USA scenario here: say I have a $2000 car repair bill and use my debit card.
Can’t be bothered to put in my pincode so I hit credit, payment goes through without pincode.
Why does the consumer have the option to pick here?
In: Other
Because in reality basically all debit cards in the US are *combo* debit/credit cards (that’s what that little MasterCard or Visa symbol on your card means).
Some banks do offer cards that are *just* debit cards, but they won’t give you one unless you specifically ask for it. I got one when I was younger, and it was a pain in the ass since there were places where it just wouldn’t work.
Also, some banks used to only allow a certain amount per day using debit. If you are traveling, use credit, then you can access cash using debit.
Because merchants want you to use debit. When you use a credit card, the merchant gets charged a fee for that. When you use a debit card, the merchant still gets charged a fee, but it’s lower.
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the main reason is that the transactional costs for the vendor associated with debit is nearly half of what the transactional costs are by using it as credit. The vendor would prefer you to use debit.
I am a software developer that does work on payment processing. The reason why you can hit credit (if your card has a visa or MasterCard logo) is because visa and MasterCard have their own network to handle payments that allows you to process the transaction without having to go trough the debit network. You’re not getting any credit, it’s just a convenience thing
If, for example, you have. US debit card and are in Canada, you must run your debit card as credit card because the US debit network does not exist in Canada.
If your debit card gets stolen then you lose your money.
If a credit card gets stolen then the store loses their merchandise.
You have a PIN because it is protecting you from theft. You are not at risk from theft from a credit card because you can just report it as stolen.
Both modes of transactions offer protection to you but in different ways. One stops the transaction from occurring, the other prevents you from being charged later.
You are being given the choice as to which protections you will be using for this transaction.
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I feel like I am taking crazy pills here.. I am genuinely interested in the answer here, yet everyone is answering a question they made up themselves, not OPs question.
WHY is it possible to use credit on a debit card? If I wanted credit, I would get a credit card. I got a debit card because I don’t want to live beyond my means.
If a debit card can be used as a credit card, why does a debit card even exist?
The reason is this, debit was built on the processing rails of credit and was pushed heavily by Visa and MasterCard back in its inception. Prior to debit cards, there were ATM only cards and credit cards. When you build a new process in the US where it’s heavily regulated by the government and the Federal Reserve you build on the rails you already have so new regulations don’t have to be written or new process scrutinized by regulators. In addition, the card brands like Visa and MasterCard incentivize the use of their networks with zero fraud liabilities. For a debit card the end result is the same for either transaction but it determines the network that processes it.
There is a recent example where similar circumstances took place, Apple Pay in 2014. Apple worked with Visa and Mastercard to develop a way to randomize a transaction so that card skimming fraud could not occur. They used some existing chip card processing and then randomized the card number. How did they randomize the card number, Visa or MasterCard just gave them a 16 digit number that they had not yet assigned to a bank and that was your virtual card number… but it didn’t work on debit. For the first several years if you did an Apple transaction on debit it failed. Visa and MC had to work with debit networks to have them determine where to process the virtual card. They did that due to complaints and because regulators stepped in and made it a requirement.
As to what other people have mentioned that debit is more expensive to run vs credit, it’s actually the other way around. Merchants prefer debit vs credit because the interchange fee is cheaper. A lot of merchants in fact default to debit processing when the upgraded to chip terminals in 2015 though they are supposed to give the option to run credit.
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