NY Times: How Visa, Using Card Fees, Dominates a Market

[marmar]

How Visa, Using Card Fees, Dominates a Market

By ANDREW MARTIN
Published: January 4, 2010


Every day, millions of Americans stand at store checkout counters and make a seemingly random decision: after swiping their debit card, they choose whether to punch in a code, or to sign their name.

It is a pointless distinction to most consumers, since the price is the same either way. But behind the scenes, billions of dollars are at stake.

When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code.

The difference is so large that Costco will not allow you to sign for your debit purchase in its checkout lines. Wal-Mart and Home Depot steer customers to use a PIN, the debit card norm outside the United States.

Despite all this, signature debit cards dominate debit use in this country, accounting for 61 percent of all such transactions, even though PIN debit cards are less expensive and less vulnerable to fraud. .........(more)

The complete piece is at: http://www.nytimes.com/2010/01/05/your-money/credit-and-debit-cards/05visa.html?em

[PeaceNikki]

1. Interesting. It it a shift of money, though. Many banks charge fees to consumers on debit

transactions. So, the net result is maybe the same. On a Visa transaction, the retailer picks up the fees that my bank would charge me. And I earn miles.

[DBoon]

2. and credit cards limit your liability for fraud

no such limit for debit cards

[Skink]

3. As a cashier very few cards if any give you the option of only using a pin.

"Despite all this, signature debit cards dominate debit use in this country, accounting for 61 percent of all such transactions"....

I just call my debit card a debit card even though it can be used as credit but not really except for the fees.

[kedrys]

4. Up here, there are apparently no co-branded debit cards

Everyone accepts debit cards, but none of the cards carry a VISA or MC logo. They simply don't exist. I was surprised at first, but it's actually made my life easier, plus there's no guesswork for the merchants. Mine has a smart chip on it, so it's nigh impossible to forge. There's never anything to sign.