transaction % fee too (visa/master card or whomever), if you pay debit then it's like cash and the store gets 100% of what you pay. when you pay with a credit card (for my store) we know bc the screen instantly asks for the last 4 digits on the card, which tells me it's a credit card, or sometimes a prepaid card. So we know, but since the cc market is so saturated with more people use debit than credit (sorry i'm responsible and like to get money back for my money. even if it's only a penny per dollar. plus i like the safety a credit card gives my bank accounts, compared to debit cards) so yeah since most people use debit it's easier to just ask up front" debit or credit".

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Postby jeffysdad » Wed Nov 24, 2010 4:52 pm

Just to clarify, almost certainly once the card is swiped the merchant knows if it's debit or credit despite what it might or might not say on the card.

Debit card transactions that use a pin yield a lower interchange fee for the issuing bank and cost the merchant less. That is why some merchants offer discount for pin-based debit.

Signature debit is processed like a cc transaction with higher interchange fees, costing the merchant more. Many merchants discourage signature debit transactions the way they try to steer customers away from credit cards. I believe signature debit offers the customer more rights in disputing the transaction (??)

I could be wrong, but I think the credit card reform legislation eliminated (at least to a large extent) the prohibition on merchants charging a "fee" for cc transactions. They could always offer a "discount" for cash/debit, but now I think they can say, "This is cheaper if you pay cash/debit."

Hotels and rental car companies and anyone else that is exposed to customer-caused loss don't like/won't take debit because they're recovery is generally limited to what is in your account, as I understand it. I wonder if we might not see hybrid cards in the future, cards that function like debit but offer a credit line that can be activated at the transaction point by the customer and offered to the merchant (hotel, car rental company) that wants the ability to tap a credit line.

I've never carried a debit card because of security concerns and the low/non-existent rewards. However, I've recently started. I think in the months and years ahead we're all going to see more merchants shunning credit, or at least offering lower prices for debit.

If they cut me a break on price that is greater than the rewards I forego, I will use debit. I recently opened an additional free checking/money market account in which I only keep a couple hundred bucks. I carry the debit card associated with this account and use it when appropriate. I will not carry the debit card linked to my main checking, which sometimes (rarely) has real money in it.

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Postby Throwback » Thu Dec 02, 2010 6:09 pm

When a debit card is swiped and the clerk gets prompted for "debit" or "credit" that identifies it and must be something only debit cards do, because credit cards won't do that. That means the clerk will always know what a card is right?

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Postby Mogul of Pineapples » Mon Dec 06, 2010 3:19 pm

Signature debit is processed like a cc transaction with higher interchange fees, costing the merchant more


Yes, the fees when a debit is processed that was is the same as a credit card. The thing I don't understand then is why are the rewards so much less than what a credit card would give, being that the fees generated are equivalent.

I believe signature debit offers the customer more rights in disputing the transaction (??)


If it's processed as a "credit" then it goes over the Visa or Mastercard network and all the rights and protections that's go with their credit cards.

I wonder if we might not see hybrid cards in the future, cards that function like debit but offer a credit line that can be activated at the transaction point by the customer and offered to the merchant


That's an interesting idea. If that happens I think it will be a feature checking accounts would add that allow spending beyond the amount in the account.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

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Postby infomaniac » Fri Dec 10, 2010 10:11 pm

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. It says right in the documentation that comes with the card, this in NOT a checking account and you can't overdraft. Since there's no overdraft fee, it's not a checking account.


It would not meet the definition of a credit card but a prepaid card would be an accurate assessment according to Investopedia.

What Does Debit Card Mean?
An electronic card issued by a bank which allows bank clients access to their account to withdraw cash or pay for goods and services.


The definition does not specify the account type in which funds are withdrawn from.

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Scary thing at Wal-shart?

Postby TruthMonger » Sun Sep 01, 2013 11:51 am

Not clear what the scary thing was at Wal-shart, except that your friend took you for $150 and you didn't even notice.

This whole blog is about your being confused by the fact that some cards can be run as debit or credit cards. This is the case with most modern ATM cards. What's the mystery?

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Postby randeman » Sun Sep 01, 2013 2:50 pm

I will be willing to bet that there is some way for stores to know if you are using a debit card as opposed to credit. The reason I say that is because there is a big local pharmacy chain here in New York called "Duane Reade." The purchaser swipes his own card rather than handing it over and the screen immediately changes to a page asking you to input your PIN. You can override it (if you know how) by pressing a certain button on the POS (the swipe machine, whatever it's called) and process the transaction as a credit card. When I have used a credit card there, the next page is the signature page. With that kind of technology I am sure the merchant could set up his POS to differentiate between credit and debit cards if desired.
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