9 ms·

The benefit of credit cards is no one can literally drain your bank account via fraudulent access to a payment card directly tied to your bank (i.e. debit card

The benefit of credit cards is no one can literally drain your bank account via fraudulent access to a payment card directly tied to your bank (i.e. debit card in US nomenclature). This is a clear benefit regardless of location. Courts are slow and not scalable, and you don't want to be in a scenario where your bank has been drained right before you need to make important payments.

PaulDavisThe1st 4y ago
This does not negate the parent post at all. You're just describing another deficiency of the US banking system.
- kube-system 4y ago
  There are always scams and exploits. Legal consumer protections are necessary regardless.
- snazz 4y ago
  Out of curiosity, how do European banks avoid this issue? If my debit card or ACH info is compromised and someone drains my checking account, is there a way to use the stolen funds before the bank/court finishes their investigation?
  - Jensson 4y ago
    The law says that the bank needs to give back your money immediately, at least in my country. If it turns out that it was your fault you don't get to keep the money, but you will have money to pay bills with during the investigation. Laws and security adapts to whatever medium people tend to use, so common problems tend to have solutions. The laws in Europe are made to make debit card transactions and security reasonable, because almost everyone uses debit cards.
    - Spooky23 4y ago
      US law does the same thing. But you need to deal with it. My credit card was compromised and AMEX has a problem. My debit card is compromised and I have several problems.
  - bckygldstn 4y ago
    Giving someone your bank account number (~EU ACH info) only allows them to send you money, not take it from you. It's not a secret, some retail businesses list it on their websites.
  - mcv 4y ago
    How would they drain your bank account? There's quite a bit of 2FA they'd have to defeat. Easiest is stealing the card after skimming their PIN, but if you know it's stolen, you're going to block it pretty quickly, and there are limits to how much you can withdraw from an ATM. The big problem with credit cards is that all the info needed to authorize a transaction is right there on the card. The second problem is that quite often you submit that data directly to the merchant or to whichever payment provider the merchant chose.
    - RHSeeger 4y ago
      In the US, automated payments tend to be "pull based", where a company tells your bank "give me this much from this account, I have permission". The company can lie but, by the time you find out, the money is already gone and it can take a long time to get it back. The bank has no real incentive to get your money back. With a credit card, on the other hand, you see what was taken _before_ you pay them. So you can tell the credit card company "this amount that was charged to me is not me, I'm not paying that". Then the credit card company has to look into it; they have incentive to figure out what happened (unlike banks) because they aren't getting payed back their "loan" to you until they do.
      - blackoil 4y ago
        In India, now you have to approve all such scheduled payments with a 2FA and upto a limit. So even if I have approved ShadyCorp they can't demand more than approved amount.
      - mcv 4y ago
        Dutch banks used to work like that too, by "incasso", and in fact still do to some extent. But any incasso that hasn't been directly authorised by you with the bank can be undone (and apparently at an additional fee to the company that originated it; they really don't like it when that happens). So that's actually very similar to how credit cards work, but without the additional fee. These days you can easily manage all upcoming incassos through your banking app and block them before they happen, though I generally prefer to pay such recurring payments through automated "push" transfer.
  - junofan 4y ago
    There’s a lot more approval-related stuff and general friction.
  - vimy 4y ago
    When you know someone’s bank account number you can only send them money. This issue simply isn’t possible.
    - deleted 4y ago
      [deleted]
    - justinc8687 4y ago
      That's not true. As a business, at least, I can run an ACH Debit[0] with just a routing number, account number and name. NACHA rules prohibit this, but nothing programmatically prevents this from happening. [0] https://plaid.com/resources/ach/how-does-an-ach-transfer-work/#:~:text=.%20ACH%20Debits%20%E2%80%94%20Requests%20for%20the%20ACH%20network%20to%20%E2%80%9Cpull%E2%80%9D%20money%20from%20an%20account%20that%20the%20requestor%20(%E2%80%9Coriginator%E2%80%9D)%20doesn%E2%80%99t%20control%2C%20say%20for%20a%20pre%2Dauthorized%20bill%20payment https://plaid.com/resources/ach/how-does-an-ach-transfer-wor....
      - brewdad 4y ago
        u/vimy was talking about European banks. There is no "pull" there. People freely share their account info because one can only push money in with that info.
        Silhouette 4y ago
        That's still not true. Pull-based schemes are widely used across the SEPA region and in national schemes such as the UK's Direct Debits. A notorious celebrity in the UK famously revealed his bank details as a stunt to show that a large-scale data loss incident wasn't a big deal and he ended up making an unexpected payment to a healthcare charity shortly afterwards.
        vimy 4y ago
        I don’t know about the UK but in my SEPA country only companies can create pull-based schemes and they can’t do it without authorization of the bank account owner. Mostly used for things like utility bills. So there’s zero danger in sharing your bank account number with someone.
  - ClumsyPilot 4y ago
    Its called Direct Debit guarantee, UK had it for decades: "Immediate refunds. You can get a full and immediate refund from your bank (also known as an “indemnity claim”) for any payment taken in error." https://gocardless.com/guides/posts/dd-guarantee-in-plain-english/#:~:text=The%20Direct%20Debit%20Guarantee%20in%20Plain%20English%201,payment%20taken%20in%20error.%203%20Instant%20cancellations.%20 https://gocardless.com/guides/posts/dd-guarantee-in-plain-en...
    - PaulDavisThe1st 4y ago
      Who defines whether a payment is or is not in error? Has the USA really made me that cynical?
      - martijnvds 4y ago
        You (the account holder) do. Direct debits are instantly reversible for a month (maybe 2?). You'll have to explain to the company that deducted the money why you reversed the charge though, and if it was legit after all you still need to pay them.
        Symbiote 4y ago
        There's no time limit for reversing direct debit transactions. https://www.cleardebit.com/indemnity-claims/ https://www.cleardebit.com/indemnity-claims/
        lxgr 4y ago
        There is. It‘s 8 weeks (for any reason including "I‘d like my money back and rather do something else with it") or 13 months (for unauthorized charges). https://www.europeanpaymentscouncil.eu/what-we-do/sepa-direct-debit https://www.europeanpaymentscouncil.eu/what-we-do/sepa-direc...
  - Silhouette 4y ago
    Out of curiosity, how do European banks avoid this issue? In the UK we have a system of Direct Debits that is popular particularly for making recurring payments like household bills or subscriptions. You provide your bank account numbers to the merchant and they can collect the required money directly. It sounds like a huge opportunity for abuse by merchants but the easy setup is balanced by a universal Direct Debit guarantee for account holders that basically says if any erroneous charge is made then you get your money back from your bank first and questions are asked later. Merchants are required to provide all customers who pay this way with certain information about the guarantee scheme (and everyone actually does). That in turn sounds like an opportunity for abuse by customers but having personally run a business that accepts Direct Debits I can tell you that we have never seen a single abusive reversal of a Direct Debit payment. In contract we've had a few problems with legitimate charges to cards being reversed later and the whole system around chargebacks with credit cards seems to be unreliable for both merchants and cardholders.
  - foepys 4y ago
    German banks require the account owner's permission to pull money from a bank account and the owner has a 6 week window to get all their money back, no questions asked. "SEPA Lastschriftverfahren" is what it's called.
  - Doxin 4y ago
    > If my debit card or ACH info is compromised There's two ways this could happen, but neither is super easy: 1) You've handed over your physical debit card and it's PIN code to a baddie and not informed your bank. Unlike the security code on credit cards the PIN code is not on the card. Unlike credit cards you need the actual physical card to transfer money. 2) You've given a baddie your online login info and had him send you a QR code which you then scan and approve the amount. Notable what does not happen, which does with credit cards, is making a payment at a webshop and that webshop then leaking your card info to a baddie. No one other than the bank ever sees the "secret" part of the card info.
  - benhurmarcel 4y ago
    It happened to me at a French bank. I got refunded everything within a few days, I just declared it to the bank.
  - lxgr 4y ago
    At least in Germany, the dispute process for bank account debits is literally clicking a single button in online banking. No proof or even reason for this is required in the first 8 or so weeks since the charge (or more than a year if the debiting merchant does not have a "direct debit mandate", which essentially means some sort of evidence of the account holder agreeing to be debited).
- KallDrexx 4y ago
  Can you explain how this is a deficiency of the US banking system? According to stats I can find, the European central bank reported 1.03B Euros of fradulent transaction via cards back in 2019 (https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudreport202110~cac4c418e8.en.html https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudre...). So the only way those fraudulent transactions won't hit your bank account is if your bank account is not directly tied to the card, which makes it a credit card by definition (because you are being given credit for purchases and not having to pay for it immediately). So it seems like what the parent is saying is true outside the US as well?
Jensson 4y ago
3% of your credit card spend is a steep cost to pay for that security though, they can't clean out all your money if you don't tie all of it to the debit card, just put a months worth there at a time and you are better off with debit unless you get your debit card stolen every year or so. It isn't more work than credit either, instead of paying it off every month you fill it up every month. And for fraud protection, 3% is only worth it if every 30'th purchase is fraud in some way. Personally I've never lost my card and never fallen for fraud, so it would just be 3% of my money thrown away for nothing.
- vetinari 4y ago
  > they can't clean out all your money if you don't tie all of it to the debit card, just put a months worth there at a time and you are better off with debit unless you get your debit card stolen every year or so. You can set up daily/weekly/monthly limits for debit cards, and separate ones for online purchases, physical terminals or ATMs, if you want.
- hypertele-Xii 4y ago
  I'd also have it empty before filling, so it never accumulates.
- maccard 4y ago
  In the EU credit cards can't be charged more than other payment methods anymore, so _youre_ not paying 3% more.
  - ironick09 4y ago
    EU credit cards also don’t have any (or anything close to) the benefits US cards have, right?
    - CaptainZapp 4y ago
      Personally I think that's a good thing. And yes, it's reflected in the fees that a card issuer is allowed to charge.
Teever 4y ago
Having two accounts, one to store your money, and one that you move money into for payments as needed would offer the same protection.
chiefalchemist 4y ago
Perhaps. Adding... The benefit of credit cards is...credit, and the ability of the card to abstract the idea of spending money away from the consumer. Few things exemplify "out of sight, out of mind" better than credit cards. The model is amazingly profitable as well. Like printing money, literally.
- asiachick 4y ago
  Interestingly, in Japan, at least until recently, the way credit cards worked is, when you buy something you'd have to say how many payments you were going to pay it off in and your bank would automatically take money from your bank account at that level. In other words, you'd go to some electronics store and by a $2000 TV and they'd ask "how many payments". You'd say 10 and you'd end up paying $200 a month. I don't know the origin of why they did it that way. To be clear, this was bank credit cards, not store cards. I imagined it was something to do with the commitment and knowing you couldn't just pay off some minimum. Purchases under a certain amount and/or by store you were not allowed to divide up. I've had Japanese friends come to America and want to buy something for $500 and ask if they can have ask for 4 payments and have to explain that system doesn't exist here. If you want to make 4 payments you make 4 payments. I've never looked into if the bank is giving all the money to the merchant and then charging the customer per month or if they're sending to the merchant per month. Nor did I ever look into interest fees. I just know it is (was?) common.
  - lsc36 4y ago
    Card companies _do_ charge interest if you pay in (usually) 3 or more installments, unless explicitly mentioned being interest-free.
  - nottorp 4y ago
    Possibly not all credit cards. We have the same in Romania - a lot of credit cards come with the option to pay in interest free (few installments) or sometimes interest bearing (more installments) installments. Sometimes at participating retailers, sometimes you just click on something in the bank's site. Your spending limit is reduced by the whole amount but those interest free installments can be useful. Esp when you get 12-24 for stuff like TVs or furniture. Other than that option, they act like normal credit cards. Pay next month, minimum payment, huge interest if you don't pay them in full, can contest any transaction, yadda yadda.
mcv 4y ago
No one can drain ky bank account through my payment card either. For one, they lack the authorisation to do so, and for another, there's a limit (which I can change) to how much can be transferred per day.
- happyopossum 4y ago
  > they lack the authorisation to do so How does the German banking system prevent an unscrupulous online retailer from charging you 500€ for a 50€ item? Or charging you twice?
  - 6510 4y ago
    In the Netherlands the customer picks theirs from a list of banks on the iDEAL website then the transaction is done on their banks website. Other services can be fit in front to extend the choices with other payment processors. shop [> mollie] > iDEAL > ABN > shop or (pc) shop QR > (phone) photo app > iDEAL > ABN
  - Jensson 4y ago
    2FA, you get a popup in your bank app asking "Do you want to pay X euro to Y?" for online payments. Can turn that off if you want, but it isn't a big bother.
    - GekkePrutser 4y ago
      It also only happens for higher-value transactions here. I don't have to authorize every tenner unless it's the 10th in a row or something
    - lxgr 4y ago
      That‘s not how direct debit works. There is no accountholder involvement with processing direct debits, but they can be easily reversed (although after the fact). There are related payment schemes though that do initiate a push payment (i.e. SEPA credit transfer), giving the accountholder control over the amount and payee, but they are not yet as ubiquitous or usable internationally.
maccard 4y ago
You don't need to go to court to reclaim a fraudulent debit. For one, there's limits in place on card transactions and bank transfers with every bank. In every (read: two) situation I've had where my card was skimmed/used without permission, the bank cancelled my card and refunded the amount within 24 hours.
pulisse 4y ago
> The benefit of credit cards is no one can literally drain your bank account via fraudulent access to a payment card directly tied to your bank (i.e. debit card in US nomenclature This difference is a consequence of law, not payment technology. It's entirely possible for someone to make fraudulent charges on a card up to its limit (which would be the analogue of draining a bank account), but CC companies are required by law to absorb fraud beyond a token amount. There's no technical reason why bank accounts couldn't be similarly protected, but banks have thus far been successful in preventing such laws from being enacted.
- kube-system 4y ago
  Part of it is inherent to the type of account. Ledgers have to balance out somehow, and fraud is going to temporarily be someones problem until it is resolved. Credit is, by definition, the bank's money. For example, US also has similar laws for debit cards, but, by definition, when a charge is made to your bank account, it is made to your bank account.
- nobody9999 4y ago
  >There's no technical reason why bank accounts couldn't be similarly protected, but banks have thus far been successful in preventing such laws from being enacted. My bank's (Chase) policy limits debit card customer fraud losses to the same $50 that the law requires of credit cards. Not sure about other banks, but while I'm not sad that I have this protection, Chase's anti-fraud measures for debit cards (mostly programmatic, I'm sure) are pretty draconian. If I travel any significant distance from my home, transactions with my debit card are almost always declined and I either have to contact customer service (a big time waster) or use a credit card. That's incredibly annoying, although if that's the reason my debit card fraud responsibility is limited to the same as a credit card, that's a trade off that some may be willing to make and some will not. Given that my debit card has been the subject of fraudulent activity several times and the bank has made me whole every time, perhaps there's something to be said for the harshness of the debit card anti-fraud algorithms. But it's still incredibly annoying.
  - jjav 4y ago

PaulDavisThe1st 4y ago

This does not negate the parent post at all. You're just describing another deficiency of the US banking system.

kube-system 4y ago
There are always scams and exploits. Legal consumer protections are necessary regardless.
snazz 4y ago
Out of curiosity, how do European banks avoid this issue? If my debit card or ACH info is compromised and someone drains my checking account, is there a way to use the stolen funds before the bank/court finishes their investigation?
- Jensson 4y ago
  The law says that the bank needs to give back your money immediately, at least in my country. If it turns out that it was your fault you don't get to keep the money, but you will have money to pay bills with during the investigation. Laws and security adapts to whatever medium people tend to use, so common problems tend to have solutions. The laws in Europe are made to make debit card transactions and security reasonable, because almost everyone uses debit cards.
  - Spooky23 4y ago
    US law does the same thing. But you need to deal with it. My credit card was compromised and AMEX has a problem. My debit card is compromised and I have several problems.
- bckygldstn 4y ago
  Giving someone your bank account number (~EU ACH info) only allows them to send you money, not take it from you. It's not a secret, some retail businesses list it on their websites.
- mcv 4y ago
  How would they drain your bank account? There's quite a bit of 2FA they'd have to defeat. Easiest is stealing the card after skimming their PIN, but if you know it's stolen, you're going to block it pretty quickly, and there are limits to how much you can withdraw from an ATM. The big problem with credit cards is that all the info needed to authorize a transaction is right there on the card. The second problem is that quite often you submit that data directly to the merchant or to whichever payment provider the merchant chose.
  - RHSeeger 4y ago
    In the US, automated payments tend to be "pull based", where a company tells your bank "give me this much from this account, I have permission". The company can lie but, by the time you find out, the money is already gone and it can take a long time to get it back. The bank has no real incentive to get your money back. With a credit card, on the other hand, you see what was taken _before_ you pay them. So you can tell the credit card company "this amount that was charged to me is not me, I'm not paying that". Then the credit card company has to look into it; they have incentive to figure out what happened (unlike banks) because they aren't getting payed back their "loan" to you until they do.
    - blackoil 4y ago
      In India, now you have to approve all such scheduled payments with a 2FA and upto a limit. So even if I have approved ShadyCorp they can't demand more than approved amount.
    - mcv 4y ago
      Dutch banks used to work like that too, by "incasso", and in fact still do to some extent. But any incasso that hasn't been directly authorised by you with the bank can be undone (and apparently at an additional fee to the company that originated it; they really don't like it when that happens). So that's actually very similar to how credit cards work, but without the additional fee. These days you can easily manage all upcoming incassos through your banking app and block them before they happen, though I generally prefer to pay such recurring payments through automated "push" transfer.
- junofan 4y ago
  There’s a lot more approval-related stuff and general friction.
- vimy 4y ago
  When you know someone’s bank account number you can only send them money. This issue simply isn’t possible.
  - deleted 4y ago
    [deleted]
  - justinc8687 4y ago
    That's not true. As a business, at least, I can run an ACH Debit[0] with just a routing number, account number and name. NACHA rules prohibit this, but nothing programmatically prevents this from happening. [0] https://plaid.com/resources/ach/how-does-an-ach-transfer-work/#:~:text=.%20ACH%20Debits%20%E2%80%94%20Requests%20for%20the%20ACH%20network%20to%20%E2%80%9Cpull%E2%80%9D%20money%20from%20an%20account%20that%20the%20requestor%20(%E2%80%9Coriginator%E2%80%9D)%20doesn%E2%80%99t%20control%2C%20say%20for%20a%20pre%2Dauthorized%20bill%20payment https://plaid.com/resources/ach/how-does-an-ach-transfer-wor....
    - brewdad 4y ago
      u/vimy was talking about European banks. There is no "pull" there. People freely share their account info because one can only push money in with that info.
      - Silhouette 4y ago
        That's still not true. Pull-based schemes are widely used across the SEPA region and in national schemes such as the UK's Direct Debits. A notorious celebrity in the UK famously revealed his bank details as a stunt to show that a large-scale data loss incident wasn't a big deal and he ended up making an unexpected payment to a healthcare charity shortly afterwards.
        vimy 4y ago
        I don’t know about the UK but in my SEPA country only companies can create pull-based schemes and they can’t do it without authorization of the bank account owner. Mostly used for things like utility bills. So there’s zero danger in sharing your bank account number with someone.
- ClumsyPilot 4y ago
  Its called Direct Debit guarantee, UK had it for decades: "Immediate refunds. You can get a full and immediate refund from your bank (also known as an “indemnity claim”) for any payment taken in error." https://gocardless.com/guides/posts/dd-guarantee-in-plain-english/#:~:text=The%20Direct%20Debit%20Guarantee%20in%20Plain%20English%201,payment%20taken%20in%20error.%203%20Instant%20cancellations.%20 https://gocardless.com/guides/posts/dd-guarantee-in-plain-en...
  - PaulDavisThe1st 4y ago
    Who defines whether a payment is or is not in error? Has the USA really made me that cynical?
    - martijnvds 4y ago
      You (the account holder) do. Direct debits are instantly reversible for a month (maybe 2?). You'll have to explain to the company that deducted the money why you reversed the charge though, and if it was legit after all you still need to pay them.
      - Symbiote 4y ago
        There's no time limit for reversing direct debit transactions. https://www.cleardebit.com/indemnity-claims/ https://www.cleardebit.com/indemnity-claims/
        lxgr 4y ago
        There is. It‘s 8 weeks (for any reason including "I‘d like my money back and rather do something else with it") or 13 months (for unauthorized charges). https://www.europeanpaymentscouncil.eu/what-we-do/sepa-direct-debit https://www.europeanpaymentscouncil.eu/what-we-do/sepa-direc...
- Silhouette 4y ago
  Out of curiosity, how do European banks avoid this issue? In the UK we have a system of Direct Debits that is popular particularly for making recurring payments like household bills or subscriptions. You provide your bank account numbers to the merchant and they can collect the required money directly. It sounds like a huge opportunity for abuse by merchants but the easy setup is balanced by a universal Direct Debit guarantee for account holders that basically says if any erroneous charge is made then you get your money back from your bank first and questions are asked later. Merchants are required to provide all customers who pay this way with certain information about the guarantee scheme (and everyone actually does). That in turn sounds like an opportunity for abuse by customers but having personally run a business that accepts Direct Debits I can tell you that we have never seen a single abusive reversal of a Direct Debit payment. In contract we've had a few problems with legitimate charges to cards being reversed later and the whole system around chargebacks with credit cards seems to be unreliable for both merchants and cardholders.
- foepys 4y ago
  German banks require the account owner's permission to pull money from a bank account and the owner has a 6 week window to get all their money back, no questions asked. "SEPA Lastschriftverfahren" is what it's called.
- Doxin 4y ago
  > If my debit card or ACH info is compromised There's two ways this could happen, but neither is super easy: 1) You've handed over your physical debit card and it's PIN code to a baddie and not informed your bank. Unlike the security code on credit cards the PIN code is not on the card. Unlike credit cards you need the actual physical card to transfer money. 2) You've given a baddie your online login info and had him send you a QR code which you then scan and approve the amount. Notable what does not happen, which does with credit cards, is making a payment at a webshop and that webshop then leaking your card info to a baddie. No one other than the bank ever sees the "secret" part of the card info.
- benhurmarcel 4y ago
  It happened to me at a French bank. I got refunded everything within a few days, I just declared it to the bank.
- lxgr 4y ago
  At least in Germany, the dispute process for bank account debits is literally clicking a single button in online banking. No proof or even reason for this is required in the first 8 or so weeks since the charge (or more than a year if the debiting merchant does not have a "direct debit mandate", which essentially means some sort of evidence of the account holder agreeing to be debited).
KallDrexx 4y ago
Can you explain how this is a deficiency of the US banking system? According to stats I can find, the European central bank reported 1.03B Euros of fradulent transaction via cards back in 2019 (https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudreport202110~cac4c418e8.en.html https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudre...). So the only way those fraudulent transactions won't hit your bank account is if your bank account is not directly tied to the card, which makes it a credit card by definition (because you are being given credit for purchases and not having to pay for it immediately). So it seems like what the parent is saying is true outside the US as well?

Jensson 4y ago

3% of your credit card spend is a steep cost to pay for that security though, they can't clean out all your money if you don't tie all of it to the debit card, just put a months worth there at a time and you are better off with debit unless you get your debit card stolen every year or so. It isn't more work than credit either, instead of paying it off every month you fill it up every month. And for fraud protection, 3% is only worth it if every 30'th purchase is fraud in some way. Personally I've never lost my card and never fallen for fraud, so it would just be 3% of my money thrown away for nothing.

vetinari 4y ago
> they can't clean out all your money if you don't tie all of it to the debit card, just put a months worth there at a time and you are better off with debit unless you get your debit card stolen every year or so. You can set up daily/weekly/monthly limits for debit cards, and separate ones for online purchases, physical terminals or ATMs, if you want.
hypertele-Xii 4y ago
I'd also have it empty before filling, so it never accumulates.
maccard 4y ago
In the EU credit cards can't be charged more than other payment methods anymore, so _youre_ not paying 3% more.
- ironick09 4y ago
  EU credit cards also don’t have any (or anything close to) the benefits US cards have, right?
  - CaptainZapp 4y ago
    Personally I think that's a good thing. And yes, it's reflected in the fees that a card issuer is allowed to charge.

Teever 4y ago

Having two accounts, one to store your money, and one that you move money into for payments as needed would offer the same protection.

chiefalchemist 4y ago

Perhaps. Adding... The benefit of credit cards is...credit, and the ability of the card to abstract the idea of spending money away from the consumer. Few things exemplify "out of sight, out of mind" better than credit cards. The model is amazingly profitable as well. Like printing money, literally.

asiachick 4y ago
Interestingly, in Japan, at least until recently, the way credit cards worked is, when you buy something you'd have to say how many payments you were going to pay it off in and your bank would automatically take money from your bank account at that level. In other words, you'd go to some electronics store and by a $2000 TV and they'd ask "how many payments". You'd say 10 and you'd end up paying $200 a month. I don't know the origin of why they did it that way. To be clear, this was bank credit cards, not store cards. I imagined it was something to do with the commitment and knowing you couldn't just pay off some minimum. Purchases under a certain amount and/or by store you were not allowed to divide up. I've had Japanese friends come to America and want to buy something for $500 and ask if they can have ask for 4 payments and have to explain that system doesn't exist here. If you want to make 4 payments you make 4 payments. I've never looked into if the bank is giving all the money to the merchant and then charging the customer per month or if they're sending to the merchant per month. Nor did I ever look into interest fees. I just know it is (was?) common.
- lsc36 4y ago
  Card companies _do_ charge interest if you pay in (usually) 3 or more installments, unless explicitly mentioned being interest-free.
- nottorp 4y ago
  Possibly not all credit cards. We have the same in Romania - a lot of credit cards come with the option to pay in interest free (few installments) or sometimes interest bearing (more installments) installments. Sometimes at participating retailers, sometimes you just click on something in the bank's site. Your spending limit is reduced by the whole amount but those interest free installments can be useful. Esp when you get 12-24 for stuff like TVs or furniture. Other than that option, they act like normal credit cards. Pay next month, minimum payment, huge interest if you don't pay them in full, can contest any transaction, yadda yadda.

mcv 4y ago

No one can drain ky bank account through my payment card either. For one, they lack the authorisation to do so, and for another, there's a limit (which I can change) to how much can be transferred per day.

happyopossum 4y ago
> they lack the authorisation to do so How does the German banking system prevent an unscrupulous online retailer from charging you 500€ for a 50€ item? Or charging you twice?
- 6510 4y ago
  In the Netherlands the customer picks theirs from a list of banks on the iDEAL website then the transaction is done on their banks website. Other services can be fit in front to extend the choices with other payment processors. shop [> mollie] > iDEAL > ABN > shop or (pc) shop QR > (phone) photo app > iDEAL > ABN
- Jensson 4y ago
  2FA, you get a popup in your bank app asking "Do you want to pay X euro to Y?" for online payments. Can turn that off if you want, but it isn't a big bother.
  - GekkePrutser 4y ago
    It also only happens for higher-value transactions here. I don't have to authorize every tenner unless it's the 10th in a row or something
  - lxgr 4y ago
    That‘s not how direct debit works. There is no accountholder involvement with processing direct debits, but they can be easily reversed (although after the fact). There are related payment schemes though that do initiate a push payment (i.e. SEPA credit transfer), giving the accountholder control over the amount and payee, but they are not yet as ubiquitous or usable internationally.

maccard 4y ago

You don't need to go to court to reclaim a fraudulent debit. For one, there's limits in place on card transactions and bank transfers with every bank. In every (read: two) situation I've had where my card was skimmed/used without permission, the bank cancelled my card and refunded the amount within 24 hours.

pulisse 4y ago

> The benefit of credit cards is no one can literally drain your bank account via fraudulent access to a payment card directly tied to your bank (i.e. debit card in US nomenclature This difference is a consequence of law, not payment technology. It's entirely possible for someone to make fraudulent charges on a card up to its limit (which would be the analogue of draining a bank account), but CC companies are required by law to absorb fraud beyond a token amount. There's no technical reason why bank accounts couldn't be similarly protected, but banks have thus far been successful in preventing such laws from being enacted.

kube-system 4y ago
Part of it is inherent to the type of account. Ledgers have to balance out somehow, and fraud is going to temporarily be someones problem until it is resolved. Credit is, by definition, the bank's money. For example, US also has similar laws for debit cards, but, by definition, when a charge is made to your bank account, it is made to your bank account.
nobody9999 4y ago
>There's no technical reason why bank accounts couldn't be similarly protected, but banks have thus far been successful in preventing such laws from being enacted. My bank's (Chase) policy limits debit card customer fraud losses to the same $50 that the law requires of credit cards. Not sure about other banks, but while I'm not sad that I have this protection, Chase's anti-fraud measures for debit cards (mostly programmatic, I'm sure) are pretty draconian. If I travel any significant distance from my home, transactions with my debit card are almost always declined and I either have to contact customer service (a big time waster) or use a credit card. That's incredibly annoying, although if that's the reason my debit card fraud responsibility is limited to the same as a credit card, that's a trade off that some may be willing to make and some will not. Given that my debit card has been the subject of fraudulent activity several times and the bank has made me whole every time, perhaps there's something to be said for the harshness of the debit card anti-fraud algorithms. But it's still incredibly annoying.
- jjav 4y ago