My understanding is that the mobile payment app is just a medium for a virtual debit or credit card
> on the internet credit cards seems to be the main supported payment method
Over many years, I've never had any issue paying with debit cards on the internet, except _once_ to rent a bike on a taiwanese website (bc they do a credit card hold).
If you have no money you will go into overdraft and that’s about it, you basically have a problem and the bank will keep nagging about that overdraft if you don’t have an agreement.
The goal is to use the “credit” of the credit card for 30 days as a convenience. The implicit expectation is that it will be paid in full at the end of the month.
In countries like US and South America (e.g.) many people see credit card as free money (that they don’t have), so when the end of the month comes they simply don’t have the money to pay the balance or pay very little of it. The consequence is what we all know: high interest on the balance which keeps snowballing.
I know in south america banks even have interface for payment in instalments etc. Here in Europe, at least my bank they don’t have have such feature, I guess it’s just not meant to be used and abused they way it happens in other places.
This is my view at least.
https://www.bankrate.com/finance/credit-cards/is-a-charge-ca...
On the Charge "credit" card you don't pay interest unless you go into overdraft at the end of the payment day for the month.
With the revolving credit you pay the balance on your own terms but you pay the interest rate for it until closed.
[1] https://www.investopedia.com/terms/r/revolvingcredit.asp
For daily payments shops all accept both credit and debit and there's no difference to the consumer whether they happen to tap a credit or debit card.
If I'd consistently used a debit card instead to make those purchases, there wouldn't be any such balance, but I also wouldn't have any more money either.
I don't quite see this as being something where I should change my behavior in order to avoid this "scam".
One good thing that came from this thread is I went to my bank's website, clicked a few buttons, and $1990 is being converted from rewards points to cash that will hit my account next week. They really got me on that scam and I hope they'll get me again every couple of years.
In any case, there are a couple of important semantic differences between a debit card vs a credit card that you pay off immediately:
* you automatically get insurance/protection for certain purchases in a credit card (so I read, I've never used it)
* It's much worse if someone steals your debit card details and starts making purchases than it is for a credit card, because it's linked to your current account that you use for other stuff. If your credit card gets deactivated for a while then it's no big deal really.
I solve this by having separate accounts for the debit cards that get manually populated with some money every now and again.
I also have a separate account to pay "Bills that will make me homeless if I don't pay them", so no matter what happens with my debit cards (and no matter how long it takes the bank-issued checks (some of my creditors still refuse to do electronic transfers, I have no idea why) to be cashed), I know those pending payments are accounted for and will not bounce.
However, the debit card industry (as do some other oddities like Amex charge cards) largely voluntarily offer very similar protection to section 75 on debit card purchases and the credit card industry largely voluntarily offer the same protection on purchases under £100.
But by and large, if a website accepts Visa or Mastercard, it doesn't tend to matter if it's a debit or credit card.
One large exclusion here is for gambling sites. Gambling using credit card sourced money was banned in 2020: https://www.gamblingcommission.gov.uk/news/article/gambling-...
But over the past 10 years or so, those debit card networks have been phased out in the UK and almost universally replaced with Visa and Mastercard debit cards. As far as acceptance goes, these are pretty much 100% identical to using credit cards on those same networks.
In the UK, credit card use is widespread even for in person purchases. By legislation it provides extra protection, for example by Section 75 (https://www.experian.co.uk/consumer/credit-cards/guides/sect...)
USA: debit cards and credit cards are both offered through banks. They operate on the same payment infrastructure (Visa, Mastercard, etc). They are all equally accepted. The only difference between them from a consumer standpoint is that a debit card immediately withdraws the money from your account and typically requires a PIN for purchases, whereas a credit card operates on credit -- ie you acquire debt when you make purchases but your bank account balance stays the same -- and usually requires just a signature, and not even always that. On a credit card, you have a (very high) interest rate, but only on balances that are carried over past the end of the month: if you pay off the entire statement balance by the due date, there's no interest. More concretely: an August statement contains all transactions for August, but you receive it during mid-September, with a due date by the end of September. So by the time you've paid your August credit, you've made more purchases, and the total balance is higher than the statement balance. You only get charged interest on the August debt that is left over after the due date; September debt continues on in limbo until its statement due date. Payment processors make money per transaction, banks make money by the ridiculously high (~20%) interest rates they charge when people don't actually pay off the statement. Both credit cards and debit cards are ubiquitous; you get a debit card any time you open a checking account, and almost everyone has a credit card (77%, and the average person has 3+ cards [1]). You do not need a savings/checking account to have a credit card account at a bank. Credit card debt is extremely widespread, currently over $1 trillion USD for the country as a whole. If a merchant says "No credit cards allowed", they may still accept debit cards, even though they operate on the same payment infrastructure.
Germany: the terms "debit card" (typically "Girokarte" or "EC Karte"; I've literally never heard someone outside of a finance context say "Debitkarte") and "credit card" ("Kreditkarte") are used almost exclusively to describe the payment infrastructure, and only the payment infrastructure. Girokarten operate on a completely different payment infrastructure and are accepted at most in-person merchants and government buildings. Meanwhile "Kreditkarte" is, at least in everyday language, only used to describe the payment infrastructure, and are not always accepted at in-person merchants, and only rarely at government buildings. If a government agency (or shop) says "No payment with Kredikarte is possible", they mean no payment with Visa/Mastercard/etc is possible. Whether it operates as an instant-debit or a revolving-credit basis is completely irrelevant. A Kreditkarte is always through Visa, Mastercard, etc, but a Girokarte never is. That's the primary difference here. Meanwhile, Kreditkarten that actually extend you credit are vanishingly rare in Germany; as a US citizen [2], I haven't even tried to find one, so I can't speak to the internal mechanics of actually having one. But I can say that the vast majority of people I've talked to here simply don't understand what the difference is in the US (I think this is compounded by the language barrier, because like many English -> German loanwords, "Kreditkarte" doesn't mean the same thing as its English root).
[1] https://www.bankrate.com/finance/credit-cards/credit-card-ow... [2] The US places large reporting requirements on foreign banks offering services to US citizens, making it very difficult to open accounts. Many foreign banks simply refuse to do business with US citizens. As with taxes, there are no exceptions for non-residents ("expats"). In some destination countries it can pose a significant burden to new immigrants.
I guess the biggest difference from US is that you need to earn the Kreditkarte, not everyone gets to own one if the bank account isn't that inspiring, and even after getting one, the limits depend on how healthy the bank account tends to be on average.
These things can and do vary regionally, but at least here (working class Berlin area), "Kreditkarte" or simply "Karte" is colloquially used for all plastic cards that are not Girokarten, when discussing in German (I'm a near-native speaker), regardless of whether or not it's revolving credit or direct debit. This could certainly be regional, but at least here, this includes in government buildings: "Keine Kreditzahlung möglich" (no payment with credit card possible) is used semi-interchangeably with "Keine Kartenzahlung möglich" (no payment with card possible -- note no explicit "credit"), and it means that they don't have any payment terminals that work with visa/mastercard payment processing, regardless of whether it's based on revolving credit or direct debit. Note that "Keine Kartenzahlung möglich" may also mean that Girokarten cannot be used, or it may say something like "Kartenzahlung nur eingeschränkt möglich" (card payment only limitedly possible). This can vary even from merchant to merchant and based on context: a grocery store that usually accepts Kreditkarten and Girokarten might say "Kartenzahlung nur eingeschränkt möglich" to note that their Visa/Mastercard PoS system is currently offline, but that they're still accepting Girokarten. But a bar that says "Keine Kreditzahlung möglich" is usually cash-only.
Again, I'm talking about the everyday colloquial language used by working-class people in German language (a chunk of the people I'm talking about have very limited English anyways). This is different in circles that have higher amounts of financial literacy, or more exposure to American culture. I'm not talking about the kinds of people who follow Finanzfluss (then it's a different story) or have studied/traveled to the US, and I'm also not claiming that people don't actually know the difference. I'm trying to highlight how different the two systems are based on what words are and are not in regular usage and how their meanings are different in the two countries.
Credit card is explicitly Kreditkarte.
I also speak German fluenty, including partial knowledge of some dialects, and Swiss German.
Since my last time in Berlin was 10 years ago, I'll have to take it.
For example, Zahlungsmöglichkeiten on these two pages:
[1] "Am Standort kann bar und mit girocard (mit PIN) (ehemals EC-Karte) bezahlt werden." This means nothing with Visa/Mastercard, period. Doesn't matter if you have a direct debit account or revolving credit. If you try to pay with eg an N26 Debit Mastercard, they say "Leider akzeptieren wir hier keine Kreditkarten". This language is basically standard in Berlin. When I responded with "das ist doch keine Kreditkarte, sondern eine Debitkarte" they said "ne, kommt von Mastercard, ist ne Kreditkarte. Sorry."
[2] "Zahlungen sind auch mit Kreditkarte möglich (VISA, Mastercard und Maestro)." They don't differentiate between Kredit- and Debitkarte; the only difference here is that they have Zahlungsautomaten that are integrated with the payment processors. This is a perfect example: Kreditkarte here explicitly refers to the payment processing system and not to the way the payment is booked to your account.
When Girokarte/EC-Karte are accepted, there is no guarantee that Kreditkarte are as well.
Here's another example [1, page 116] from the BMI (so, federal now): "Haben Sie ein Konto bei einer Bank oder einer Sparkasse, wird Ihnen häufig eine Giro-card oder eine Kreditkarte ausgestellt (zum Teil gegen Gebühr), mit der Sie bezahlen können. Der bezahlte Betrag wird dann automatisch von Ihrem Konto abgebucht"
> If you have an account by a bank or a Sparkasse (special kind of bank), you will often be issued a Girokarte or a Kreditkarte (sometimes for a fee), with which you can pay. The paid amount will then be automatically deducted from your account.
Note that Debitkarte isn't even mentioned, and the behavior described for both kinds of cards is the same. This is not true of Kreditkarten that operate on a revolving credit basis; the amount is not automatically deducted from your account, but rather paid later. To me, this language is pretty clear: the federal government sees the system as "you either have a Girokarte or a Kreditkarte" and that Debitkarten are included in Kreditkarten.
[1] https://www.bmi.bund.de/SharedDocs/downloads/DE/publikatione...
As for the rest, I guest we are wasting each other's time discussing this any furher.
I'm not sure how to handle this because it's both incorrect in technical language (Girocards are exclusive to a particular payment infrastructure that only exists in Germany, unless partnered with a separate payment infrastructure, but the co-branded payment infrastructure is only used outside of Germany [1]) as well as incorrect with respect to my experience with everyday language, including all of the links I've provided including from official government sources.
But I agree on one thing: it's a waste of time to keep talking about this.
However, as the Maestro and VPay networks are being shut down by MasterCard and Visa, things are in the process of changing. Most payment terminals now accept MasterCard/Visa as well as Maestro/VPay, though due to EU/EEA legislation, some may only accept debit cards as well as credit cards issued outside the EU/EEA (but not credit cards issued inside the EU/EEA).
At the moment, most banks are still issuing Maestro/VPay-based debit cards, likely because a small amount of payment terminals still doesn’t accept MasterCard/Visa. However, some smaller banks have already started to issue MasterCard/Visa-based debit cards.
* Historically, ‘pinpas’ referred to cards on the domestic PIN network, which were usually co-branded as Maestro for international use. With the introduction of EMV, the PIN network was retired, but debit cards are referred to as pinpassen to this day.
Why is this? If this is about the fee-capping rules, I would have expected that they’d disallow foreign credit cards and allow EU/EEA credit cards, since the foreign credit cards are not subject to the fee cap even when used within the EU.
I’m not really sure why said legislation doesn’t end up applying to foreign cards, though.
Another interesting point about fees is that when retiring the old domestic PIN network, Dutch banks ended up negotiating very low fees for domestic debit (then Maestro) transaction. Therefore, debit can end up being a lot cheaper than credit [1].
[1] https://www.mastercard.com/content/dam/public/mastercardcom/...
> 5. What if I don’t want to accept credit card payments?
> While there is no immediate need to make this change, by the end of 2024 all merchants will be obliged to accept all card products from Mastercard and Visa, under the Honor All Cards Rule, which states that if a merchant accepts one type of that brand’s cards, they must accept them all. Merchants who accept Visa and Mastercards’ debit cards are also required to accept Visa and Mastercard’s credit cards (if they are issued outside EEA)
> This means that if you as a merchant accept any kind of Mastercard or Visa card, you must accept all Mastercards or Visa cards: debit, credit, prepaid and commercial. However, legislation does allow you, as a merchant, to refuse acceptance of credit cards issued in the EEA that are in scope of the Interchange Fee Regulation, article 10; if you wish to arrange this, you can reach out to your terminal supplier.
Strangely though, the third major bank (ABN AMRO) actually doesn't seem to mention this and only mentions EEA debit cards [3].
[1] https://www.ingwb.com/en/service/corporate-cards/debit-maste...
[2] https://media.rabobank.com/m/6ac771022c42bd61/original/Wat-g...
[3] https://www.abnamro.nl/nl/zakelijk/producten/betalen/winkels...
That fee is massive business for Visa etc. There was a pretty big battle between Walmart and the credit card companies a few years ago because Walmart started defaulting to “debit” as the option when you stuck a debit card into their machines (debit cards can be run as either debit or credit) in order to save money. Which of course removed that money directly from the pockets of the payment processors.
Not really. Most businesses don't set prices based on "cost plus" methodology. Maximizing profit based on price and volume is how most do it. Some merchants may choose to absorb the 3%, to compete on price and maximize profit through higher volume than a competitor who charges the same price but doesn't accept credit cards.
You "always pay the 3% fee" the same way you "always pay" for anything else the merchant may offer but you don't use: curbside pick-up, free delivery, the "free gift with purchase" you don't accept because you don't need it, generous returns policy, etc, etc.
Though the costs of cash and checks is probably more than the 3% fee on a credit card. Cash needs to be counted twice at the register, then change made which again is counted twice (at least, sometimes a 3rd time if the numbers are not the same!), then at the end of the day the manager needs to count it all twice again, and even then mistakes are made. On top of that is often stolen: by robbery, dishonest clerks, management fraud, and owner fraud (owners are defrauding the IRS, while management implies someone not the owner who is trusted to count the cash). Checks need to be counted as well, and they can bounce thus being worth very little (they are sold to collections - see article for hints to how that works). Credit cards by contrast are run electronically and so know instantly you are paid you don't have the overhead of adding up the numbers. (debit cards with the lower fees are still subsidizing the others)
Almost every online web shop here will accept debit cards, but it's through a Dutch specific payment mechanism (iDEAL).
Maestro is being sunset by Mastercard and no new card can be issued. Only Mastercard Debit. So the problem with the fact that Dutch debit cards (Maestro) are not accepted online will be solved in a couple of years.
The terms on credit cards are expensive for issuers, so when they came out with debit cards they issued them with terms that are much more favorable to issuers. Its so severe that even if they improved the terms, nobody would use them because US debit cards' reputation is tainted.
Europe has much stronger consumer protections, so I can only assume EU debit cards dont share the disadvantages of US debit cards.
It’s so severe that even if they improved the terms, nobody would use them because US debit cards' reputation is tainted.
“According to the 2019 Federal Reserve Payments Study1, “Debit cards, including both prepaid and non-prepaid, were used almost twice as often as credit cards in 2018, but the value of credit card payments exceeded the value of debit card payments by almost 30%.”
In Visa’s Operational Performance Data4 report for the three months ending on Dec. 31, 2020, it reports $741 billion in U.S. debit transaction volume, a 17.4% increase over the previous year. It compares to $542 billion in credit card volume.
Debit cards in the US are widely used.
You only need a bank account to get a debit card. The bar is much lower.
And if you're including prepaid cards, those are handed out like candy for promotional purposes, as gifts, etc.
They will only accept credit cards, not debit cards. Unless you also agree to pay for their shady and useless insurance (useless because typically the broker already offers better and cheaper insurance, so in this case you double pay).
For all purposes, they are the same. In fact, they are bundled in the same physical card. The only difference is that one debits my account immediately (usually, unless the point of sale is not networked), and the other collects debt I usually pay off at the end of the next month.
I've never had any special rewards or cash back programs associated with my cards. There is some kind of travel insurance bundled with my Visa Credit cards, but that's kind of worthless for me as I usually have other insurance in place already.
- With a debit card, I am out $X of my own money, until the bank can be bothered to agree that the charge is fraudulent and refund my money, which can take weeks or months, if at all. Good luck paying rent or buying food or whatnot in the meantime if you don't have a nice savings cushion.
- With a credit card, I am out $0 of my own money, and now the bank is potentially out $X of THEIR own money, making them significantly more motivated to investigate promptly and agree that the charge is fraudulent. For however long this takes, I still have my own money to pay rent and buy food, and I'm not on the hook for paying the fraudulent charge.
The fact that credit cards tend to have "rewards" in the form of cash back or airline miles or whatever is secondary to me, personally, although I do take advantage of this as much as possible.
The rise of the chip card may have fixed that; it's been a long time since I've had a problem. But I'm reluctant to find out.
Every single thing I'm actually paying for goes on one a handful of cards.
Does being a US resident have any meaning here? I mean, does the rest of the world not secure credit card payments, or does the rest of the world secure debit card payments like the US secures credit card payment?
Note that the above is about the number, which is not secure in any situation. You don't need to have someones credit card, you just need to know the numbers. If you compromise an insecure website and get these details (bank rules don't allow storing the numbers, but if the website doesn't follow the rules). You can also take a picture of a card as someone is scanning it.
Europe went to the chip and pin system, plus a system where they bring cards readers to each table because they did not have the above protection for credit cards. Thus in Europe you would be a fool to let your waiter take your credit card to a backroom to pay for a meal because the waiter can then copy the numbers and/or the magstripe, and then use your credit card after returning the physical one to you (again, this is 20 years out of date, laws have changed but I don't know how!). Since the US has (20 years ago) better consumer protection laws around credit cards, people didn't care that chip+pin was more secure as practically it didn't make any difference, and for a while banks figured it wasn't worth caring. Once banks started caring everyone switched to the chip in the US - but we mostly don't use a PIN as the annoyance of needing to remember a PIN isn't worth putting on consumers here. (also Europe has made the portable terminals cheap so you find a lot of portable terminals here as well so cards are less likely to leave the owners hands thus making the PIN less important)
The motivation of Chip&PIN in EU is driven by the fact that banks are forced to cover most of the fraud costs (as opposed to USA, where much of stolen card fraud is forced upon merchants), so they have a motivation to actually prevent it; and the inconvenience of PIN is mitigated by highly prevalent contactless (and PIN-less) chip payments for small transactions.
Not sure if a fraudulent charge of a debit card is a thing I ever heard of in Europe. These cards have also been using chips for over 20 years. Maybe they work differently here.
To me credit cards sound less secure than debit cards: debit cards have chips and pin codes. With credit cards, knowing the number is in theory enough (they have digital verification now too though). Also, with debit cards, you put it in the payment terminal yourself.
With credit cards, in the US I've had the waiters in restaurants taking your credit card from your table, walking to somewhere else with it, and giving it back to you later. I had never seen that before (In Europe, they carry a portable payment thingie in which you can put/tap credit or debit cards to the table). How is that more secure? They could easily copy the number there.
A slightly different but similar issue is paying for services in advance but never rendered. When that happens on a credit card I just inform the card issuer and they handle it.
We were going to get a large water purifier from Costco. On the order of $6000. We paid, but we had 3 days to cancel. We found it for significantly cheaper the next day and cancelled. 3 months later Costco still hadn't reversed the charge, so we challenged it with the credit card company. Fixed in 24 hours.
Also, it's worth pointing out that when you challenge something successfully, it's effectively like it never happened. Interest gets rolled back and you can call to have late payments associated with that time period striken from your credit report.
On the flip side, I would never use a debit card. I've been told "your pin was used so it must have been you" when contesting small things there. Credit card have chips and some banks allow you to use pins.
If someone steals your card and can guess your pin, then you're out of luck in filing any claim because obviously you disclosed your pin.
Key is never having outstanding debt. Pay your credit card balance in full. Most people with credit cards do this. I have never met anyone who paid any interest on their credit card because everyone I know pays it in full each month.
> And I have never met anyone who had a fraudulent charge (without being dumb).
And? The point is if it happens, you are far safer with a credit card than a debit card. Once the money is gone from the credit card, it's the credit card companies problem. Once the money is gone from your debit, it's your problem.
> To me, I cannot understand why anyone would use a credit card unless debit isn't accepted.
Because credit card is more secure. As the OP already told you.
As long as you have financial discipline, using a credit card is smarter than using a debit. It's a simple concept.
Reader from Europe here. I use debit cards for daily payments, that's just the most standard expected payment method in Europe (with mobile payments now replacing it. Is a mobile payment app more like a debit or like a credit card? I have no idea actually!).
But credit cards for online payments on the internet because (despite some debit card based systems existing which don't seem to work by default) on the internet credit cards seems to be the main supported payment method, including e.g. through Paypal, but also for local online shops, airlines, ...
So in the US credit card vs debit card is probably an important distinction between buying on actual credit or not and all the fun stuff they have there like credit ratings, but in Europe the main distinction seems to simply be which one works for online purchases or not. Of course some reward programs for credit cards do exist here, I think American Express specifically has some benefits to the user but doesn't work everywhere (heard from other users, don't have this one myself). Also, visa and mastercard seem to have no practical difference and some banks just give both. If this view is naive or incomplete, it probably just shows credit cards are indeed not as important in Europe, if they gave some huge benefit I'd have known!