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Offering a discount for Debit Cards
PeteM




msg:3844528
 5:45 pm on Feb 7, 2009 (gmt 0)

My client wants to offer a 2.5% discount for clients that pay by Debit Card (instead of Credit Card). I think this will alienate Credit Card payers and reduce sales. Does anyone have any experience of this?

Cheers, Pete

 

Essex_boy




msg:3844688
 9:12 pm on Feb 7, 2009 (gmt 0)

Personally I wouldnt, it will annoy people or have tehm wander off to find tehir debt card and the phone rings/door bell rings i.e they go off and do something else, instead of paying.

Personally id work out the average processing fee and factor that into the price, instead of teh credit card processing fee.

jsinger




msg:3844737
 11:03 pm on Feb 7, 2009 (gmt 0)

Brilliant! Give a discount to people who can ONLY get a debit card and charge more to highly creditworthy people with traditional credit cards. I don't own a debit card and if I did, I would't use it online.

Haven't we kissed up to the less credit worthy population long enough?

Also, CC TOS agreements often prohibit giving discounts for other means of payment.

jecasc




msg:3844921
 10:53 am on Feb 8, 2009 (gmt 0)

Brilliant! Give a discount to people who can ONLY get a debit card and charge more to highly creditworthy people with traditional credit cards. I don't own a debit card and if I did, I would't use it online.

Thats funny how things are seen differently from country to country. In many European countries when you pay with your credit cards you are regarded as someone who hasn't any money and can only pay by making debts. When you have a debit card you are able to pay from your bank account which means there is actually money on it. Or you have a credit line with your bank which means you are worthy for "real" credit and not dependent on credit card contracts with 15% interest.

So if its a good idea depends on the country and its monetary culture. Where I live its not uncommon to give people who use cheaper and more secure payment options like bank-transfer a 2-3 percent discount.

[edited by: jecasc at 11:38 am (utc) on Feb. 8, 2009]

Essex_boy




msg:3844942
 11:36 am on Feb 8, 2009 (gmt 0)

kissed up to the less credit worthy population long enough? - The words 'prime' and 'sub' come to mind

jecasc




msg:3844943
 11:40 am on Feb 8, 2009 (gmt 0)

kissed up to the less credit worthy population long enough? - The words 'prime' and 'sub' come to mind

The next crisis is just at our door steps. It's called credit card crisis and has something to do with $900 billion credit card debts which are likely to be not payed back.

HRoth




msg:3844944
 12:00 pm on Feb 8, 2009 (gmt 0)

Do not assume that people who only have debit cards can't "qualify" for credit cards. Lots of people only have debit cards because they don't believe in credit, because they hate the cc companies and refuse to give one cent to those skeevs, or because paying interest is for suckers. I have had only debit cards since 1985, and that means I owe nothing to any credit card companies, whereas the average American owes thousands. I know a number of people who refuse to have a credit card. Wave of the future.

That said, I would not give a discount to debit card users for the reasons essex_boy gives.

jsinger




msg:3844975
 1:34 pm on Feb 8, 2009 (gmt 0)

Excuse me if I was screaming out loud. I think we all do that nowadays.
------------------------------------------------------
I got my first credit card after graduating from law school, passing the bar and getting a nice job. It had a $300 limit!

I bought my first piece of investment real estate with a 25% down payment and a ten year mortgage!

I bought every car I've owned with cash. My house was paid off with 18 years to go on the (20% down) mortgage.

Was just talking with my 90-year old mother in law who told me that she bought the only house she ever owned, with $10,500 of cash!

That's just the way things were a generation or two ago.

[edited by: jsinger at 1:39 pm (utc) on Feb. 8, 2009]

lgn1




msg:3844976
 1:36 pm on Feb 8, 2009 (gmt 0)

In Canada, debit cards require a PIN numbers, and can't be used as a subsititute for a credit card for online purchases. In Canada we call debit cards Interac or bank cards.

Now saying this, Interac did launch Interac Online in 2005 but only 286 Canadian merchants had signed as of Febuary 2009, so the program has been a dismal failure. Also I suspect that Canadians would be very relunctant in giving their PIN number online.

I know I would never pay by debit with a PIN number online.

Also in Canada, giving a discount/charging more to discourage C/C purchases is against the V/MC/Amex TOS.

rocknbil




msg:3845001
 2:55 pm on Feb 8, 2009 (gmt 0)

I think it really does get down to the credit card company's TOS against offering discounts for debit purchases, along with another often abused policy, minimum purchases via CC. Both are explicitly forbidden by most contracts I've seen.

From a consumer standpoint, most are not concerned about any of the points raised in this thread, if they can save 'fitty cents' on a purchase they won't care about the details. What's probably more important is the liabilities this presents the merchant.

Receptional Andy




msg:3845008
 3:08 pm on Feb 8, 2009 (gmt 0)

In the UK at least there are a fair number of places who charge a "processing fee" for using a credit card rather than a debit card. They claim that this is an additional charge they are merely passing on to the consumer.

I renewed a tax disc online (with the UK government), for instance which would have cost me more had I used a credit rather than debit card.

I tend to use a credit card for more "risky" purchases, since they have much better in-built fraud protection, whereas with a debit card, the money's gone and would be much harder to get back.

jecasc




msg:3845017
 3:42 pm on Feb 8, 2009 (gmt 0)

In the UK at least there are a fair number of places who charge a "processing fee" for using a credit card rather than a debit card.

I think the practice of forbidding discounts on other cheaper methods of payments in the credit card companies TOS has been ruled out as illegal by Europan Union Anti Trust Agencies. At least I remember reading something in this regards a few years ago.

There are a lot of shops offering discounts for other payment options in Europe. And it makes sense. Why should the normal customers carry the high fees for those who want to pay with credit card? If you don't know how to make a bank-transfer or use another decent method of payment then you have to pay 3 percent more.

Don't people realize how expensive credit card payment is? People pay 15-20% interest and the shops pay 2-5% on every purchase for a simple money transfer. First people compare prices and bargain for the last cent and then they make the purchase and pay insane amounts of interest and fees to their credit card companies.

So as I said before: It really depends on the country. In countries where a great variety of payment options are available such as direct debit, wire transfer, giropay and the like people might respond positively. When you have 90% of the customers using credit cards as primary payment option and the competitors don't charge fees or give discounts you will probably be not very succesful with this policy.

piatkow




msg:3845039
 4:25 pm on Feb 8, 2009 (gmt 0)


Brilliant! Give a discount to people who can ONLY get a debit card and charge more to highly creditworthy people with traditional credit cards. I don't own a debit card and if I did, I would't use it online.

In the UK your ATM card is also a debit card. If you don't have a debit card it implies that you are such a bad risk you can't even open a bank account. On the other had you can still get a prepay Visa card for cash.

jsinger




msg:3845047
 4:31 pm on Feb 8, 2009 (gmt 0)

Why should the normal customers carry the high fees for those who want to pay with credit card?

Because they're aren't any high net costs

This argument briefly flares every time there's a recession with all sorts of nonsense offered by 'consumer advocates.' For most merchants card processing is pretty cheap, and in the B/M setting is easier to handle than checks, and has virtually eliminated store holdups.

You won't find much government support either. Credit cards are mighty easy for the tax collector to audit!

I think cards save money for savvy shoppers and online and B/M merchants.

jecasc




msg:3845083
 6:04 pm on Feb 8, 2009 (gmt 0)

I think cards save money for savvy shoppers and online and B/M merchants.

This may be true for the US where there are no real cheap and reliable alternatives.

But in most of Europe there are alternatives available. Many banks even offer wire transfers with Instant Notification nowadays. And even without - the transfer takes only one day - and costs me nothing and the customer about 30 Cent in fees. Debiting a customers account is not more expensive than that.

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