"Debit or credit?" "Debit." "Okay, but debit or credit?"

July 17, 2010 8:18 AM

When I pay by credit card or debit card in most stores (NYC), the entire process is automated except for one step. The clerk always has to ask me "Debit or credit?" The card machine also asks me that -- in fact it forces me to choose a payment type -- but my choice doesn't do anything (apparently). I choose debit and checking account, enter my pin number, decline cash back, accept the amount... and then the clerk asks, "Debit or credit?" And when I say "Debit," he pushes a button on his side of the counter. Why?
posted by grumblebee to work & money (33 answers total)

I've always assumed that if you use debit the cash drawer has to open as a required step of whatever system they use. If you get cash back, it's open to get the cash out, and if you don't get cash back, they push the tray back in to register $0.

I have no idea if this is accurate, but I think I only get the credit/debit question at stores where you'd get cash back for something (grocery, drugstores) and not places like clothing stores.
posted by phunniemee at 8:22 AM on July 17, 2010

I've been wondering this myself, particularly because it seems like I don't have to do this in other states, like when I visit my family in Florida (though maybe I'm wrong about that).
posted by ThePinkSuperhero at 8:25 AM on July 17, 2010 [1 favorite]

I think I only get the credit/debit question at stores where you'd get cash back

Definitely not the case with me. My grocery store doesn't give cash, but I always get asked the question there.
posted by grumblebee at 8:27 AM on July 17, 2010

I remember when debit cards first existed, at least in my neck of the woods (1995 or 1996). It's always been this way, I have no idea why.
posted by RustyBrooks at 8:27 AM on July 17, 2010

And what's really weird, now that I think of it, is that when "I say 'debit,' it looks like the clerk presses a button on the back of the card-swipe machine -- the same machine into which I already entered that information."
posted by grumblebee at 8:30 AM on July 17, 2010

If you choose "debit" on a debit card, you are then required to enter your PIN and the money is taken out of your account immediately. If you choose "credit" instead (and the transaction is over $25), you will be required to sign and the money will not come out of your account for a couple days. Retailers prefer that you choose debit because their transaction fee is smaller.
posted by gman at 8:30 AM on July 17, 2010

My guess is that it has to do with bank cards. Some cards you can use as credit or debit. Rather than make the assumption that they should charge said card as a debit (when you'd rather use it as credit), they ask. For the businesses, the debit and credit are two separate things since the business gets charged two different amounts based on whether it is a credit or debit sale.

I also consider it another security "feature" and a symptom of having old credit/debit processing systems in the stores.
posted by Stynxno at 8:32 AM on July 17, 2010

When I worked briefly in a convenience store, it was just really braindead software that didn't receive the proper input from the card reader.

When you swipe your card, the card data is input into the POS terminal as if it were a keyboard - typing the data into fields in the terminal window (usually hidden, with the input fields behind an opaque graphic of some sort, but that often broke and displayed everything for a half second or so).

When you hit Debit or Credit, it SHOULD type the corresponding option. In my employer's case (7-11), this didn't accomplish anything, as the screen for debit or credit didn't actually accept keyboard input. You used the touch screen to click on the option. Then it blithely accepted input for cash back and so on as normal from the terminal.
posted by Rendus at 8:32 AM on July 17, 2010 [3 favorites]

I suspect the register software and the pin-pad software are not entirely compatible, perhaps the register doesn't have a way to read the pin-pad's entry. I find that at some stores, the register doesn't require the cashier to key in the type of transaction, but at some stores it does. If the register could accept that info from the pin-pad, the poor cashier wouldn't have to ask; it seems all pin-pads I encounter now either auto-detect or require me to make a selection.
posted by galadriel at 8:33 AM on July 17, 2010

Merchants ask because the fees they pay are different for credit and debit transactions. It is usually cheaper for the merchant to process a debit transaction, however the agreements with the card-issuing institutions prevent them from forcing you one way or another. That's why if you say you don't care a smaller merchant will usually choose debit for you.
posted by rollo tomassi at 8:36 AM on July 17, 2010

Guys, please note that grumblebee is specifically asking why the PIN pad asks credit or debit, and THEN the cashier asks the same thing, duplicating the work. Not why the "credit or debit" question exists in the first place.
posted by Rendus at 8:42 AM on July 17, 2010 [9 favorites]

This is actually a very hot-button issue right now, as new financial regulations have been passed (I believe) that will require banks to start charging merchants a fair fee for debit card credit transactions.

Right now, using the same card if you make a debit payment, the fee the bank pays is small -- there is no risk of loss because the debit transaction comes right out of your account.

Credit cards got away with charging higher transaction fees because the merchant was shouldering some of the risk of loss ... there was a chance you wouldn't pay your credit card bill, so they could put that risk onto the merchant by charging them 2 or 3% of the cost of the purchase. This is much higher than a debit transaction.

Along comes the debit card that has a credit card logo on it and the banks are in heaven: they get to charge 3% to a merchant, but they know for a fact when the transaction comes out that the money is in your account. So the merchant still pays like there is credit card risk even though there is none.

This has caused merchants, especially ones where small transactions happen like 7-11 to fight like hell, since there is basically no way to get around such a high interchange fee on debit cards when used as credit cards.

I believe the new legislation makes it so that debit cards, even when used as credit cards, can no longer charge such high interchange fees. This means that banks will make a TON less money, and will likely jack up fees elsewhere.

Anyway, one of the reasons you may be asked so many times is that many retailers have their systems set to insist on debit at every option ... that is, they hope that by catching you in a few places, you might put your pin number in and save them money. So even if you swipe and debit card and say use it as credit, the merchant asks a few times hoping you'll say -- Oh yeah, it's a debit card, let me enter my PIN number.

With this new legislation, that will no longer be necessary.

Links:

http://www.restaurantnews.com/national-restaurant-association-praises-senate-passage-of-interchange-fee-reform/

http://www.bradenton.com/2010/07/15/2435987/consumers-small-businesses-win.html

http://www.marginalrevolution.com/marginalrevolution/2010/06/the-economics-of-interchange-fees.html

Todd Zywicki, a lawyer and economist, I believe, has written a lot on this subject; here's a link: http://laweconcenter.org/images/articles/zywicki_interchange.pdf
posted by JakeWalker at 8:42 AM on July 17, 2010 [3 favorites]

Merchants ask because the fees they pay are different for credit and debit transactions.

Either I don't get the point of these answers, or I didn't make something clear in my original question.

THE MACHINE ASKS ME IF I'M USING MY DEBIT CARD OR CREDIT CARD.

I PUSH THE DEBIT CARD BUTTON.

THEN THE CLERK ASKS ME THE SAME QUESTION. WHY DOES THE CLERK ASK IT WHEN THE MACHINE HAS ALREADY ASKED IT?

He doesn't ask me if I want cash back, he doesn't ask me the amount, he doesn't ask me which account the money is going to come out of, he doesn't ask me if I agree to the transaction... he gets all that info from the machine.

Why does that one question have to be asked once by a machine and once by a human?

That's my only question. (Sorry, not shouting. Just trying to make my question clear. I've had a couple of people in real life tell me the same thing when I asked the question ("stores don't like you to use credit cards.") And when I said, "That's not what I'm asking. I'm asking why I get asked the same question twice, they say, "Oh. I don't know."
posted by grumblebee at 8:44 AM on July 17, 2010 [1 favorite]

(The above was posted before I'd read JakeWalker's connection between the two issues. However, this is not recent. This has been going on for at least ten years in NYC stores.)
posted by grumblebee at 8:46 AM on July 17, 2010

So even if you swipe and debit card and say use it as credit, the merchant asks a few times hoping you'll say -- Oh yeah, it's a debit card, let me enter my PIN number.

Then why when I swipe my card and choose debit does the cashier still ask if it's a credit or debit transaction?

The only explanation that makes any sense is that the card reader hardware and the cash register hardware aren't compatible, or that the cashiers have been systematically mistrained to never allow a customer to choose for themselves.
posted by Rhomboid at 8:49 AM on July 17, 2010 [1 favorite]

Sorry, I may not have been being clear ...

The legislation is new; the change would be coming soon (that they won't be so insistent on asking).

Also, my theory really only works if you say credit and they keep asking you DEBIT DEBIT DEBIT. Once you say debit, they should be happy and stop asking.
posted by JakeWalker at 8:49 AM on July 17, 2010

I do consulting work for a large grocery chain. In our case the reason that you are asked twice is because the card swiper and its software are provided by a different vendor than the point-of-sale software. In our case, the button that you press on the card reader actually does nothing. The card reader has an interface that would provide all that data to the point of sale system, but the POS system doesn't know how to read anything but the digits. The POS vendor has a version of their software that would handle the reader, but we haven't bought it yet. It is expensive. Therefore, the clerk has to ask you, because otherwise the POS system doesn't know how to code the transaction. We asked the card reader people to disable that question on the reader, but they could not. I suspect that the fact that disparate vendors provide the POS and card reader is the source of the problem for most retailers.
posted by Lame_username at 8:50 AM on July 17, 2010 [12 favorites]

I know at the store I worked at it was because the little swipey machine and the cash register didn't actually communicate with each other AT ALL, there was no cord running between the two or running between the card reader and the computer. This was a small, local store years ago but I imagine many stores have not upgraded their hardware in a while.

So the card machine asked because it needed to know, and I asked because the cash register needed to know.
posted by magnetsphere at 8:52 AM on July 17, 2010 [4 favorites]

When I worked in retail (ok it was 10+ years ago) the credit/debit machine was completely separate from the cash register with no data connection whatsoever. So, you might ask the customer what they had just used in order to put the correct transaction type on the cash register record, since if you did not do this correctly it was a bitch to reconcile cash register totals with the machine's credit and debit totals at the end of day.
posted by avidreader at 8:53 AM on July 17, 2010 [3 favorites]

Just a note--I've always assumed that if you use debit the cash drawer has to open as a required step of whatever system they use. If you get cash back, it's open to get the cash out, and if you don't get cash back, they push the tray back in to register $0. --years of working at grocery stores tell me that the cash drawer pops open no matter what, at least on many registers.
posted by PhoBWanKenobi at 9:09 AM on July 17, 2010

I've been asked this with cards with a Visa logo, but never with an American Express card. I understand the hardware / software issues as discussed above, but why is American Express different?
posted by busboy789 at 9:11 AM on July 17, 2010

No such thing as an American Express debit card. Same, I believe, with Discover.

Only Visa and Mastercard let companies other than themselves distribute cards - They're more a service provider than a card/credit provider, while AMEX and Discover are both wholly operated by themselves.
posted by Rendus at 9:25 AM on July 17, 2010

Weird. It's the other way around in Canada, at least at my register and most of the ones I frequent. You have to declare that you're using credit or debit, the cashier pushes a button to tell the machine that, and then you swipe the card. The bane of my retail existence is the customer who apparently doesn't know the difference between the two; the machine has a minor fit if you put a debit card through in credit mode or vice versa.
posted by Schlimmbesserung at 9:48 AM on July 17, 2010

In Canada, the key difference is that your credit card and your debit card are not the same card. The machine can't accept a debit card in credit mode or vice versa because the card can't be used that way. In the US, the same card can often be used as both debit or credit.
posted by jacquilynne at 10:10 AM on July 17, 2010

I always had a similar question - why can't credit AND debit cards have an extra bit on the magstripe that answers this question without your intervention at all? It's giving up your card number already, it can't say "I'm a debit card?"

With my last bank's debit card, it could be run either way, so I always wondered why I needed to be asked that. The fees get charged to the merchant, not to me, so WTF do I care which way they run it? Now, my new bank gave me a debit card that won't run as a debit card for some reason. It works in an ATM, and it works as a credit card, but it always comes up declined if I use it in a swipe machine and type the PIN like a debit card. Must be so the bank can charge the merchant the credit card fees. In any case, I have to be ready and tell them when I use it, because merchants have stopped asking and they'll start running my card, which is clearly a debit card, and then have to back out and re-run it as credit. And if someone hands over a credit-only card, they won't know the PIN to use it as a debit OR want to get charged for a "cash advance" on their CC if they do know the PIN. I guess I can imagine a scenario where I have a debit card but forgot the PIN, so I want it run as a credit with signature instead.

Probably the answer to your question is non-standard interfaces between the card terminals and POS machines. Probably someone should invent a standard, make POS software and card terminals that are as fully featured as current packages and affordable enough for merchants to buy as an upgrade to their existing pieces of crap, and thereby make barrels of cash. Unfortunately it's hard to make a "standard" by yourself, especially if someone else has the same bright idea.
posted by ctmf at 10:21 AM on July 17, 2010

Questions like this are extremely strange from a British context, where the idea of having a choice between debit and credit on a card is unknown.

I've never really understood what the american meanings of "debit" and "credit" are.
posted by curious_yellow at 11:36 AM on July 17, 2010

Curious_yellow: A debit card is essentially an electronic check. It takes the money out of your checking account immediately. A credit card, on the other hand, puts the amount of purchase on your tab, which you have to pay off later. It's the difference between a loan duration of a microsecond and of managing an interest-bearing loan that could go on for years.
posted by KathrynT at 11:42 AM on July 17, 2010

@katrynt we have that part, but the notion of a single piece of plastic that does both is utterly foreign.
posted by curious_yellow at 11:45 AM on July 17, 2010

I always had a similar question - why can't credit AND debit cards have an extra bit on the magstripe that answers this question without your intervention at all? It's giving up your card number already, it can't say "I'm a debit card?"

Because the issuing bank (and everyone else in the system) gets more money when the transaction is run as credit.

The whole card processing business is a massive scam in my opinion. When cards replaced checks, banks and VISA/MC began to collect from 2-5% of every single transaction, effectively skimming off everyone, but I'll save that off-topic rant for another day.
posted by Lame_username at 11:50 AM on July 17, 2010

curious_yellow: used as a debit card it takes money out immediately, requires your atm pin and at some retailers you can get cash back - it's just tacks the extra onto your transaction price

credit: for me it does not work like described above - because my card is a credit / debit check card the credit transaction will be taken out of the checking account automatically too but a little slower than the debit.

some retailers if presented with the card seem to only want you to use debit.

I'm actually going to try and get out of the habit as using it as debit because it's easier to find and fix mistake if used as a credit card and to lessen the risk of having the PIN compromised.
posted by oneear at 11:53 AM on July 17, 2010

"The fees get charged to the merchant, not to me, so WTF do I care which way they run it? "

I get back a percentage from my bank when my debit card is run as credit, but not when it I run as debit. In both cases, the money comes directly from my checking account.
posted by Jahaza at 1:06 PM on July 17, 2010

The fees get charged to the merchant, not to me, so WTF do I care which way they run it?

You may also find you have stronger consumer protections when your card is run as credit than as debit. Thinks like automatic extended warranties and abilities to do chargebacks may not kick in if you're using your card as a debit card.
posted by jacquilynne at 4:16 PM on July 17, 2010

The fees get charged to the merchant, not to me, so WTF do I care which way they run it?

Some people actually like their local merchants. "Whichever is cheaper for you guys" is their usual response to the "debit or credit?" question.
posted by mediareport at 9:27 PM on July 18, 2010