Online Financial Tips

Archive for the ‘Debit Card Protection’ Category

Fraud Protection on the Short term

The bad guys that have this debit card data are not going to attack online merchants for goods that they will have to convert to cash. They have been walking straight to the ATMs for the green dollar.

The impact on merchants in the CNP world will be minimal; certainly no more than a few numbers of credit cards but probably less. I do not think the CP merchants will feel it much either. Consumers, on the other hand, are going to take a huge hit. As you probably know, credit card holder’s liability is limited to $50 under FTC regulations but I do not think there is any such limit for debit cards. The card holder is responsible for keeping the PIN private and shame on him if it gets out and he does not report the card stolen.

And yes the banks will almost certainly do what they can to keep their card holding customers happy, particularly if the cleaned out account can be traced to a compromised PIN by whoever it shakes out is accountable. Will that responsibility always be traceable? I do not know. But even if the banks in the end cover those losses, the cardholder has to deal with his account being cleaned out and all that goes with it.

Fraud Protection on the long term

The big concern for the merchant, on line and off, is if the consumer confidence disappear. We already have confirmation that confidence in online transactions has been falling a bit. This first debit/PIN compromise by itself is survivable, but if it turns out that it was not a one-time thing and we have all of a sudden discovered that PIN transactions are not as safe as we thought. Well, then on line merchants are in trouble and brick & mortar could be in trouble as well.

And I wonder how long the banks are able to calm down their debit card holders. When will they begin to pass the losses to the cardholders like they already pass them on to the online merchants now? It could become a matter of continued existence.

Debit card issuance is rising in the United States, according to both Visa and Mastercard. Visa reported a 16.5% increase in debit card issuance last year; Mastercard says debit card issuance rose 10.5% in the same period. Not surprisingly, both credit card associations also reported a substantial dip in credit card transactions and an increase in debit card transactions.

What does this mean to you, the merchant? Well, with more debit cards coming into use, you will see an increase in the number of your own customers that will present a debit card for payment at the register, versus a credit card.

In today’s economy many people have maxed out their credit cards or have damaged their credit and can’t qualify for an actual credit card. Then there is the growing sector known as “The Unbanked”, individuals who are not in the banking system, either by choice or due to credit problems. These people often carry pre-paid debit cards purchased at check cashing stores, etc. They load cash onto the cards and use them just like any bank-issued debit card. The cards carry either the Visa or Mastercard hologram.

Debit cardholders may elect to have you swipe their card as either debit, requiring the customer to enter their Personal Identification Number (PIN), or have you swipe their card as “credit”.

Most merchant normally actually ask the customer, “Debit or credit?” This is not the way to save yourself money on transaction processing costs. As most merchants know, the cost is much less to process a transaction as debit than credit. Debit transactions do not run through the Visa or Mastercard interchange network, and thus bypass their fees. A typical credit card transaction might cost a merchant 1.6% and 20 cents transaction fee. To process that same transaction as a debit, the cost is typically 0.7% and 30 cents. The difference will average roughly $100 savings per $10,000 in sales. ( In this example, 1.6% would represent a transaction at the lowest tier, known as Qualified. If the card has rewards, such as cash back or airline miles, it would run as Mid-qualified at around 2.7% or more. A business or corporate or foreign card at 4% or more.)

So why would you leave the choice of processing to the customer? They don’t care, trust me. What you should be doing every time you take a debit card is swiping it as debit and presenting the PIN keypad to the customer so they can enter their PIN. If you ever get a customer who for some odd reason really prefers to run the transaction as credit, just hit your cancel button and re-swipe as credit. Some pre-paid debit cards do carry a transaction fee to the cardholder for credit swipe transactions and I have met people who incorrectly believed their bank would charge them a fee for a PIN debit transaction.

Being proactive like this can save you thousands of dollars a year, and with debit card use on the rise, processing debit cards properly will become ever more critical.

What’s that you say? You don’t have a PIN keypad? Well, contact your account executive with your merchant processor and order one today. They cost anywhere from $100 to $300 and are often available refurbished.

Many credit card terminals actually have a PIN pad function built in, the customer enters their PIN directly on your terminal keyboard. Check if your terminal does this.

One final remark about the savings by processing a debit card as debit versus credit. Depending upon what your merchant services provider (MSP) is charging you for debit card PIN-based transaction versus credit card, there is a price point below which you may save money by choosing to swipe a debit card as a credit card. Example: You sell ice cream cones. Average sale ticket is $10 for a family’s purchase. To process as a PIN-based debit, the cost to you will be .70% plus 30 cents. That comes out to 7 cents and 30 cents= 37 cents to process as debit. As a credit sale it would be 1.6% and perhaps 15 cents so that comes out to 16 cents plus 15 cents = 31 cents. 6 cents lower that a PIN-based debit sale. Not a big difference for one sale, but multiplied out to a month’s sales volume it amounts to a bit of money you might be wasting. You will have to run your own numbers depending on your own processing costs.

What’s that you say? You don’t know exactly what you are paying to process plastic? Well, you need to find out!

My own company, the merchant services provider for whom I am an account executive, offers a free analysis of your recent merchant account statement. We break down what you pay for all three tiers of credit cards (known as Qualified, Mid-qualified and Non-qualified) as well as the various monthly fees that may be tacked on, and we the, side by side, show you what we propose to charge and what your bottom-line savings could be by switching your merchant processing to us. All in one neat and easy-to-read page. Free. I have looked at many merchant account monthly statements in my time and most can be very confusing to the customer.

We are entering a cashless era in society and the ability to take electronic payments – credit and debit cards, gift and loyalty cards, electronic check processing and more – is a crucial aspect of running your business, and managing the associated costs is just good business.

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Millions of Americans do not qualify for a credit card and opportunity to put a card with a MasterCard or Visa label in their wallets in the form a debit card is enticing. Using a debit card will deduct payments directly from your checking account. With no need to provide I.D. at the checkout counter or many trips to the ATM it may make sense to your situation. Now that your ordered your cheap personal checks and have your checking account tied to your debit card, you’re in business.

Sometimes a debit card can be a smart choice if you are trying to control a spending habit. With a debit card you can only make as many purchases as the money that your checking accounts can cover. There is a hitch, however. If you overdraw your checking account, expect to get hit with a heavy overdraft fee that could range in dismal $30 to $35 charges for each (just like a personal check) overdraft. Using a debit card with overdraft protection is a preferable choice whereby the debit charges can be paid out of your savings account or a home equity line of credit when your account becomes overdrawn. But with the protection, the discipline may just fly out the window.

Debit cards require you have to keep accurate and current records so you have no big surprises. Overdraft fees can mount up quick. However, using credit cards, you don’t have that problem, plus you’ll get money or other rewards back at the end of the year.

Naturally, if the debit card is lost or stolen you’ll want to report it immediately. Most cards will limit your liability if promptly reported. With debit cards issued by Visa or MasterCard, you are not liable for charges made if your card is lost or stolen. Under federal law, cardholders aren’t liable for more than $50 if they report unauthorized purchases within a certain period of time.

I’m a fan of using the traditional checking account. You’ll have a first-hand handle on your transactions and an immediate written record of the transaction. Beside buying cheap check personal check design features you get by ordering online, you’ll save more money. Jockeying pocket cash, cheap checks you order online and credit cards will give you more money back at years end than relying on debit cards.

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If you can ration yourself with walking around cash in your wallet without hitting the ATM machine all the time and see the reasoning behind using credit cards in order to earn that big refund at the end of the year, you’ll not use debit cards. Visa gives you 3% back on your gasoline and other purchases. Discover card gives you 2% back on everything each and every time their credit card is used. Other cards have similar give back deals and will put a bigger smile on your face at years end.

As society increases it’s reliance on technology, consumers are the inevitable benefactors of increasingly convenient shopping solutions. The use of the personal credit and debit card has become extremely common in recent years. It’s virtually unheard of to find a merchant who doesn’t accept major credit cards, and they are increasingly required to complete certain transactions, such as online shopping and most travel reservations.

Most people don’t have problems with these requirements, but for people who can’t qualify or don’t wish to have traditional credit cards, prepaid credit debit cards are a great option.

Before applying for a prepaid card, however, it’s prudent to examine the situation and ensure that it’s really the best option. For an individual who is able qualify for a traditional credit card, it’s probably more helpful in the long run to use the traditional method. Prepaid cards cannot build a person’s credit history, which will be necessary for larger purchases such as cars and homes.

Additionally, since “loading” the prepaid card requires parting with the cash upfront, a family or individual with a tight spending situation needs to be careful to ensure they will still have the cash flow necessary to pay other bills in a timely manner. Also, if prepaid credit debit cards are used on a repeated basis, the user should ensure that whatever card is chosen offers convenient reloading options.

Generally speaking, prepaid cards are more beneficial to user’s who can’t qualify for a traditional credit card, usually because of credit problems. Some banks also require debit card users to pass certain checks, which may limit usage of debit cards for some individuals as well.

Prepaid cards can also be a good idea for anyone who is looking to tightly control their spending. Overspending is not an option with a prepaid credit debit card, since there is no overdraft protection and no line of credit is actually being extended. Before applying, users should be aware of a few things. First, it’s important to fully understand the fees associated with opening an account and, sometimes, with reloading the card. Users should also double check the spending (or loading) limit on the card of their choice.

With identity theft on the rise, it is necessary to be aware of how thieves operate and what you can do to protect yourself. This article will deal specifically with these issues regarding debit cards and ATM cards.

With ATM and debit cards, it is the PIN that poses the risk for identity theft. An identity thief can illegally obtain your PIN and gain access to your bank account using three primary methods.

The first of these methods is keeping your PIN with your ATM or debit card, especially if it is designated as such. If a thief grabs your wallet or purse and gets his hands on your debit card, it will be useless to him without your PIN. If he has your PIN, he can fully access your bank account without anyone even knowing it isn’t you.

The greatest risk to your debit card security is using it in a crowded public place, particularly a restaurant or bar. There is always a risk of being watched or overheard while giving identity information and it is especially so when there is a crowd around an ATM machine. One well-known method used by identity thieves is called ‘shoulder surfing’ where the thief tries to see what PIN is entered when you make a transaction. There are other risks that are not as obvious, too. Though you may trust that the person you are dealing directly with is honest enough, you can’t be sure the same is true of those nearby who may be able to see and hear what is going on.

Your best defense is to be habitually aware and vigilant. Always keep in mind that obtaining your PIN is going to be followed by the theft of your card or your card number. You are at risk of being mugged for your card a short time later if you let a thief see or hear your PIN.

The third method of obtaining your PIN by an identity thief is through a magnetic strip reader or keyboard entry logging applications. Some of these have a very sophisticated design. Some will use a pinhole camera to get a recording of your PIN. The thief affixes these devices to the ATM or similar machine for the purpose of capturing the details of your card. This is called ‘skimming’. In recent years, skimming applications have increasingly become a risk because of the advancements in technology but they are not as yet commonplace. The thief no longer needs your physical card to gain access to your bank account once he captures your card information in this manner. Though they do look very much like a real card swiping machine, a frequent user will most likely discern the difference.

Another method of theft that is rare can occur at the point of sale but card swiping that is beyond what is necessary for the sale is harder to hide. The best way here to protect yourself against identity theft is to be aware of what is happening to your card if it is out of your personal possession.

PIN number security is the best way to protect yourself from being a victim of debit card identity thieves.

Contact your bank and have your PIN number changed if you believe your PIN number has been stolen but you still have possession of your card. For a lost or stolen card, Cancel the card as soon as possible and get a new one issued. Be sure to get a new PIN number, too. Never use your old PIN number after you have replaced a lost or stolen card.

Using the information above will help you to avoid becoming the victim of identity theft. Being vigilant in protecting your information can save you money, time and stress.

These days, it seems as though there’s a slew of debit cards within our fingertips. Whether it’s just signing up for that basic checking or savings account, purchasing a prepaid debit card or filling out an application for one online, there are a ton of debit card options for the everyday consumer – yet only the savvy ones take the time to question which debit card truly outshines the competition.

If you’ve found yourself pondering this very same issue, then you’re in luck: we’ve gathered information on a few of the best debit cards out there – including some which don’t even require a credit check to obtain!

Of course, no article about the best debit cards would be complete without mentioning two major brands: Visa and MasterCard.

These mega-companies have earned reputations for providing consumers with debit cards that are both flexible and convenient, as they allow you to make purchases all over the world, avoid carrying cash and control spending habits. With the usage of credit cards quickly on the decline due to the current economy, debit cards are now taking over as the plastic of choice for customers worldwide – and Visa and MasterCard have taken notice!

The best debit cards are also the ones that carry no hidden fees. Unlike credit cards, debit cards carry no high interest rates, since it’s your money that’s being spent, and not a loan from a credit card company. Additionally, the best debit cards carry overdraft protection plans.

Due to the fact that banks tend to charge large overdraft fees, debit cards that are worth your while will be linked to another one of your bank accounts or credit cards. This is done so that in case you spend more money than what is in your bank account, the purchase will be made through your backup account or credit card – therefore, you’ll never have to fork over your hard-earned money to bank’s overdraft fees again!

The best debit cards are also catching on to credit cards in another arena: protection. Visa offers zero liability in case your prepaid debit card is compromised in any way. You will not be liable for any fraudulent charges on your Visa debit card account.