[153682] in North American Network Operators' Group
Re: OT: Credit card policies (was Re: Dear Linkedin,)
daemon@ATHENA.MIT.EDU (Stephen Sprunk)
Sun Jun 10 15:25:14 2012
Date: Sun, 10 Jun 2012 14:23:42 -0500
From: Stephen Sprunk <stephen@sprunk.org>
To: nanog@nanog.org
In-Reply-To: <201206101901.q5AJ1kSJ003190@mail.r-bonomi.com>
Errors-To: nanog-bounces+nanog.discuss=bloom-picayune.mit.edu@nanog.org
This is a cryptographically signed message in MIME format.
--------------ms050106070207090404070501
Content-Type: text/plain; charset=UTF-8
Content-Transfer-Encoding: quoted-printable
On 10-Jun-12 14:01, Robert Bonomi wrote:
>> From: Jay Ashworth <jra@baylink.com>
>>
>> Even Further Off-Topic, isn't "debit" supposed to be "cash"? Why do=20
>> I pay the Credit price for it?
> It is, and *ISN'T*, 'cash'.
>
> Unlike cash (and like a credit card), it is simply an instruction to a =
third party to pay the retailer a specified amount. And as such, is subj=
ect to the terms of the contract between -those- parties as to how paymen=
t is made an what charges are imposed.
>
> Unlike a credit card, the money _is_ immediately dedecuted from your ba=
nk account.
All of the above is completely irrelevant to the merchant.
> Like a credit card, it is the third-party clearinghouse that gets the m=
one from you, and passes it on to the retailer. AFTER extracting their c=
harges for the service they provide.
FWIW, this is known as the "discount" rate.
> You pay the 'credit' price, because the card issuer, and the clearingho=
use operations _charge_ the merchant the same amount for those transactio=
ns as for 'credit' ones. Thus the merchant does not receive any of the b=
enefits of a 'cash' transaction, so there is no 'discount' to pass on to =
the buyer.
The merchant's discount rate varies between card types. That's why many
merchants don't accept AmEx, DC, CB and Nexus: their discount rates are
higher than Visa and MC. For a low-margin business, the difference in
rates can make the difference between profit and loss on a given sale.
> At one point, VISA, charged -more- for debit transactions than credit o=
nes. Despite the fact that there was -zero- risk to them on the debit tr=
ansaction.
Wrong. Even debit cards present a risk of chargeback due to fraud.=20
However, the fraud rates are lower due to the us of PINs, so the
discount rate is also lower.
> VISA got sued over the matter, since (at that time) it was impossible t=
o tell whether the card number presented was debit or credit.
It's still impossible to tell, which is why most card terminals ask
whether the card is credit or debit. If you press the "credit" button,
even if the card is a debit card, it is processed as a credit card--with
the credit card discount rate. That's why Visa's advertising and
contests promote customers using signature (i.e. "credit") transactions:
Visa gets more money that way (at the cost of their merchants).
> As a result of the lawsuit, the cost differential between credit and de=
bit transactions was eliminated.
=2E.. except it's still there, though perhaps in the other direction.
The discount rate for "debit" transactions is lower, but a PIN must be
used to get that rate. The exact rates vary between card networks, card
processors and even merchants, but a few years ago the numbers I heard
were 4% for "credit" (i.e. signature) transactions and 1% for "debit"
(i.e. PIN) transactions. That is why those nifty PIN terminals appeared
everywhere virtually overnight: saving 3% on every "debit" transaction
easily paid for all those new terminals.
S
--=20
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking
--------------ms050106070207090404070501
Content-Type: application/pkcs7-signature; name="smime.p7s"
Content-Transfer-Encoding: base64
Content-Disposition: attachment; filename="smime.p7s"
Content-Description: S/MIME Cryptographic Signature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--------------ms050106070207090404070501--
