I'll buy that for a thousand dollars... but no credit please.

May 19, 2006 1:00 PM

My work wants to accept payments online but doesn't want to accept credit cards. Most banks issue debit cards that work as credit cards. Is there a way to determine the difference?

Several years ago my boss went through some tough financial times that almost made him declare bankrupcy. He is a religious and moral man and after taking several credit courses, has become convinced that the whole concept of personal credit is immoral in some aspect.

In addition to the moral implications of accepting credit cards, there are some business decisions. I work for a company that does landscaping, landscape lighting, irrigation, and installs Christmas Lights during the holidays. There have been one or two occassions where customer was unhappy with an aspect of the work and rather than working with us to resolve it or with the BBB, they instituted a chargeback.

Currently when a customer accepts the service, we go and physically pick up a check or ask them to mail it. This year for the holiday lighting services, repeat customers will be able to just log into the website and select what service they want again this year.

We would like to be able to offer them the convience of online payment without accepting actual credit cards.

Gold stars for anyone that can suggest a payment processor that would allow us to just accept cards on the PULSE (ATM) network as well as electronic checking.

posted by lockle to Work & Money (21 answers total)

You can still institute chargebacks on anything with a VISA logo.
posted by oaf at 1:12 PM on May 19, 2006

Also, I think the whole point of debit cards is that they're instantaneous, and the transactions wouldn't go directly through the ATM network if you had it done through a web site, I think. (I've never seen a web site that let you put in a debit card number.) I believe that this is how the UK's chip-and-PIN system works, but I'm not sure—it really won't let you do card-not-present transactions.
posted by oaf at 1:14 PM on May 19, 2006

PayPal? (But I am pretty sure you can place PayPal payments in dispute pretty easily.)
posted by joannemerriam at 1:22 PM on May 19, 2006

Yup, chargebacks can be done on debit cards too, so accepting only them isn't going to stop them.

I would think it should be possible to accept checks online--all you really need is the account number, routing number, etc. I suspect that's not really been done very often (none that I know of) because it seems awfully consumer-unfriendly, but not because it's not possible.
posted by Drastic at 1:25 PM on May 19, 2006

The idea of this seems kind of weird, but I'll bite. I have a pinpad terminal here in my office, and I notice that credit card authorizations come through with a 6-digit number while debit cards start with a letter. Technically you could just void out the ones that look like credit cards after they're authorized. However this may not be totally accurate and probably violates something on page 2758 paragraph 48-2985(b)1 of the Visa merchant agreement.
posted by rolypolyman at 1:25 PM on May 19, 2006

I'm not 100% sure about this, but I believe that paypal would meet your basic requirements. I'm pretty sure that paypal payments are drawn first from funds you've got on deposit with Paypal, and if those aren't sufficient, from a bank account you designate as your backup.

It's been a long time since I went through the whole paypal setup process, so it's possible they let you designate a credit-card as your backup, but I don't think that was the case when I signed up.
posted by adamrice at 1:26 PM on May 19, 2006

What of the moral implications of asking customers to surrender the greater online protection of a credit card instead of a debit card?

You can validate the BIN number, which looks like it sometimes differentiates between credit and debit cards.

Paypal personal accounts will allow online payment, but not for credit/debit transactions, which have higher overhead. (but personal accounts are really not intended for business use)
posted by misterbrandt at 1:27 PM on May 19, 2006

Not sure about online merchant services which would allow you to charge cards only on the STAR, PULSE, etc networks; I've never run into anything like that at my work and we've gone through numerous banks and online services. Not to get off topic, but I'd also think that would limit your potential client base, too. You want your client's to have more options.

Yeah, and I'll second PayPal.
posted by redsnare at 1:29 PM on May 19, 2006

Actually, not only is it possible to designate a credit-card backup on Paypal, it's now pretty much required for an instant transfer. Otherwise you have to wait a few days for the transfer to clear through the banks.
posted by smackfu at 1:29 PM on May 19, 2006

Some of the internet merchant accounts offer bank withdrawls via checking account. Customer only needs to have their checkbook infront of them.

This won't prevent disputed charges however. A customer can still dispute a transfer at the bank if they feel services weren't rendered.
posted by IndigoSkye at 1:34 PM on May 19, 2006

Well, the whole thing about charge-backs isn't the primary reason for wanting to avoid credit-card transactions. As I also mentioned, it's primarly a decision of the owner in regards to his personal beliefs on consumer credit.

As an employee I respect his decision but it makes it hard for me to try to streamline the payment process so I'm trying to research alternatives.

Thank you for all your responses so far, they have been very helpful.
posted by lockle at 1:43 PM on May 19, 2006

Look into accepting ACH (Automatic Clearning House) payments. It's related to "check by phone" but this way your customers can pay with any account that has a routing number and an account number (checking, savings, etc).

I use VeriSign and they hold the money for 3 days to make sure all the parties involved (you, your bank, client's bank, client, etc) are cool with the transaction before you get the money. This helps a lot with fraud.

Another thing: You do realize that chargebacks are not automatic, correct? Our customers constantly do chargebacks because they think it's an easy to get our product for free. If VISA reports a charge back and the customer already received the product we tell VISA and the chargeback is usually denied.
posted by sideshow at 1:47 PM on May 19, 2006

There have been one or two occassions where customer was unhappy with an aspect of the work and rather than working with us to resolve it or with the BBB, they instituted a chargeback.

If that is true, Paypal would NOT be a viable option. The credit card issuers may occasionally screw merchants over chargebacks, but with Paypal you will roasted alive. I don't conduct any business there in amounts over $200.
posted by rolypolyman at 1:49 PM on May 19, 2006

redsnare: Not to get off topic, but I'd also think that would limit your potential client base, too. You want your client's to have more options.

I agree with you 100%. I gave him my opinion and he listened to it with an open mind and still wants to go with what he believes is the moral choice. Even though I still disagree, I understand and respect his position on the issue. Besides, he's the boss :-)
posted by lockle at 1:50 PM on May 19, 2006

If VISA reports a charge back and the customer already received the product we tell VISA and the chargeback is usually denied.
sideshow: Who is your merchant bank? Sounds like I need to switch to them. My merchant bank (Cardservice) always sides with the customer unless I get a signature in person or get a delivery signature... maybe you can recommend something better than Cardservice for the OP.
posted by rolypolyman at 1:55 PM on May 19, 2006

Have you considered simply putting a strongly worded warning that credit cards won't work, but debit cards will?

If you tell them they can't use a credit card, most people will assume that you are telling the truth and never try.
posted by Megafly at 2:15 PM on May 19, 2006

Presumably he feels that credit cards are usury. I'm not sure that the alternatives are any more agreeable, though, since people determined to get themselves into debt will just charge something else to make the cash available for this service (or go to a competitor, of course.) Since this is a personal and moral belief on his part, could you accept cards but put a statement on the website expressing a preference that customers not get themselves into debt? (Counterintuitive, but if it's from the heart...)

Personally, I'd never permit a merchant to do a direct withdrawl from a bank account. Perhaps check into switching merchant banks, too.
posted by desuetude at 3:24 PM on May 19, 2006

You might remind your boss that according to many biblical scholars, an action not taken because the action was not available, is not the same thing as the decision not to make the action. Following that logic, desuetude's suggestion of a 'warning' on the page about the dangers of debt seems more 'moral'.

Honestly, I'd be surpised if you could find a bank willing to give you a merchant agreement that allowed you to not honor Visa-credit, but would honor Visa-debit. Seems like that would violate some basic part of their Visa/MC franchise.
posted by nomisxid at 4:02 PM on May 19, 2006

Paypal and ACH look like pretty much your only options. The whole morality thing is kinda irrelevant, because you can make a moral argument against any of it if you try hard enough...
posted by Mr. Gunn at 4:23 PM on May 19, 2006

Winco Foods, a large grocery chain based out of Boise, accepts debit cards but not credit cards (my Visa debit card goes through just fine). Costco also accepts debit but only American Express for credit. Granted, they are larger than your boss's business, but those two places might be a good place to start looking (or simply talk to a merchant bank, they should be able to tell you).

It's certainly your boss's right to conduct business as he sees fit, and there's obviously precedent for the direction he wants to go, but I would question the ethics and/or morality of forcing his own views on his customers. He's got a lot of company, as it there are a lot of religious people who think it's their duty to dictate the actions and moral choices of others. That's not your problem, of course...I just needed to say it. Good luck finding the right direction!
posted by lhauser at 10:48 PM on May 19, 2006

Thank you everyone for all of your insight!
posted by lockle at 1:34 PM on May 22, 2006