Tuesday, June 20, 2017

Pinless Debit Transactions ...

For those of you that shop at Walmart and Amazon and use cash back cards or use rebate apps ...

I've discovered something interesting ... Big retailers are switching to "pinless debit transactions" * WITHOUT YOUR CONSENT * for transactions under $50. 

Why does this matter? 

As part of the Dodd-Frank "financial reform" Bill ... credit card companies were forced into (3) scenarios 

1) Chip cards 

2) No signature credit transactions below $50 

3) Transactions can run as a debit transaction if card is a debit card and transaction is under $50.

First, chip cards have been an utter failure. They don't take so long because of slow equipment, but because of all the red tape the transaction has to go through. Your card is encrypted - that encryption has to be read, verified, retransmitted, transmitted again and then sent to your retailer. If you read that like I typed it - you'll see that at one point - unencrypted info is at some point traveling the www. 

What's the point? 

Case study: While moving to Chattanooga last year I had a pretty rough going with my bank, etc transitioning smoothly. I used my wife’s chip card for two months. Her full name is clearly not a man's name. Not once did I sign or get questioned in the dozens of places I used her card. 

What's supposed to be so secure about these cards? I know the technical answer, but it doesn't pan out in the real world. The sole reason chip cards were put into place is tracking and whatever you read otherwise is just subterfuge.

Two, debit cards work privately with your bank. Credit cards work in harmony with your retailer. (And your credit card company is better at what they do) Debit cards cost a retailer 20¢ per transaction. Credit cards (on average) cost a retailer 2% per transaction. It's obvious to see why a retailer would want to force you into a debit transaction. 

And so is the way of all government - Walmart lobbied heavily in the House and Senate to get the little Trojan Horse of pinless debit transactions. Think of a pinless debit as you virtually signing your receipt. Or think of it like I do - a retailer getting to forge your signature so they can save and you can't.

Three. One small convenience is not having to sign for most transactions under $50. Well, that's nice until you realize you are now on the hook for $50 a day if a hooligan or reprobate steals your card or info. This little clause in the law has led to identity thieves stealing volumetric amounts of micro-transactions rather than stealing large sums from 100s. If you can steal 30¢ from millions, why steal $300 from 100s?

All this presents two problems:

1) You don't get cash back because cash back comes from credit card use.

2) You may not get printable receipts which results in loss of receipt submission app rebates. (I.E.,you can use your credit card in any fashion IF you use Walmart Pay. You get your 1.5% back but you don't get a printed receipt NOR WILL WALMART PRINT YOU ONE)

I've tried hard to convert to paying apps rather than swiping my card for security purposes. This is just one of the bumps I've run into.

Hope this clarified some of this for you.