Why is bypassing the PIN on a debit card something you can do? Doesn’t that defeat the purpose of having a PIN to begin with?
In: 7068
Source: used to work in the credit card processing industry.
How a card is processed affects how much it costs to run the card. Every swipe includes a flat fee and/ or a percentage charged that the store/ merchant pays. The fees are based on the risk of a type of transaction being charged back.
For example, a card given over the phone is the highest risk and cost; the card isn’t present, there’s no pin option, and there’s not even a physical evidence of who made the transaction! It is nearly impossible for a bank/ card processor to contest. However, the strongest transaction is a card present, debit with pin. In this case you have the physical card present (the clerk definitely checked your ID against your card signature 😉) and then you punched in a number that you are expressly told to not share with anyone that isn’t allowed to spend your money. And if people find out, it’s your fault. Nearly, impossible to charge back.
As a merchant, you’d want everyone to use debit, right? Well, of course you would! However, this is extremely impractical and likely to piss your customers off. You’re going to lose more money than you’re saving, especially as we go more into card and tap based spending.
So, to answer your question… they’re both there because the merchant wants you to use the more inconvenient option, so they present both.
And don’t get me started on rewards cards.
Sorry for the high and way too detailed answer, lol.
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