A Simple Swipe on a Phone, and You're Paid [telecom]

A Simple Swipe on a Phone, and You're Paid

By DAVID POGUE September 29, 2010

It's always thrilling when somebody looks at the Way Things Have Always Been Done, and then asks: Why?

And then goes on to change the world forever.

1967: Why is it necessary to wait in line for a human teller if all you want to do is withdraw cash?

1974: Why shouldn't your document on the computer screen look the same way it will when it's printed?

1991: If shampoo always settles to the bottom of the bottle, why is the cap on top?

Recently, a San Francisco company has been asking an equally groundshaking question: Why can't everyone accept credit cards?

Look, credit cards are great. There's a paper trail, there's fraud protection, there's incredible convenience - just swipe and go. But why is it that only companies accept them?

Why can't we use them to pay the piano teacher, the baby sitter, the lawn-mowing teenager, even first graders at their lemonade stand? Why aren't credit cards accepted at garage sales, food carts and PTA bake sales? Heck, when your tipsy buddy wants to borrow $20 for a cab home, why can't you eliminate the awkwardness and future conflict by just running his Visa card on the spot?

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***** Moderator's Note *****

It won't work.

Businessmen take credit cards because their customers insist on using them, and because the card fee is offset by the costs of handling, counting, and safeguarding cash.

Ordinary people don't trust banks, and they don't trust credit cards: not when they're on the receiving end.

Bill Horne Moderator

Reply to
Monty Solomon
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Businesses take on substantial burdens to accept credit cards. Typically they pay the card company 10-20% of the amount charged, and have to agree to let the card company resolve all disagreements in favor of the customer, with no proof required (which often means the merchant gets stiffed, since its only recourse is to sue the customer).

The main reason businesses put up with these burdens is that cards enable customers who don't have enough cash with them (whether because they forgot or because they fear being robbed) to make impulse purchases.

Ordinary people don't have this reason to accept credit cards. They also sometimes don't want their transactions recorded (whether because they want to evade taxes or just to keep their leisure activities private). Thus, any attempt to legislate a "plastic-only economy" will only be evaded, even if it means barter.

And with good reason. I've yet to find a bank or credit union that didn't regard its possession of my money as a license to steal (and call it a "fee") whenever they felt like it.

Reply to
John David Galt

..........

There are further non-technical reasons for people not having that instant convenience of accepting card instead of cash transactions - and that is it is too convenient.

A lot of people continually get themselves into more debt than they would like by getting sucked in to impulse purchases on their card(s), purchases they may have to give more thought to if they had to accumulate to the actual cash for the transaction.

And for those accepting card payments for trivial items, imagine the hassles of having a transaction challenged months after a "garage sale" by someone disgruntled over an old lamp that only worked for a day etc?

-- Regards, David.

David Clayton Melbourne, Victoria, Australia. Knowledge is a measure of how many answers you have, intelligence is a measure of how many questions you have.

Reply to
David Clayton

Are you kidding? Half the people in this country would give you their bank account number and online password if you pretended to be from the bank.

Thanks

Reply to
David Wolff

Uh, you've got an extra digit in there. The card companies take between 1% and 3%. The worst rate you get through Paypal is about 3%.

People use credit cards for a variety of reasons. I use mine because it lets me pay for everything once a month, with a month's float on the money, and the card companies give me a rebate. ObTelecom: I even pay my phone bills with a credit card, for those reasons.

Yeah, I've heard that the banks in California are unusually bad.

R's, John

Reply to
John Levine

They actually pay the card company 1 to 3% of the amount charged, not

10-20%. (For American Express it's higher. The largest convenience store chain in the Oklahoma City metropolitan area does not accept American Express cards for that reason. There is a local supermarket chain in the area that doesn't take Amex either, and for the same reason.) I do not know why Krispy Kremes does not accept Discove cards. At one time Discover cards were rejected by many businesses, due to the additional effort to get them reimbursed. but now most all businesses accept Discover. I have had very few disputes with credit card charges, once it was probably a mistake, the other time somebody had obviously stolen my credit card number.) Once the same charge had been run through twice. I can't imagine most types of stores expect to get that much in impulse purchases. They have a much wider access to customers from all over the country that think the additional business they generate is worth the cost. I usually carry a very small amount of cash, charging just about everything to my credit cards. Wes Leatherock snipped-for-privacy@aol.com snipped-for-privacy@yahoo.com
Reply to
Wes Leatherock

One large church-sponsored festival in Oklahoma City, including food service and a bake sale, does accept credit cards. Taxicabs in many cities do, too. Wes Leatherock snipped-for-privacy@aol.com snipped-for-privacy@yahoo.com

Reply to
Wes Leatherock

This quote contains 2 errors. Firstly the fee charged by the cc company is nowhere near 10-20%. Its 4-5% and down. The larger the average charge is and the larger the total charges over a month is, the lower the fee.

Secondly, they don't resolve all disputes "in favor of the customer, with no proof required". I have had personal experience here.

Reply to
Rich Greenberg

I have all of my recurring bills (telephone, satellite TV, Internet service, etc.) charged to my credit card (CC). Once a month, the CC sends me an email that my statement is posted, and I pay it in full on-line via EFT from my bank. I started doing this when I was traveling extensively, gone for a month or two at a time, and I didn't want to incur late fees. As a bonus, my CC pays a 1% rebate.

When dealing with a locally owned business like a restaurant or gas station, I pay cash to save them the CC fee. But with national companies like Wal-mart, I pay with CC.

Reply to
Richard

About 30 years ago, I was staying at a mom-and-pop owned motel in Amarillo. At checkout, I offered the choice of 2 credit cards, Visa and AmEx. He chose Visa. I asked if it was because their fee was lower. He answered "Not the main reason. With Visa I get reimbursed faster. I can take the Visa charge to my local bank today and get reimbursed, but I mail AmEx charges to New York once a month."

Reply to
Richard

On Sun, 03 Oct 2010 11:12:22 -0400, Wes Leatherock wrote: ..........

In Australia Mastercard are introducing the "Swipe and go" system where you just wave your card at a terminal for transactions under under a certain amount - no signing, not PIN to enter, just grab your receipt and go (TV ads are running now promoting it).

They are definitely going for the "impulse" market as a direct replacement for cash.

-- Regards, David.

David Clayton Melbourne, Victoria, Australia. Knowledge is a measure of how many answers you have, intelligence is a measure of how many questions you have.

Reply to
David Clayton

That's called Paypass. My Mastercard debit card here in the US has it, but I've never used it. If my credit card had it, I would use it.

R's, John

Reply to
John Levine

The thing with any unauthenticated transaction system is that is assumes the person with the card (token of authority) is the owner of the card - what happens if your card is lost/stolen and someone goes on a spending spree of multiple transactions for potentially days before you realise and get the card blocked?

Whether the actual token is an actual card or a phone display may still open up a whole can o' worms if it falls into the wrong hands in this increasingly "trade off security for convenience" path we seem to be on.

-- Regards, David.

David Clayton Melbourne, Victoria, Australia. Knowledge is a measure of how many answers you have, intelligence is a measure of how many questions you have.

Reply to
David Clayton

Today, American Express _does_ cost merchants more than most other cards, the difference is around 0.5% -- funds reach the merchant with about the same latency as other cards. It's all electrionic clearing these days.

AMEX fees have to be higher, since they make far less money off interest charges than the other cards do. (Amex -really- wants you to pay off the entire outstanding balance each month.)

Reply to
Robert Bonomi

Chase calls it "Blink" on their credit card.

I destroy this feature on any credit card that comes equipped with it. I don't know what (or whether) the designers were thinking. "Let's put a feature on our credit card that will let anyone with the right equipment tracelessly read all information on the card, from a distance.

Cites:

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many others

Reply to
Ron

Depends on the flavor of Amex card. Some are charge cards which require that you pay in full each month. Some are revolving credit cards with the usual unconscionable interest rates. (I have one of each, the former billed in euros, the latter billed in dollars.) Some aren't even issued by Amex, just Amex branded but run by large banks, just like MC and V. Whatever logic there once was for Amex to charge more has long gone away, and now they charge more just because they can.

ObTelecom: my ILEC phone company only takes MC/V, but my long distance and VoIP providers take all three.

R's, John

Reply to
John Levine

You're confusing two things, tap vs. swipe and signed vs. unsigned. I swipe my card at my local supermarket, but they don't ask for a signature for charges under $50. And even when I do sign, it's on a pad the cashier can't see. I've been writing things like BOGUS or NOT ME for years, and nobody's noticed.

They have presumably figured out that the small gain in cashier productivity from not waiting for th signature outweighs the small increase in fraud from not having a signature.

R's, John

Reply to
John Levine

I agree, but in Australia they are deliberately phasing out signing for purchases in the next couple of years to be replaced by compulsory PIN - allegedly for reducing fraud - and now they are bypassing that entirely with the "tap" purchases!

Having to pause to sign something still allows a bit more risk for the fraudsters as far as being identified by the salesperson and/or cameras, but just being able to swiftly "tap and go" must cut that down a bit.

Also, if a phone gets this valuable role as a payment token, then doesn't that also increase the chances of the phone being a greater target for theft?

Maybe it's all calculated that the increased losses are offset by the increased "productivity", but who will end up paying for this convenience anyway, I wonder?

-- Regards, David.

David Clayton Melbourne, Victoria, Australia. Knowledge is a measure of how many answers you have, intelligence is a measure of how many questions you have.

Reply to
David Clayton

For many years Amex had a provision that no bank could issue an American Express card except their own. They lost an antitrust suit on that provision several years ago, and I now have a store-name card which is an Amex card issued by GE Money Bank. Wes Leatherock snipped-for-privacy@aol.com snipped-for-privacy@yahoo.com

Reply to
Wes Leatherock

You are once again confusing the technology used between the card and the bank with the validation.

The contactless chip is basically the same as the contact chip with some RFID stuff to talk to the terminal. Either can work with or without a PIN. If the bank is allowing purchases without either a signature or a PIN, I hope your government makes it clear that shifts the risk of fraud entirely to the bank and merchant.

R's, John

Reply to
John Levine

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