Walmart running Debit Card as debit even if I hit Credit button?
March 3, 2015 10:09 PM   Subscribe

With recent purchases at Walmart I've noticed something odd. Despite hitting the "credit" button on the keypad when swiping my Visa Debit Card, my receipts list "EFT Debit" instead of listing it as a Visa transaction. What has me concerned is that during these transactions, I don't get asked for my Debit PIN.

It was my understanding that PIN entry was required for EFT Debit transactions to verify that the card holder has authorized the transaction, is this no longer the case?

To me, it feels like Walmart is pulling a fast one here: wait until the customer base has gotten acclimated to certain types of credit card transactions that go through with just a card swipe and then slam them over onto a different payment method that's cheaper for Walmart, but doesn't offer consumers the same level of fraud protection.

(Signature-less CC transactions still sometimes gives me pause, but if the credit card processors are ok with not needing a signature, that's between them and the merchant, as long as I'm still covered by Visa's fraud protection policy. Walmart ignoring the fact that I hit the credit button though, makes me worry that I'm not.)

I will be consulting with my financial institution, but I was curious about the whole "EFT Debit" without PIN entry thing -- is it valid and just new, or is Walmart just saying "Screw the rules, we're so big, what are the processors going to do? Say no to us?"
posted by radwolf76 to Work & Money (16 answers total) 4 users marked this as a favorite
FWIW I ran mine as debit tonight at Walmart and wasn't asked for a PIN. I don't know if it has always been that way though.
posted by irisclara at 10:28 PM on March 3, 2015

Response by poster: Oddly enough, I also have gotten an email from my credit union today, regarding some restrictions on Walmart transactions they're putting in place for fraud protection. The restrictions are limited to Walmarts in Texas and Oklahoma (interesting in itself because my credit union primarily serves Georgia and South Carolina).

At Walmarts in those two states, Debit Card transactions $50 or less, that do not include a request for cash back will be Denied by my credit union. Debit Card transactions $50 or less that have requested cash back, Debit Card transactions greater than $50, and Credit Card transactions of any amount will be unaffected.
posted by radwolf76 at 10:52 PM on March 3, 2015

At my work (in Canada) we take debit or cash only. Credit-debit cards are new in Canada and usually international students are the ones using them. In any case, we've found MasterCard credit debit cards go through as credit but visa work properly as debit. Our point of sale system accepts *only* debit and they put in their password ... But MC always gets billed to us as credit merchant fees. Nothing to do with the in store systen in our case, and very frustrating.
posted by chapps at 11:40 PM on March 3, 2015

Best answer: It's been a while since taking payment systems in law school, but IIRC, a debit card is a debit card is a debit card. You can run as "credit" but it is still considered a debit transaction under the relevant laws (TILA/Reg Z). Certain protections may be extended by the issuing bank and/or Visa, but a debit card transaction does not qualify for the statutory protections for credit transactions, even if you press "credit" on the terminal. The statute governing debit cards is the Electronic Funds Transfer Act (and Reg E).

Under Sec 909 of the EFTA, the consumer has no liability for unauthorized charges if the transaction did not require some sort of proof of identity (e.g., pin, signature, ID). If there was an ID verification step, then your liability is usually limited to $50. In the law, that limitation applies only if you notify the bank of the unauthorized charge within a certain number of days, but MC/Visa agreements typically require the issuing bank to waive that requirement for MC/Visa branded cards.

Pressing credit simply makes it an "offline" debit transaction rather than an "online" debit transaction -- this makes no difference for the consumer, but does usually affect which merchant agreement applies for the store. Online debit transactions have the applicable debit card processing fees while offline transactions have the credit card processing fees. Debit transactions are usually cheaper for the merchant than credit transactions. My guess is that Wal-Mart ran the numbers and found it's cheaper to (a) run all debit transactions as online debit; (b) not require a pin or signature (faster to process); and (c) assume any liability for fraudulent transactions (chargeback by the card issuer). That is, in the aggregate, it's cheaper for them to pay for any mistakes than to ensure the mistakes don't happen in the first place.
posted by melissasaurus at 4:30 AM on March 4, 2015 [14 favorites]

Interesting info on the lack of difference between pressing debit and credit. I always choose credit because my bank transfers $1 into savings every time I use credit instead of debit. It's all my money obviously, but is a nice no-think way to save some cash.
posted by COD at 5:43 AM on March 4, 2015

Granted, I have only been to a Walmart once in the last decade and it was one of those Walmart "neighborhood" express stores, BUT. I paid with a debit card and specifically tried to process the transaction as credit, but the system required that I input a PIN.

I had forgotten the PIN for that particular card so it was a bit of an issue.
posted by phunniemee at 5:49 AM on March 4, 2015

I have noticed some shenanigans with card purchases at Walmart lately. Before (maybe a month ago?) you swiped and there was a yellow button you could press to say what kind of transaction it was. Now it automatically ask me if I want money back, I say no, then I can press the yellow button for credit.

I thought it was a weird attempt by the card companies to offer me cash so they could charge me the higher interest on cash advances. But if this is Walmart trying to save a few pennies, that makes complete sense.
posted by royalsong at 5:58 AM on March 4, 2015 [1 favorite]

Especially with all the retailer breaches lately, I personally would never use my debit card in a store (in fact I only use mine at ATMs inside a bank branch unless I'm truly desperate). Your fraud liability is limited, but with a debit card, any fraud that happens is taking money directly out of your bank account and you're out that money until the bank gives it back. At least with a credit card you have some buffer there. The debit card is cheaper for the merchant, but they don't pass any of those savings on to me. So it's all downside imho.
posted by primethyme at 6:23 AM on March 4, 2015 [4 favorites]

I think melissasauras has it. If you swipe your debit card, you are using a debit card, regardless of whether you select the "credit" option rather than the "debit" option at the point of sale. This article seems to do a pretty solid job of explaining what is going on. With a credit card, a financial institution is extending you a line of credit, and you are paying them back later. With a debit card, you are debiting your account in which you already hold money for the amount of purchase.

The bottom line is that if you want the protections of using a credit card, you need to get a credit card, and use it.
posted by J. Wilson at 6:31 AM on March 4, 2015

Best answer: I've been noticing this as well and have been meaning to look into it, since my bank charges me for more than 15 debit transactions a month. I also have a high interest card/account, so I have to have 25 credit transactions to qualify. Lately they have been showing up as debit and I am not entering in the number at all.

If this is the case I will see if I can get the debit portion turned off.
posted by cjorgensen at 6:42 AM on March 4, 2015

Response by poster: If you swipe your debit card, you are using a debit card, regardless of whether you select the "credit" option rather than the "debit" option at the point of sale.

I know I'm only protected so far as my agreement with my Debit Card issuer specifies, but are there any other consequences of what network is handling the processing on the back end?

I remember some consumer advocate stories on the evening news advising to select credit unless you specifically needed cash back, because people were being hit with out-of-network ATM fees for their purchases without even knowing it, but I have a feeling that information might be woefully out of date. Is that even still a thing?

(I'll also be asking my credit union if they have any limits on debit transactions like the ones cjorgensen mentioned having to deal with.)
posted by radwolf76 at 6:48 AM on March 4, 2015

If they're not asking for your PIN they're probably running it as a credit card (see here) but the above holds that you're not getting credit card charge protection doing that. As for fees, I know that the Arco station near me charges for debit transactions but they have a warning on the machine when you use it (just like on ATM machines). Walmart is probably not going to do that, no matter how much they want your money. You can imagine the press about that.
posted by fiercekitten at 7:27 AM on March 4, 2015

Was the money debited from your account at the time of purchase?
posted by SemiSalt at 7:53 AM on March 4, 2015

Response by poster: Was the money debited from your account at the time of purchase?

I'll have to watch the next time I have a $50 or less transaction at a Walmart, but the one I had approximately 12 hours ago is already showing as deducted from balance.

Talking with my credit union, they confirmed that my account has no limit on the number of Debit transactions, just a per-day dollar amount. They also confirmed that they have no fees for debit transactions at merchants.

They also explained that the restrictions for Texas and Oklahoma were due to needing to get some legal clarification with regards to those states' specific liability laws and how they interact with the Federal Law mentioned above.

They said that even for transactions $50 or less, if you ask for cash back, Walmart will ask for a PIN.
posted by radwolf76 at 8:43 AM on March 4, 2015

Running it as credit or debit doesn't change the fact that it's a DEBIT card and is processed against your account immediately. What changes with your choice is the manner in which your identity is verified. Running as debit requires pin entry, running "as" a credit requires signature, unless you're in the particular circumstances of location, type of business, and dollar amount that don't require a signature.
posted by stormyteal at 11:20 PM on March 4, 2015

Response by poster: Running as debit requires pin entry, running "as" a credit requires signature, unless you're in the particular circumstances of location, type of business, and dollar amount that don't require a signature.

That's the crux of the original question: Walmart was running it as debit without requiring PIN entry, something I hadn't seen before, but apparently is just as valid under the law linked to by melissasaurus above, as the times you'd run it "as" credit but not be required to sign.
posted by radwolf76 at 6:34 AM on March 5, 2015

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