Money Money Money, it's a rich man's world

July 29, 2006 7:04 AM

Credit filter: How do companies know you're using a debit card?

When companies online offer deferred billing, they list the disclaimer that debit or secured credit cards aren't eligible for deferral. How do they know whether you're using a true credit card or a debit/secured card?

posted by hollygoheavy to shopping (7 comments total)

The number scheme is different.
posted by bonaldi at 7:16 AM on July 29, 2006

Bonaldi pretty much hit the nail on the head. Whenever you enter a card number on a website, a bunch of behind-the-scenes applications run and process the number. Different banks, card types, and the like have different number schemes.
posted by fvox13 at 7:51 AM on July 29, 2006

In the US, when a bank licenses the Visa or MasterCard logo/program, there is no alternate number scheme. Just a four digit prefix indicating the bank, and a MOD10 sanity check on the digits themselves.

The reason they say that debit cards or secured cards aren't eligible is this: When you do deferred billing, the merchant will often place an "authorization" on your account for some percentage of the final total (sometimes, all of it) to see if your card could otherwise handle the charge -- let's say that amount is $500, for our example. That authorization usually "falls off" in a few days on a normal credit card, but on a debit card or some secured cards, it won't go away for (potentially) weeks. When the card is a debit card, you're essentially out the $500 until the authorization falls off (it's deducted from your account, and credited back when the authorization falls away).

But by looking at the number, the only thing a computer algorithm can deduce is the type of card and the issuing bank.
posted by Merdryn at 8:06 AM on July 29, 2006

MOD 10 = Luhn, in case you've heard of Luhn.
posted by Merdryn at 8:10 AM on July 29, 2006

There is no real distinction between Visa/MC debit and credit cards except in interbank protocol coding and how the settlement terms for a transaction gets coded against the security or account backing that card.

Both can be processed using either the credit or debit network at point of sale or online, and both are eligible for either signature, PIN, or EMV operation. That is why you get a debit/credit choice for most swipe-throughs - whether it works depends on the interbankagreements.

That is why, for example, you can do balance transfers from a credit card to a debit card, ensuring that the credit is converted into cash and deposited into the associated bank account.
posted by meehawl at 8:23 AM on July 29, 2006

As a tiny merchant using a pinpad terminal, I can always tell when a debit card has been used because the authorization code contains a letter instead of a number on the sixth digit.
posted by rolypolyman at 10:42 AM on July 29, 2006

rolypolyman: I don't see that difference when I run a credit versus a debit card on my terminal. Does the letter show up only when a PIN is used?
posted by Merdryn at 7:47 AM on July 30, 2006