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How Visa Reigns With A Silent Tax

Posted by ralph on January 5, 2010

If you’re curious about more credit card shenanigans after reading this article, check out Danny Schechter’s In Debt We Trust which Disinformation distributes on DVD and also via iTunes. Disinfo is currently helping to raise funds for Schechter’s latest film Plunder: The Crime of Our Time.

ANDREW MARTIN writes in the New York Times:

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.

Read More in the New York Times

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  • urza9814

    “even though PIN debit cards are less expensive and less vulnerable to fraud.”

    BULLSHIT! Well actually, ok, _maybe_ they're less vulnerable, but if someone steals your card and pin and drains your bank account, you know how much you'll be able to get back? Pretty much nothing. My bank gave me a big listing when I got my debit card of what happens with fraudulent charges in each case. If they're to your debit card, you're pretty much screwed. If they go through Visa, you'll get every cent back as long as you act within a month or so. For me, it's no question – it's a lot less likely that someone else will get my debit info if I never type it in. If I use it everywhere, all it takes is one compromised PIN pad, and those things get compromised way too frequently to be trusted.

    I _always_ use Visa. So what if it charges the store more? That money goes to help protect _me_. Even if they passed the fee on to me, I'd still pay credit. I mean hell, it's less than 1% extra cost, for a massive increase in protection. It's like a very cheap insurance policy.

  • Ace 78

    whatever happened to just useing cash .. why should a corporation make extra money off consumers when they give nothing back … its kind of like old school thug protection … you said your self you are paying an extra 1% for there protection but if you didnt use a visa card and just spent cash you wouldnt need there protection would you. Its corporate extortion and they can kick back the govrnment enough money to get away with it… visa just fuels the monster.

  • urza9814

    I don't know about you, but I don't really feel comfortable carrying around a couple thousand dollars in cash. Also, how do you plan on paying cash over the internet? Over the phone? What about mailing cash?

    Visa is not only safer than debit, it's safer than cash. I mean hell, if I forget my wallet somewhere – if it's full of cash, I'm screwed. If it's just got my visa card – well, I call, tell them I lost the card, and I'm not liable for anything.

  • Belcat

    I have to agree – credit cards are safer, mainly because there is better legislation – the government (at least in Canada) legislated that your maximum liability is $50 provided you report it within 30 days of getting your statement. That's pretty good protection compared to debit. And then add the fact the credit card passes you some of the money they skim off the merchant (Air Miles cards, etc), and you're ahead – provided you don't overspend.
    My only qualm is in the case of fraud, VISA rarely does anything except screw the merchant over, leaving him without any cash – sorry, you accepted that card, you should have checked it more. (right. Joe merchant is going to do this?).

    Cash is fine but I don't want to go to the bank to withdraw $300 to do my Cosco shopping (and what if I get more?).

  • urza9814

    Honestly, I don't really care if the merchant gets burned. Because they never do _anything_ to verify the card. The way the interaction _should_ work is you give them the card, they swipe it, they have you sign the receipt, and then they check that the signature on the receipt matches the one on the card – and if not, they ask for ID. The way it usually works is they swipe the card and give it back to you and then occasionally make you sign the receipt. Hell, one of my cards has 'ask for ID' written in the signature field, and you know how many times I've been asked for my ID when using it? None. Not a single time. If that card ever got stolen and a merchant got burned because of it, I would have absolutely no remorse. It's their own damn fault. The way most merchants treat credit cards today is similar to if they accepted a $100 bill without checking it with the pen thing or even looking for a watermark. If you don't take _any_ steps _at all_ to verify that the payment you are getting is genuine, you deserve what you get.

  • Anonymous

    Honestly, I don’t really care if the merchant gets burned. Because they never do _anything_ to verify the card. The way the interaction _should_ work is you give them the card, they swipe it, they have you sign the receipt, and then they check that the signature on the receipt matches the one on the card – and if not, they ask for ID. The way it usually works is they swipe the card and give it back to you and then occasionally make you sign the receipt. Hell, one of my cards has ‘ask for ID’ written in the signature field, and you know how many times I’ve been asked for my ID when using it? None. Not a single time. If that card ever got stolen and a merchant got burned because of it, I would have absolutely no remorse. It’s their own damn fault. The way most merchants treat credit cards today is similar to if they accepted a $100 bill without checking it with the pen thing or even looking for a watermark. If you don’t take _any_ steps _at all_ to verify that the payment you are getting is genuine, you deserve what you get.