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Visa’s Take on Debit Cards

This article was written by in Credit. 10 comments.


A representative from Visa offered to answer a few questions for Consumerism Commentary readers about debit cards. I’ve written previously about five reasons to avoid debit cards, preferring credit cards for plastic payment. Here are three questions I asked Visa and the company’s responses. I have three more questions to post in the future as well.

What are your thoughts?

Question 1: With credit cards, the user has a chance to dispute fraudulent charges before their bank account is affected (through their payment of the credit card bill). With debit cards, any purchase made immediately affects a customer’s balance, and a fraudulent charge reduces the user’s available balance and increases the likelihood of an overdraft when it may not otherwise occur. How does Visa help protect the customer against this situation?

Response: If your account is compromised, Visa is committed to setting things right without further aggravation or inconvenience to you. Visa’s cardholder protection policy requires all financial institutions issuing Visa products to extend provisional credit for losses from unauthorized card use within 5 business days of notification of the loss. Many institutions will provide replacement funds even faster, sometimes within 24 to 48 hours.

My comments: The requirement of provisional credit within 5 business days is a benefit, but the delay can cause major headaches for people who keep their checking account balance high enough to cover expected expenses only. A provision credit can also be removed if the issue is not resolved within a certain amount of time.

Question 2: What other types of consumer protections does Visa offer to debit card holders?

Response: The Visa Check card offers better security protections than cash or checks. All Visa cardholders (debit, credit, or prepaid) are protected by Visa’s Zero Liability policy, which means you pay nothing if unauthorized purchases are made on your Visa Check cards or credit cards when you choose to sign for your transactions. While some issuing financial institutions also offer Zero Liability protections for certain PIN debit transactions as well, the best way to ensure you are protected is to sign for your purchase.

My comments: Unlike some credit cards, debit cards do not offer price matching guarantees or automatic extended warranties. Debit cards will never change interest or late fees, and there is a soft limitation to spend only what you have available.

Question 3: How is a debit card transaction that requires a PIN different than a debit card transaction that requires a signature? In some cases, merchants require neither a PIN nor a signature for the card to be accepted. Is one method more secure than the others?

Response: That’s a great question. Many of the benefits and protections Visa cardholders rely on, like Zero Liability protection, fraud monitoring, dispute rights and reward points, may only be available if the transaction is a “Visa” transaction, meaning it was processed over Visa’s network. The best way to ensure that Visa protections apply to the purchase is to sign (choose “credit”). Some PIN transactions are processed over Visa’s network, but merchants may use other payment networks that don’t offer the same protections. Cardholders should check with their issuing financial institution on their specific policies related to PIN debit transactions.

My comments: Be aware of competing priorities. When you’re shopping, cashiers often encourage you to use no-signature options, such as entering your PIN. This merchant pays less for this type of transaction than one that requires a signature. If your debit card has a Visa (or MasterCard) logo, choose a “credit” payment option to ensure you’re covered under the “Zero Liability” protections.

I have three more questions and responses to share. Do you have any reactions or comments about these responses?

Updated May 26, 2009 and originally published December 22, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 10 comments… read them below or add one }

avatar Writer's Coin

I think the only real advantage, in my eyes, is for those people that can’t control their spending and don’t want to fall into debt. But I think lots of those people will simply get hammered for overdrawing their accounts with debit cards.

As you may guess, I’m a credit card guy myself.

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avatar Juggler314

I only used my bank debit card, when I had no credit cards to use. Now that I have them i pay for 95% of everything with credit cards for protection. The real value I see in a debit card is buying some anonymously with cash and putting them in that kit with my fake identity “just in case”;-)

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avatar Josh

I have been told it is illegal for businesses to have a minimum on all credit card purchases. Is this correct? It really pisses me off if I have to go to a bar and they say I can’t run my card for a $7 glass of wine then close out.

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avatar Yana

I use Visa and MasterCard debit cards for most purchases, and do not have or use their credit cards at all. I choose to sign when using the cards in person. I’ve run into a couple of problems with internet merchants, like one going out of business and not sending me the product, and another charging me a different price than I authorized. In the first case, US Bank covered my loss through a procedure they have for these things, and in the second with a local bank, they did not. It was a small charge, but I closed the bank account. I have a couple of small bank accounts that I use for internet purchases, so as not to put significant funds at risk. US Bank also saved me from an internet service provider that wouldn’t quit charging me after cancellation, so I am rather a fan of US Bank.

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avatar Barb

I use my debit card for most purchases because I don’t want to add to my credit card balance. Honestly, using my debit has reined in my spending quite a bit.

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avatar ruckerz

I have a WellsFargo checking in which I have the choice of using the debit portion of the card (using my pin) or the credit portion of the card (signing something). Both methods automatically deduct immediately from my checking account. The question really is do I want the merchant to bear fees for my transaction ?

For most small /local businesses I always pay with the debit (sometimes issuing a check or even paying cash) because I think the 2.0-3.0% merchant fees are way to much for small businesses to bear. If I’m not at a small business, I normally still choose debit if it’s available, because I don’t like signing things.

However, if I’m at a major retailer (Walmart, circuit city, etc) spending more than $50, I’ll normally swipe with my rewards credit card. I figure large multimillion dollar businesses can take the merchant fees.

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avatar K

I would like to see a response to the scenario where your card is just swiped, no PIN, no signature. By the time this is done, the transaction is over and I do not have the option to choose signature. I’m not even sure why this is allowed :(

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avatar mathews

can i purchase with my debit card more than my balance that is can i go to minus.Please answer to me….

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avatar DB

Question…Why on earth would someone want to use a credit card for purchases, and pay, hello….INTEREST on those purchases when they can use the money that they have in their bank for those purchases at NO INTEREST???
You can use the debit card “credit” option at no interest, I understand. But the people that are saying they use credit cards instead of debit cards….WHY???
Another thing…you have to spend somewhere around $30,000.00 to get a mere $200 or so cash back….REALLY????
This might just be what is wrong with our economy and our ability to cope with it!!!

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avatar S

Not only do I *not* pay any interest on my credit card purchases since I pay the credit card bill in full every month, the money I haven’t spent yet actually remains in my bank account and continues to *earn* interest for the rest of the month until I pay the credit card bill. Win-win.

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