The idea of carrying around cash for every transaction puzzles me. I pay almost exclusively with credit. I get a push notification to my phone for every transaction. At the end of the month, I get a nice CSV file with all my transactions for analysis and budgeting. I get a 1-3% rebate on all my purchases. If my card is lost or stolen, I hold no liability. With cash, the liability is all mine. I hate using cash, and only use it when I must.
Right on the money. In the US at least, there are a ton of laws and protections for consumers when it comes to disputing charges and credit card fraud in general. It is much harder to do this with debit.
Have had only debit for 20years and never used credit. I have not seen a single transaction rejected because the visa/MC debit cards weren't credit cards. Either they aren't countless or they must be focused to a few countries.
And what happens when someone snarfs your number and clears your bank account out? How do you pay the rent? With credit, it's the banks money that gets stolen, and they worry about getting it back, not me.
For consumers, credit vs debit is in theory about the same, in practice it's slightly different. The main difference though is consumer vs business. A business debit card attached to a checking account, is the same problem with fraud as the checking account itself, the burden is almost entirely on the business not the bank.
> With credit, it's the banks money that gets stolen
Regardless of debit or credit the CC company always has responsibility if there is fraud. With debit I might risk having an empty account for a longer period of time after an incident though (Refunds might take a while).
It's a reality in the states. But, yes, it's weird.
We model credit worthiness largely on past payments of credit; which means that we are incented to use the system.
I don't see using my credit card as really "using credit." I use it as a charge card and pay every bill as it comes; so it's merely a (30-59 day) float. I, of course, have a difference financial capability than much of the US, and recognize that privilege. For many people, CC float is what let's them live paycheck to paycheck and is the first brick in Americans penchant for debt.
That being said; there is a huge benefit to many consumers having a short term credit facility. It's as if the CC industry made a micro loans initiative. (And then proceeded to abuse it).
Debt isn't bad. I recently purchased a car. Given my credit, I was offered 1.8% financing with first months interest paid for. If I took it, they would throw in a bunch of perks like lifetime oil changes, loaner cars for repairs, etc. I did, drove home, immediately paid off the loan, and continue to enjoy the benefits. No worrying about bank checks or cash or whatever. Credit makes my life so much easier. Credit and even debt is not the problem - it's living beyond your means.
What I did was take the money I would have used to pay the car off, and instead put it into a term deposit for the same duration as the loan payments, thus earning myself a couple percent above the loan rate with no risk.
The thing is, all of those benefits to you come with hidden costs. Those costs will almost universally be dumped on the merchants, because the large payment services take advantage of their dominant position to set horribly one-sided terms.
In practice, that means you're paying more to the merchant, possibly quite a lot more in some cases. That 1-3% rebate is going to translate quite directly into a 1-3% increase in sticker price. That lack of liability if your card is lost or stolen is essentially a mandatory insurance scheme with everyone paying a premium on sticker price to fund it.
It's really no different to, say, all those offers to buy something on-line but then return it for a full refund if you don't like it. In industries like clothing, a significant fraction of customers will abuse this by doing things like buying some nice clothes, actually wearing them once or twice, and then trying to return them. Often the return will be accepted even though the merchant knows very well that the clothes have actually been worn and they can't restock them, because it's too much trouble to argue the point. The bottom line is that if you're that abusive customer then the refund deal is great for you, but everyone else is paying higher prices for your clothes to cover the merchant's wastage due to abuse.
Of course there are other advantages to digital payment in terms of keeping records of what you spent (and potential disadvantages in terms of privacy if others have access to those same records) but to me that's a separate issue to the direct financial implications of paying by different methods.
Retailers eat the cost in order to get the customers.
Cc processors earn the cost. Banks, in order to get customers, pass some of the dough back to consumers in marketing and rewards.
So it's somewhat fairer now than it was ten years ago with similar fees but less rewards. But an economist would say that optimal would be to massively reduce fees and take away rewards.
I suppose they meant "authorized by your bank at time of purchase" and not "done on a website". The former is for example not done if the merchant uses one of those old imprinter machines. There is no way a bank can send an SMS when they don't know of the transaction.
"online authorisation" means the POS terminal authorizes the transaction with the issuer. EMV is a complicated protocol and that may not always happen for whatever reason. One example is the terminal has no internet connection but the terminal may also be programmed to not do it in certain cases for various reasons (eg. speed up checkout).
In these cases your issuer will learn about these transactions when the nightly batch job finishes. I don't think you want to get an SMS at that time.
Even if the authorisation is successful the final transaction may not happen, may happen at a different time or may happen over a different transaction amount.
You can certainly get a notification at the time the issuer finds out about the charge. Typically that's instantly, but on an old imprinter machine it may be delayed. You still find out as soon possible.
Ok, that can be different elsewhere but my experience with German cards in some European countries is that contactless payments are almost always online authorized even if no cardholder verification is required.
