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Thread: Why do some merchants not want to accept debit cards?

  1. #1
    Moderator Kay is a Premium Member
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    Why do some merchants not want to accept debit cards?

    I don't know the answer. Do you?

    We've just had a right old goose chase. I wanted to buy something online and the seller only accepted credit cards. I would have thought that a debit card would be just as good. After all, the money is already there. I searched all over the place to see if I could find the same product from a different vendor, or even if I could find a similar product to use instead. No joy. And I had my heart set on getting that particular one. In the end we had to get a friend to buy it for us using his credit card.

    It's not uncommon to find merchants who take credit but not debit cards. Does anyone know why?
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  2. #2
    Publishing Mentor dsieg58 is a Premium Member
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    Usually they offer the alternative of PayPal if they don't want to accept debit. So that's strange. The only reason I can think of is the vendor gets charged higher fees and/or charge backs from fraud with debit cards and made the business decision to no longer accept them.

  3. #3
    Moderator Kay is a Premium Member
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    Amazon is even weirder. I have an Amazon.com account and UK-based plastic. They will accept UK credit cards but not debit cards. OTOH, if I go to our Amazon.co.uk account, they will accept the UK-based debit card. I don't know why that should be the case either.
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    I think it's a US misunderstanding. UK has debit cards that use an offline debiting system and work via VISA, Mastercard, etc. I think all US debit cards are online ATM cards which need a PIN number to be entered. I have successfully used a VISA debit card where the merchant says 'enter credit card details'.

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    New Member Mentor JimWaller is a Premium Member
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    When you make a purchase at a store in the US with a debit card, you often can choose whether to process it as a debit card or as a credit card. If processed as a debit card, it requires entering a PIN. If processed as a credit card, it usually requires a signature and takes longer to show on your bank account. Online, it usually processes as a debit card because the first four digits tell whether it is a debit or credit card.

    My best guess is that it is related to fees and fraud as dsieg58 suggested. IMHO, it is bad business practice to make it harder for potential customers to pay. In most cases, the consumer will not jump through the hoops that Kay did to make the purchase. Even if they do, they are less likely to be repeat customers. A business should be focused on not only selling you what you are purchasing now, but future purchases as well. Creating barriers to payment makes it a bad experience for the consumer.
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    Publishing Mentor dsieg58 is a Premium Member
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    If you're working within the Visa/Mastercard system, credit and debit cards are interchangeable. I've never had a problem using either one, anywhere, even overseas, from any ATM. What it's like on other systems I have no idea. But Visa/Mastercard is completely merged.

    I agree with Jim, above. I'm surprised he gets any sales at all. My experience is, almost no one will buy if there is any hassle whatsoever.

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    Top Contributor crabfoot is a Premium Member
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    We have to remember that there are still a lot of places where you can't get a Paypal account. Large parts of Africa, South America, The Eastern Bloc and the Far East are excluded. But merchants can still get facilities to process credit cards in egs. the Ukraine and Pakistan.

    Credit cards are a truly international system, and the card provider says up front what charges are for transactions. What you can do with debit cards varies a lot from country to country, although within one country you don't usually get many problems. Here are some instances where I have had trouble -

    There are some strange anomalies in the UK banking system. The automated IBAN system only works in one direction - you can receive money from a European bank account into a UK bank account for a charge of around 1. You want to send money from a UK account to another European account? You have to go through the old fashioned paper transfer system, with charges around 15 and an unfavourable transfer rate. There are some UK banks offering semi-automated versions of the process online, but they still cost money and work slowly. And UK branches of foreign banks, eg. Santander, follow the UK system.

    In most of Europe the IBAN system works both ways, it costs about 1 per transaction. I once got a friend in Italy to pay a German for me, then sent him money by Paypal because it was my cheapest option. The Germans like to be paid direct into their bank account.

    GoDaddy have a London office and charge VAT on UK transactions. If I pay them with a UK debit card, when the transaction shows up on my account it is flagged as a "foreign transaction" and I get charged 1. I always pay them through Paypal these days.

    In the US, there is no central clearing system, and transactions between two banks have to be individually cleared. People become accustomed to paying a transaction charge if they use another bank's ATM, but the charges can be a shock to non-US citizens. Visa and Mastercard are the closest thing to a clearing system over there.


    The original problem could have been solved by using a virtual credit card (really a pre-paid debit card) which you can find online. With some of them you actually get a physical plastic card, others just give you a number and a pin by email. There are lots around because Muslims are forbidden from using real credit cards, but they want to shop online like everyone else.
    Last edited by crabfoot; 29 April 2014 at 6:00 am.

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  11. #8
    Publishing Mentor dsieg58 is a Premium Member
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    The automated IBAN system only works in one direction - you can receive money from a European bank account into a UK bank account for a charge of around 1. You want to send money from a UK account to another European account? You have to go through the old fashioned paper transfer system, with charges around 15 and an unfavourable transfer rate.
    I also noticed the same thing in a lot of Asian countries. But I chalked it up to government regulation. Not the banks. The banks were only doing what their Master's told them to do. Countries love it when money pours in from overseas, but they loathe to part with it. They seem to like trapping the money once it gets there. The first line of defense seems to make it so difficult most people give up.

    I once transferred some money to Vietnam to buy a house. When the deal fell through, I literally had to smuggle the money out of the country to get it back out. The banks wouldn't do it because the laws didn't allow them too. In Vietnam, they didn't even want to give me a receipt for the money when it arrived and I had to go all the to the bank's vice president to get that. Thailand, while not as bad, certainly didn't like moving large amounts out, and made it as difficult as possible.

    There are fewer barriers in that regard to the flow of money in the US. Americans have a long history of "voting with their checkbooks." If one bank is a hassle, we move our accounts to another that isn't. It is more difficult now since 9-11, and more controls in place to "watch" the money, but it still flows relatively easily within the US System, as well as Visa/Mastercard. As far as the transaction fee goes, there's ALWAYS a transaction fee associated with handling money, whether you see it or not. Banks don't handle other people's money for free. The US is up front about the fee. But a $2-$3 fee for the convenience to access your money anywhere in the world isn't a steep price to pay.

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  13. #9
    Top Contributor crabfoot is a Premium Member
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    Quote Originally Posted by dsieg58 View Post
    As far as the transaction fee goes, there's ALWAYS a transaction fee associated with handling money, whether you see it or not. Banks don't handle other people's money for free.
    Banks do handle other peoples' money for free - but not in "the land of the free"!

  14. #10
    Publishing Mentor dsieg58 is a Premium Member
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    How do you know it's not lumped into another cost, like "administration" or "transfer" fee, or something else? How do know they are just not telling you it's added in somewhere else?

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