Credit vs Debit cards

This post is probably going to be mostly questions as I know little about the payment card industry, but here goes.

I was going through the drive-thru at a fast food establishment the other day and I was thinking about what card to give them. I have read the stories about how credit cards are “safer” than debit cards because any lost money through fraudulent use is the credit card company’s issue. You don’t really have to do much of anything other than report it, they reverse the charges and they worry about tracking down what happened.

Debit cards on the other hand, you do have a dog in the fight. From the same stories it says that you are sometimes liable for up to $500 if you don’t report it in the first two days. Well if you’re not paranoid and checking your bank online every day it’s easy to go over that line. Plus if you lost the money in the account, you may bounce things while waiting for it to be returned.

This brings me to the question about chip & pin. So let’s say the geniuses in DC decide they are going to force chip & pin because it will limit fraud, save time, etc. Great idea right? What will the consumers say? We’ve all heard the stories about people being upset that they have to remember passwords for however many different accounts. Now add a different pin to every credit card they own. At what point will they say “enough is enough” and ditch them?

They already have to use a pin to get money out of the ATM though so what about putting a chip in those cards & starting chip & pin that way? Would that even be an option? I would assume that the start-up cost to upgrade all the ATMs along with all the swipe pay terminals would be huge. The question would be: Would consumers be willing to upgrade to a chip & pin system if it meant they were no longer liable for the money fraudulently taken from their debit account?

No idea, just throwing it out there. Though my guess is no, they’ll just complain.

One thought on “Credit vs Debit cards”

  1. The startup cost is the reason it hasn’t been implemented up to this point. The amount lost annually is still less than replacing all of the devices. I think I read somewhere that visa/MasterCard are responsible for the terminal cost? Could be wrong on that one though.

    I’d prefer chip/pin over chip/signature. Mine is a wreck and never the same, just a scrawl.

    I had thought 2FA could be implemented as a solution. Integration with an app from Duo Security or the like wouldn’t be too difficult. Or even a text msg as others do. That would at least alleviate remembering a pin and its insecurities. He downside of an app based solution would be those still using flip phones, or even none at all (do those people even exist). This would even allow usage for online purchases, where chip/pin would not.

    My $0.02 anyway.

    Like

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