Consumer protection and Financial access

Consumer protection

Consumer protections vary, depending on the network used. Visa and MasterCard, for instance, prohibit minimum and maximum purchase sizes, surcharges, and arbitrary security procedures on the part of merchants. Merchants are usually charged higher transaction fees for credit transactions, since debit network transactions are less likely to be fraudulent. This may lead them to "steer" customers to debit transactions. Consumers disputing charges may find it easier to do so with a credit card, since the money will not immediately leave their control. Fraudulent charges on a debit card can also cause problems with a checking account because the money is withdrawn immediately and may thus result in an overdraft or bounced checks. In some cases debit card-issuing banks will promptly refund any disputed charges until the matter can be settled, and in some jurisdictions the consumer liability for unauthorized charges is the same for both debit and credit cards.
In some countries, like India and Sweden, the consumer protection is the same regardless of the network used. Some banks set minimum and maximum purchase sizes, mostly for online-only cards. However, this has nothing to do with the card networks, but rather with the bank's judgement of the person's age and credit records. Any fees that the customers have to pay to the bank are the same regardless of whether the transaction is conducted as a credit or as a debit transaction, so there is no advantage for the customers to choose one transaction mode over another. Shops may add surcharges to the price of the goods or services in accordance with laws allowing them to do so. Banks consider the purchases as having been made at the moment when the card was swiped, regardless of when the purchase settlement was made. Regardless of which transaction type was used, the purchase may result in an overdraft because the money is considered to have left the account at the moment of the card swiping.

Financial access

Debit cards and secured credit cards are popular among college students who have not yet established a credit history. Debit cards may also be used by expatriated workers to send money home to their families holding an affiliated debit card.

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Issues with deferred posting of offline debit

To the consumer, a debit transaction is perceived as occurring in real-time; i.e. the money is withdrawn from their account immediately following the authorization request from the merchant, which in many countries, is the case when making an online debit purchase. However, when a purchase is made using the "credit" (offline debit) option, the transaction merely places an authorization hold on the customer's account; funds are not actually withdrawn until the transaction is reconciled and hard-posted to the customer's account, usually a few days later. However, the previous sentence applies to all kinds of transaction types, at least when using a card issued by a European bank. This is in contrast to a typical credit card transaction; though it can also have a lag time of a few days before the transaction is posted to the account, it can be many days to a month or more before the consumer makes repayment with actual money.
Because of this, in the case of a benign or malicious error by the merchant or bank, a debit transaction may cause more serious problems (for example, money not accessible; overdrawn account) than in the case of a credit card transaction (for example, credit not accessible; over credit limit). This is especially true in the United States, where check fraud is a crime in every state, but exceeding your credit limit is not.

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Internet purchases

Debit cards may also be used on the Internet. Internet transactions may be conducted in either online or offline mode, although shops accepting online-only cards are rare in some countries (such as Sweden), while they are common in other countries (such as the Netherlands). For a comparison, PayPal offers the customer to use an online-only Maestro card if the customer enters a Dutch address of residence, but not if the same customer enters a Swedish address of residence.
Internet purchases use neither a PIN code nor a signature for identification. Transactions may be conducted in either credit or debit mode (which is sometimes, but not always, indicated on the receipt), and this has nothing to do with whether the transaction was conducted on online or offline mode, since both credit and debit transactions may be conducted in both modes.

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Overdraft fees

A 2007 Washington Post article — on banks' lucrative debit card overdraft fees — pointed out that debit card issuers could notify customers electronically, allowing them to avoid overdraft fees. Nessa Feddis, banking industry spokesperson and lobbyist, contended that "current technology makes real-time notification of overdrafts cost-prohibitive." The article contended that "financial institutions don't want to change the status quo because they make good and easy money off their own customers' mistakes and irresponsibility."
On the other hand, prevention to keep consumers from debt has been a great relief to many consumers who are irresponsible and lack the necessary budgeting skills. Instead of taking away from others blindfolded, prepaid debit cards will disallow consumers from not spending what they do not have and encourage better habits with money management. To a great extent, prevention from such fees is helpful, trustworthy, and provides great relief to many that do not have to worry about any financial loss.

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Debit cards around the world

In some countries, banks tend to levy a small fee for each debit card transaction. In some countries (for example, the UK) the merchants bear all the costs and customers are not charged. There are many people who routinely use debit cards for all transactions, no matter how small. Some (small) retailers refuse to accept debit cards for small transactions, where paying the transaction fee would absorb the profit margin on the sale, making the transaction uneconomic for the retailer.

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Australia

Debit cards in Australia are called different names depending on the issuing bank: Commonwealth Bank of Australia: Keycard; Westpac Banking Corporation: Handycard; National Australia Bank: FlexiCard; ANZ Bank: Access card; Bendigo Bank: Cashcard.
EFTPOS is very popular in Australia and has been operating there since the 1980s. EFTPOS-enabled cards are accepted at almost all swipe terminals able to accept credit cards, regardless of the bank that issued the card, including Maestro cards issued by foreign banks, with most businesses accepting them, with 450,000 point of sale terminals.
EFTPOS cards can also be used to deposit and withdraw cash over the counter at Australia Post outlets participating in giroPost, just as if the transaction was conducted at a bank branch, even if the bank branch is closed. Electronic transactions in Australia are generally processed via the Telstra Argent and Optus Transact Plus network - which has recently superseded the old Transcend network in the last few years. Most early keycards were only usable for EFTPOS and at ATM or bank branches, whilst the new debit card system works in the same ways a credit card, except it will only use funds in the specified bank account. This means that, among other advantages, the new system is suitable for electronic purchases without a delay of 2 to 4 days for bank-to-bank money transfers.
Australia operates both electronic credit card transaction authorization and traditional EFTPOS debit card authorization systems, the difference between the two being that EFTPOS transactions are authorized by a personal identification number (PIN) while credit card transactions are usually authorized by the printing and signing of a receipt. If the user fails to enter the correct pin 3 times, the consequences range from the card being locked out and requiring a phone call or trip to the branch to reactivate with a new PIN, the card being cut up by the merchant, or in the case of an ATM, being kept inside the machine, both of which require a new card to be ordered.
Generally credit card transaction costs are borne by the merchant with no fee applied to the end user while EFTPOS transactions cost the consumer an applicable withdrawal fee charged by their bank.
The introduction of Visa and MasterCard debit cards along with regulation in the settlement fees charged by the operators of both EFTPOS and credit cards by the Reserve Bank has seen a continuation in the increasing ubiquity of credit card use among Australians and a general decline in the profile of EFTPOS. However, the regulation of settlement fees also removed the ability of banks, who typically provide merchant services to retailers on behalf of Visa, MasterCard or Bankcard, from stopping those retailers charging extra fees to take payment by credit card instead of cash or EFTPOS. Though only a few operators with strong market power have done so, the passing on of fees charged for credit card transactions may result in an increased use of EFTPOS.

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Brazil

Brazil

In Brazil debit cards are called cartão de débito (singular) and are getting increasingly popular as a replacement of checks, that are still uncommonly popular in the country.

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