Read It Here First: Retailers vs Visa
Back in September, we discussed the brewing battle that was taking place between Retailers and Banks. Big stores prefer for you to use your debit card, which comes with much lower fees than your credit card.
Today’s NYT has a long article covering a similar topic: Whether you sign or punch in a PIN when using that debit card:
“When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code.
The difference is so large that Costco will not allow you to sign for your debit purchase in its checkout lines. Wal-Mart and Home Depot steer customers to use a PIN, the debit card norm outside the United States.
Despite all this, signature debit cards dominate debit use in this country, accounting for 61 percent of all such transactions, even though PIN debit cards are less expensive and less vulnerable to fraud.”
As I noted then, if I like the retailer and feel they treat me fairly, I use the PIN.
click for larger graphic
courtesy of NYT
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Previously:
Banks vs Retailers: The Battle For Card Usage (September 29th, 2009)
http://www.ritholtz.com/blog/2009/09/banks-vs-retailers-on-card-usage/
Source:
How Visa, Using Card Fees, Dominates a Market
ANDREW MARTIN
NYT, January 4, 2010
http://www.nytimes.com/2010/01/05/your-money/credit-and-debit-cards/05visa.html
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January 5th, 2010 at 6:49 am
I like the float myself. It also helps the credit score to pay it off monthly.
January 5th, 2010 at 8:06 am
POS charges?
January 5th, 2010 at 9:06 am
POS=Point Of Sale.
Debit PIN sales used to cap off at $0.45 per transaction.
Retail swiped transactions would be a minimum of 1.49% + $.10.
After the Wal-Mart settlement, signature debit was put at 1.29% + $.15.
Then Visa started advertising debit for everything, and many banks give cardholder rewards for debit swipe use. Why–because they get a cut of the %, and also don’t risk their own funds on the transaction (as opposed to a credit card). WIN-WIN for them, mixed value for consumers (better control of funds vs. worse protection from fraud).
Haven’t seen base rates for about 3 years, but that is my best recollection.
January 5th, 2010 at 9:45 am
Target’s second biggest expense after payroll? Credit card fees!
http://www.minnpost.com/businessagenda/2009/06/23/9718/can_you_guess_targets_biggest_cost_after_payroll
January 5th, 2010 at 10:17 am
not sure why one would use a debit card. there are to many potential vulnerabilities (you don’t have any protection from fraud such as with a credit card, you are allowing some one else to access your bank account just to name , open your self to potential losses from some one getting to your account using spoofing just to name a few).
as long as you pay off the credit card every month its works a lot better.
January 5th, 2010 at 11:39 am
The debit card is America’s most efficient and practical means of payment. I applaud all of you who use a credit card, then pay off the balance in full each month, but this is a pretty sophisticated bunch that post on here. I don’t count myself as sophisticated, except for my taste in college football teams (Roll Tide Roll). As a result of the average Americans’ tendency to carry an interest-inducing balance, credit cards just don’t make sense for the vast majority of people. Sure, there is a greater security of funds (I still think this is even open to discussion), but the tendency to go into high interest debt is too much of a price to pay.
We haven’t used a credit card for a purchase in over 3 years now, and we still can’t get out from under all the stupid debt we ran up before then. It’s down about 70% from it’s maximum, but it still hangs like an albatross around my neck. But it’s current, I’m paying 7.99%, and I pay more than the minimum. It will go away, with time.
January 5th, 2010 at 11:51 am
willid3 is correct, you have far less protection. Unfortunately, I speak from experience. Use the credit card, avoid the pin.
http://redtape.msnbc.com/2008/08/could-a-hacker.html
January 5th, 2010 at 12:56 pm
I would use my PIN debit if it had the same fraud protection and a credit transaction. I’ve been the victim of a stolen credit card number (not identity theft – just the number) twice and it cost me nothing but a phone call or two to fix – very nice protection. A lot better than having my bank account drained and not being able to get it back. Just use credit and pay it off each month.
January 9th, 2010 at 3:55 pm
I just received my new account card from JPMorgan Chase in the mail. It encourages me to “Earn Points on Everything You Buy” but you must “select ‘credit’ NOT ‘debit’” when making purchases. Hmm, why the hell should I be forced to use a specific method to accumulate “points”? I’m using their card, isn’t that enough? Apparently not. They want to force me to shovel more of my money into THEIR accounts by applying a higher surcharge to the retailers I’m buying from, ultimately driving up the prices I pay in the long-term.
Am I missing something? Isn’t this just a pure wealth transfer from us to credit-card companies, with zero added value for us (in terms of additional convenience)?
I love how they try to convince me this is in my interested because “you’ll have the added security of not entering your PIN in public”. Yeah, thanks for also telling me how many billions of dollars you hope to earn this year by scaring us into not entering PIN numbers. Arrogant, monopolistic jerks.