The differences between PIN-debit and Signature debit are often confused. Most merchants cannot track how many debit card they get vs the number of credit cards.

I work for a credit card processor and can look at individual transactions and which of the 100+ categories of Visa or MC a single payment is charged at.

Now some merchants get VERY bad deals from their card processors but that is different from what they should be paying. My experience is that most merchants have neither the time nor the industry resources to evaluate the cost for a single transaction. They are at the mercy of the goodwill of their processors, sadly.

I work for a credit card processor and the fees are as I described. Sales with the 4-digit PIN are a flat fee. Sales without the PIN on the same card are a percentage of the sale amount.

I look at individual transactions throughout my day and can assure you I know what I am talking about.

The breakeven point will vary based on a merchant's processor but the wholesale cost of the transaction is published as Visa or MC interchange rates.

Feel guilty yet?

I kept on wondering why the opposite. Why are companies like IKEA suggesting that you use your bank card for debit instead of credit.

Disclaimer: This is coming from a person that has yet to master capitalization.

The word "asshole" doesn't inspire real confidence either.

Debit cards are incredibly convenient and I figure throwing some higher fees to that network helps to keep them afloat...

A PIN debit transaction would be 1.92% plus $0.10
A Visa debit transaction would be 2.5% plus $0.10

I'm assuming most retailers are the same albeit with a higher negotiated fees.

It's easy to shield others from seeing your pin as you are entering it at the grocery store or at the ATM. It's much more difficult to correct things after the fact if something were to happen. Protecting a PIN is very cheap insurance.

Is the scenario as described unlikely to happen? Sure, though incidents of similar things have been widely reported and seem to be escalating. More importantly, do I want it to happen to me? I'd rather not have the hassle and to be out however much money while fighting with the bank for what could potentially be a very long time. The cost of being slightly paranoid in this instance is outweighed by the potential downside many times over.

Suggesting it is too much of a hassle to shield your PIN from others is akin to suggesting that it's too much of a hassle to lock one's car. The PIN could be considered to be the key to the account, and should be safeguarded as such.

just pay with cash.

Same here, and it usually confuses the shit out of them surprisingly. I thought everyone knew that most debit cards have credit card power these days. They usually look at me and then I finally just say "credit......... OR debit!" but by that time they've already ran it through via credit heh

If that wasn't available, I'd still make signature transactions to keep losers from getting my PIN.

To me, that's like worrying about catching cancer by drinking out of plastic bottles. But I understand some people would worry about this, so to each his own I guess.

@Landru: All Synovus banks. They are located throughout the southeast.

Since obtaining your card or at least its data could be as simple as downloading the data from the skimmer they've installed on the store's card reader, both parts of the key - the card and the PIN - would be fairly easy to get if one was determined, even if the actual card never left your posession.

For the criminal, having both halves of that puzzle makes it much easier for them to get away fast and clean and makes it much harder for you when it comes time to dispute any mischief. The bank simply says, "Sir, could you please prove that you didn't withdraw $1000 from this ATM with your PIN, only half a mile away from your previous purchase and 15 minutes later, when you haven't reported your card stolen until now and you had used it again some time later, proving that it was in your possession immediately before and after the transaction in question?" That turns into a much bigger can of worms.

@adamczar: If the customer behind or next to you has a good view of you entering your PIN, they may be more inclined to do something to get your card and use it. I've never worried about this, but I can see why some people might be concerned - especially in areas where groups of people might coordinate to rob someone.

Back in the early 90s when I had my first apartment, my Fleet Debit Card charged $0.25 for every debit transaction. And while I hated it, I hated writing a check for every little purchase even more. Eventually they got rid of the fee, and then I got rid of them... Then they bought the bank I switched to and that why I am at BoA now... Talk about fees.

The problem with processing debit as credit is the amount of money they block of for the transaction.

I know every here is a financial guru, but some us here do live paycheck to paycheck. Namely me. So when gas was $3.25-$4.00 per gallon, maybe that $58.00 fill-up I did gets $75.00 frozen in my account? Perhaps $100.00, what then, if the money is needed for some reason.

That $42.00 might be needed for pediatric co-pay which then bounces because the last money in my account is frozen? So, that's $35.00 for an overdraft and then possibly another $10 for a transfer charge even when I have the money in saving to cover it?

No way. I know there are ways to combat it (and these fees), but if even paper checks are instantly verified- how come an electronic debit as credit needs 3-day freeze.

Just another way to screw us.

@Dethzilla: Not illegal - just against the credit card companies' contracts / terms of service with the merchants. But not against the law.

@Collie: "your PIN number" - Your Personal Identification Number number?

@rworne: It's illegal to charge more based on the payment type at the location of the transaction.

The idea here is when you use your card as a debit at the store instead of the store paying a fee for the transaction to Visa or Mastercard, you pay a fee. somewhere between 1.50 to 3.00 a transaction.

Basically its the same as going off your banks ATM network. You will be charged they want to make money off you.

It used to also be a fact you could ask the store to add $20 to the transaction total and give you the difference back, I don't see that happen to much anymore.

The best way to pay is cash if you want to save you and the place you do business with money.

@iluvhatemail:

That could be true. I have a merchant account and depending on the type of card, transaction, etc, we are charged different fees anywhere from 3.5% to 5.5% per transaction. It depends on the deal some banks have with VISA or MC. Chase might offer a discounted rate for someone using their Visa, but it could be more for their MC, or another bank might be higher. Its hard to know how much transaction fees are from month to month because of the variable fees each bank charges.

One thing that I have noticed is that we get charged a higher percentage for people using debit cards as a CC, than people using a traditional CC.

Debit transactions using signature incurs the same fee as a credit transaction - a smaller fixed fee but then a percentage fee. What the actual numbers are will depends on the merchant (grocery stores pay less than mom & pops).

@stopNgoBeau: I think it depends on the bank. Back in my (constantly overdrawn) college days, I switched banks a couple times (mostly to correspond with who did and didn't put a hold on the checks I deposited from my parents) and each bank was different. Most often though, I was allowed to be overdrawn up to a point (somewhere between $100-$250, or for certain amount of time, depending on the bank) at which point my card would be declined at every transaction. I'm sure there was some sort of risk management calculation involved balancing the $$ earned from overdraft fees with the likelihood of never being paid for them.

I'm so glad that I've gotten everything straightened out and I don't have to deal with that mess anymore.

I moved to Minnesota last June, and I have never heard of this. I use my debit card infrequently, but it certainly does work. The only reason I use the debit card is to get infrequent cash back, since I don't have access to ATMs in my area. Perhaps it works for me since I've only used it at Target stores (credit card at all other retailers)?

Ahhh, so that's why every time I shop at the little liquor stores and bodegas instead of being asked "credit or debit?" they just ask "debit?", and I have to specify that I'd like to use credit.

I always find it interesting that lot of people (especially on Consumerist) complain endlessly about retailers trying to make a buck, yet they never take retailers' costs into consideration. News break: they just pass the cost to you. One way or the other, you're paying for those miles and points you earn on those credit cards.

On credit cards there's generally a small cap on liability, and it's rarely charged. Banks typically refund the amount with a stolen credit card, but for debit card fraud, you can potentially lose all the funds in your chequing account.

@zigziggityzoo:

How are you protected additionally from the PIN transaction by using signature?

it is also frustrating that pin pads at stores all offer the debit option but we can't use it.

@Collie: I'd be all in for that!

@Robert M Getch: Yep, I've fought with some merchants over that. Once, I even contacted Visa in order to get a copy of the service agreement to prove that they are not allowed. Visa now dis-allows that merchant to take their card. This has significantly affected business because it is in a high volume white collar area where people rarely have cash!

@gStein: Yup, just hit cancel or tell the checker to run it as credit. Either way.

We don't use credit, except for travel, but we use our debit Visa cards for all day to day spending (easier to keep track of than cash when it comes to Quicken). I always use my Visa debit as a credit card transaction whether I'm at a small retailer or a large mostly because of data breaches and security purposes and also because we get Visa points when we use our Visa debit card as a CC.

The CC transaction fees are already built into the price of the goods/services so unless the mom and pop gives a discount for using cash I have no problem saying Credit when asked credit or debit.

I don't think Chase is making any money on the consumer side of the transaction, but if I'm not mistaken they're a pretty big player in the merchant account game.

I've had card processors break down the fees for me, and there was no mention of the cardholder's bank getting a cut of the proceeds. Of course they could have been lying through their teeth.

There's a chain of liquor stores in Texas (Spec's) that give a 5% discount for cash, check, or debit purchases.

I vowed from that moment on never to use an ATM/debit card with a Visa/MC symbol ever again. Period. My only bank card now is a regular old fasioned ATM card, with NO visa/MC logo on it. Banks love customers who use the "credit" option, because it racks up more fees for them. I on the other hand decided that I wanted to be in control of my money, that if I make a purchase at a retail cash register for $40, that if my checking account somehow inexplicably only has $30, that the transaction will NOT go through. If you choose "credit" on your card, then yes it will go through - and surprise, the next day you'll get a hefty fee. Yet another way for banks to make their money. So I cut 'em off at the pass - from now on, it's only an ATM card for me, no Visa/MC symbol here.

@supercereal: I'm guessing this is a US thing. In Canada if you try to use a Visa/MC branded debit card as a debit from US Banks in some places it declines as invalid card and ONLY allows it to go through as a credit transaction.

& i believe the % is typically between 1.78-2.78% for most merchants, but can be higher depending on your merchant code.

before the settlement (& the need for updated machines/operating practices), it was always the customers right to choose. now a merchant has the prerogative to force you into a PIN transaction. most will counsel you on the work-around (rather than lose a sale), but that's why you see PIN-first machines.

incidentally, another result of that settlement was the reduction of visa debit interchange & processing fees at certain merchants (such as wal-mart) by ~30%.

i would LOVE to implement something similar at my credit union, but our banking platform SUUUUUUUCKS. there's no way we could track a program like that effectively.

The retailers always push the debit feature, sometimes they don't even ask me "debit or credit" they just put it in as debit and hand me the keypad to punch in my PIN. It's highly annoying.

My bank encourages me to use the credit feature. This leads me to conclude that the credit feature is good for the bank, and the debit feature is cheaper for retailers.

I like the debit feature because it's handy, fast, and I can get cash back at some registers, saving a trip to the ATM. However, the protection of using the credit feature is nice, too. I think after thinking this over, I'll use the credit feature whenever I can except on the occasions I need cash back.

I will not punch my PIN into a gas pump, so I pressed "Credit." It went through just fine.

I travel 80% for business and use points earning cards for all my transactions (hotels, airlines, meals, etc). When you rack up $1,500+ in expenses every week, the points add up very quickly.

I don't spend any more of my money to earn those points because it was never my money in the first place.

In (mainland) Europe, you've had to enter a PIN number at the POS with a debit card for aeons now. I'm from the UK, where we've only caught up with such technology relatively recently (like, oooh, about 5 years ago) - the introduction of "chip and PIN" and the insistence on PIN numbers for all debit card purchases caused all kinds of uproar when it was first introduced, but it quickly became obvious just how much more secure it was.

Then I moved to the US where you can use your PIN number with your debit card, but will more than likely be charged for the privilege, and where if your card falls into the wrong hands, your bank account can be drained without any kind of safety measure being in place at all. Hmm.

Ahhh....credit card companies love point programs because the retailers are the ones that pay the fees for it; and credit card companies know that you - yes I'm talking about you - will spend more money on your card than you otherwise would have in order to get that brand new TV. So dont' think for a second that those things were "free". They weren't.@wfgunn:

@tedyc03: or you could use a checkbook register and not have a problem to begin with.

@Skeptic: Well not exactly, the bank still must allow the credit transaction to be approved, thats why the little machine still has to process the transaction and it can be declined.

*Purchase protection
*Extended warranties where applicable
*Charge dispute rights that may be superior to merchant's return policy
*Cash back or airline/hotel/points rewards
*Easy tracking of expenses (this is true for debit cards as well, but not so much for cash)
* 20-40 day float before you have to pay (more if you're willing to pay interest, though there are plenty of limited-time, zero interest cards out there)

Given the above, it makes little sense not to use a credit card, if you have one.

@roshambo: That is not true of all banks, for example at US Bank you can overdraw your account with Pin based or even ATM transactions.

The bank controls the processing system, I don't see why you would thing that a PIN transaction would be unable to overdraw an account.

@rworne: Some consumers prefer to use their pin and will pay for it and merchants can charge a fee for this. Visa & Mastercard prohibits such charges.

@iluvhatemail: This is because Visa & Mastercard do not alow their merchants to charge a fee to use "credit".

All the merchants I go to that ask me: "debit or credit?" I usually tell them "It's either one, doesn't matter".

They invariably run it as a credit card.

The only exception are those places that charge fees to use debit cards.

Well in some cases the merchants screw themselves. Take just yesterday when I was picking up lunch from Arby's. If I use my card as a debit card, they charge me a $0.35 convenience fee and I have to use the shifty-looking device on the counter. But if I tell them it's a credit card, I pay nothing extra. I don't even have to sign!

No brainer there.

I have the same thing, it was 5.5% when I signed up last year. I assume they can afford it via the merchant fees or whatever. However on my account PIN based transactions still count towards the 12.

@robodomo: Not with my debit card. If the funds aren't there, transaction declined.

Using a PIN because you "like" a retailer vs credit doesnt' work unless many people do it. The costs (realized or unrealized costs) of the customers using credit over debit/cash/etc is already factored into the goods you purchase, so whether you try to "help" by paying with pin doesn't matter...you're already helping by purchasing the item with the cost of credit purchase built in. I say use the system and get whatever rewards you would garner from using the credit feature. If your bank doesn't give you debit card rewards like that then this might be a good time to shop around :)

Our bank just started charging a POS (point of sale) fee for using debit cards. At $1.25 a pop! Apparently, this is a fairly new fee that banks are starting to charge. We get around that by using our debit card as "credit."

Our bank just started charging this fee, and we were not notified. Or if we were it was buried deeeep in some monthly statement. More and more banks are starting to charge a fee for using your debit w/ pin. So, watch your statements for that POS fee.

Signature debit is a % of the sale amount say 1.50%.

So it can be cheaper to the merchant for small sales if treated like a credit card.

Large sales would be cheaper as a PIN transaction.

In this case a $10 sale is cheaper to the merchant as a "credit card" sale than PIN debit sale. $0.15 vs $0.35

Merchants need to also consider that monthly network fees may be required to access the PIN networks, say $10.

Rule of thumb for a merchant is "the bigger the sale the cheaper a PIN transaction is compared to signature transaction."

If your bank doesn't have a Points program for your credit/debit card you should find one that does. Over the last 5 years I have used my card as a CC and gained a very nice high end DSLR camera, a gorgeous LCD 42" TV, and two round-trip tickets to Jamaica.

I also use this card to pay for Comcast online, ATT online, and any other business I have that will take a CC for that purpose.

Meet the requirements each month and they pay 4% on your balance. Miss the requirements and the percentage falls to 0.5%

When I use my debit card at the grocery store, pharmacy/drug stores, or anywhere else where the swipe terminal is up high, I always opt for the signature debit. I just don't feel comfortable enterting my pin when the person next in line is hovering near me.

It will really likely make them more money at both ends. The merchant will pay more for the processing and the consumer who doesn't balance their check book will be more likely to get overdrawn and rack up fees. A debit transaction is instant and will be declined if the funds are not available. The credit transaction may not post right a way allowing you to make more transactions afterwards, even a debit transaction and then end up overdrawn once all the charges hit. Stick to cash or debit, you will stick it to the banks and likely save yourself money in the long run.

Though for the most part, I agree with the benefits of exclusively using a credit card, and I made that switch awhile back. If you're responsible and actually have the money to spend, then there's really no reason to use a debit card at all (aside from those intermittent, annoying CA gas stations that only take debit cards...).

i thought merchants pay a single fee($0.35) per debit transaction, but a fee + % for credit

or i guess for credit, the credit card processing company takes more of a %

and using PIN, its kinda verifying ur identity(unless someone stole ur card AND pin), harder to say ur card's been stolen