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The key thing to remember about credit cards is "credit", "CREDIT" You can have literally no money to your name but if you have a credit card, you can spend up

The key thing to remember about credit cards is "credit", "CREDIT" You can have literally no money to your name but if you have a credit card, you can spend up to whatever the balance is. Someone is loaning you money, someone is taking risk that you will pay. You are protect by government regulation so that if you file a dispute, you are protected until it's proven that you actually did spend the money. With debit card or FedNow, you need to have the money, you don't have dispute protections.

ensignavenger 2y ago
There is no reason why a bank couldn't allow customers to use FedNow to access a revolving credit line.
- KingMachiavelli 2y ago
  Sure but AFAIK FedNow is not going to hold funds or authority to payback or revert "fraudulent" transactions? If I lend out $X dollars but my client says the loan was accessed fraudulently then who pays for this loss? The bank, the payment processor (FedNow/Visa), the customer, or the vendor?
  - ensignavenger 2y ago
    The bank usually handles initiating reversals, not the payment processor. Though FedNow may not have the API to facilitate them easily, not sure on that.
  - usehackernews 2y ago
    These are called ACH return codes and are similar to disputes on credit card. Liability is on the receiving or the originator institution. But in practice, it depends on the contract with the “processor”. Many Pay By Bank “processors” offer a guarantee model to cover these returns. Otherwise, liability is typically on the merchant. However, Nacha is beginning to iterate on their return codes to better fit the e-commerce use case and clearly define liability.
Loughla 2y ago
The main reason I use credit cards is having my account compromised. It happened once to my debit card when I was 20, and I went without food for a few weeks. Thank God for food pantries. Ever since, I've used MasterCard for everything. They might be an evil monopoly, but fixing fraud is stupendously easy, and becomes not my problem with one mouse click.
- seizethecheese 2y ago
  I’m not sure this is still true. Debit cards have a similar dispute process to credit cards.
  - wccrawford 2y ago
    But the money is already gone. You will probably get it back, but you don't have it until then. With a credit card, you haven't lost anything yet.
    - AnthonyMouse 2y ago
      Well sure you have, you've had your available credit reduced by that amount. If you have a surplus of cash or available credit then this makes no major difference in either case. If you don't and then try to make a transaction, you get whacked with penalties etc.
      - Loughla 2y ago
        There is a distinct and appreciable difference between having a lower credit limit and not having the actual money in my bank account. One of those involves me not having money. One does not.
        AnthonyMouse 2y ago
        If you have money in your bank account, you can swipe your card at the store and get stuff. If you have available credit, you can swipe your card at the store and get stuff. These are both money. In the second case you may have borrowed the money and are then expected to pay it back later, but in general this is the method to be avoided unless you have a need for it, because borrowing money incurs fees/interest charges (whether directly or indirectly).
ponty_rick 2y ago
UPI requires a one time password sent to your phone to work (via an app or text message, app being obviously more secure). Now, if you lose both your phone and your card, you would need to apply for a new card - hopefully your phone is password protected.
cubefox 2y ago
Credit card companies make absurd profits. This means: In expectation, you are paying more than you benefit. It's basically an insurance. Buying insurance only makes sense for sums so large they could easily bankrupt you. But credit cards are used mainly for small to medium sums.
- carlosjobim 2y ago
  Visa made $17-$18 billion in profits in 2023 for handling transactions worth $12 trillion. Is that an absurd number for maintaining an instant payment system on a planetary scale?
  - kibwen 2y ago
    It would be an absurd amount for a payment system, yes, because we already have a secure worldwide communications network that we pay to maintain and there's nothing special about Visa's encrypted bits. The value that credits cards provide isn't the network, it's the insurance (chargebacks). And while I appreciate payment insurance when I'm paying for an expensive object from halfway around the world, it's unnecessary overhead when I'm buying a bagel in a cafe.
    - carlosjobim 2y ago
      So if we lived in a perfect hacker paradise where there are no company profits or private property, what would be reasonable operating costs for maintaining an instant planetary payment system – including fraud insurance? Assuming the same amount of transactions as today?
      - poincaredisk 2y ago
        I don't know, but in Europe the visa/mastercard charges are capped at 0.2% for debit cards and 0.3% for credit cards. This seems to be enough for them to continue operating.
        2y ago
pjmlp 2y ago
I always use my card properly charged, the only reason to still use a credit card in Europe is for car rentals.
lxgr 2y ago
The funding method (credit or debit) is in theory completely orthogonal to the dispute settlement mechanism and legal liability provisions of a given payment method. One exception is that for debit, you're possibly out the money until the dispute is settled; one mechanism to avoid that would be a regular overdraft facility (in the European sense, i.e. with a listed interchange fee and not a fine-like flat fee like in the US) for credit-worthy account holders, and a refund of all interest incurred due to eventually successfully charged back payments.
- ThunderSizzle 2y ago
  I'm not charged interest on chargebsck balances that are ruled against me right now on my credit cards. You seem to be proposing that I would now need to pay interest on chargeback balances, and if I win, then it's waived? That seems like a lot of risk for me, if I happen to lose a chargeback for some reason.
poincaredisk 2y ago
>With debit card (...), you don't have dispute protections. In Europe you do. There's no reason this can't be the case in the US too.
- kelnos 2y ago
  We do in the US, too. GP is misinformed. What is correct, though, is that while you wait for a credit card dispute process to be resolved, you have not spent any money, and still have that money in your bank account. But if you want to dispute a debit card charge, that money is gone until the dispute is (hopefully) resolved in your favor. The only way to regulate that problem away is to require debit-card-issuing banks to preemptively return the money to an account immediately after the account holder disputes a charge, which... I dunno, maybe that's not a terrible idea. Or maybe it is.
- ywvcbk 2y ago
  > In Europe you do Sort of.. generally in Europe chargebacks are still pretty rare in general and convincing your bank to make one is non-trivial and takes a lot of time
  - nolok 2y ago
    ... What? In France I can vouch that both personally and professionally, a charge back at caisse d'épargne, banque populaire, société générale or crédit agricole will take you less than 5 minutes on the phone. I would be interested to know which country and bank gave you a hard time to do charge back
    - addandsubtract 2y ago
      I've had to file 2 chargebacks so far with N26. First one took two weeks, and was possibly resolved by the merchant refunding me after getting pressured. And the second one I filed a month ago and hasn't even been confirmed to be investigated into.

ensignavenger 2y ago

There is no reason why a bank couldn't allow customers to use FedNow to access a revolving credit line.

KingMachiavelli 2y ago
Sure but AFAIK FedNow is not going to hold funds or authority to payback or revert "fraudulent" transactions? If I lend out $X dollars but my client says the loan was accessed fraudulently then who pays for this loss? The bank, the payment processor (FedNow/Visa), the customer, or the vendor?
- ensignavenger 2y ago
  The bank usually handles initiating reversals, not the payment processor. Though FedNow may not have the API to facilitate them easily, not sure on that.
- usehackernews 2y ago
  These are called ACH return codes and are similar to disputes on credit card. Liability is on the receiving or the originator institution. But in practice, it depends on the contract with the “processor”. Many Pay By Bank “processors” offer a guarantee model to cover these returns. Otherwise, liability is typically on the merchant. However, Nacha is beginning to iterate on their return codes to better fit the e-commerce use case and clearly define liability.

Loughla 2y ago

The main reason I use credit cards is having my account compromised. It happened once to my debit card when I was 20, and I went without food for a few weeks. Thank God for food pantries. Ever since, I've used MasterCard for everything. They might be an evil monopoly, but fixing fraud is stupendously easy, and becomes not my problem with one mouse click.

seizethecheese 2y ago
I’m not sure this is still true. Debit cards have a similar dispute process to credit cards.
- wccrawford 2y ago
  But the money is already gone. You will probably get it back, but you don't have it until then. With a credit card, you haven't lost anything yet.
  - AnthonyMouse 2y ago
    Well sure you have, you've had your available credit reduced by that amount. If you have a surplus of cash or available credit then this makes no major difference in either case. If you don't and then try to make a transaction, you get whacked with penalties etc.
    - Loughla 2y ago
      There is a distinct and appreciable difference between having a lower credit limit and not having the actual money in my bank account. One of those involves me not having money. One does not.
      - AnthonyMouse 2y ago
        If you have money in your bank account, you can swipe your card at the store and get stuff. If you have available credit, you can swipe your card at the store and get stuff. These are both money. In the second case you may have borrowed the money and are then expected to pay it back later, but in general this is the method to be avoided unless you have a need for it, because borrowing money incurs fees/interest charges (whether directly or indirectly).

ponty_rick 2y ago

UPI requires a one time password sent to your phone to work (via an app or text message, app being obviously more secure). Now, if you lose both your phone and your card, you would need to apply for a new card - hopefully your phone is password protected.

cubefox 2y ago

Credit card companies make absurd profits. This means: In expectation, you are paying more than you benefit. It's basically an insurance. Buying insurance only makes sense for sums so large they could easily bankrupt you. But credit cards are used mainly for small to medium sums.

carlosjobim 2y ago
Visa made $17-$18 billion in profits in 2023 for handling transactions worth $12 trillion. Is that an absurd number for maintaining an instant payment system on a planetary scale?
- kibwen 2y ago
  It would be an absurd amount for a payment system, yes, because we already have a secure worldwide communications network that we pay to maintain and there's nothing special about Visa's encrypted bits. The value that credits cards provide isn't the network, it's the insurance (chargebacks). And while I appreciate payment insurance when I'm paying for an expensive object from halfway around the world, it's unnecessary overhead when I'm buying a bagel in a cafe.
  - carlosjobim 2y ago
    So if we lived in a perfect hacker paradise where there are no company profits or private property, what would be reasonable operating costs for maintaining an instant planetary payment system – including fraud insurance? Assuming the same amount of transactions as today?
    - poincaredisk 2y ago
      I don't know, but in Europe the visa/mastercard charges are capped at 0.2% for debit cards and 0.3% for credit cards. This seems to be enough for them to continue operating.
      - 2y ago

pjmlp 2y ago

I always use my card properly charged, the only reason to still use a credit card in Europe is for car rentals.

lxgr 2y ago

The funding method (credit or debit) is in theory completely orthogonal to the dispute settlement mechanism and legal liability provisions of a given payment method. One exception is that for debit, you're possibly out the money until the dispute is settled; one mechanism to avoid that would be a regular overdraft facility (in the European sense, i.e. with a listed interchange fee and not a fine-like flat fee like in the US) for credit-worthy account holders, and a refund of all interest incurred due to eventually successfully charged back payments.

ThunderSizzle 2y ago
I'm not charged interest on chargebsck balances that are ruled against me right now on my credit cards. You seem to be proposing that I would now need to pay interest on chargeback balances, and if I win, then it's waived? That seems like a lot of risk for me, if I happen to lose a chargeback for some reason.

poincaredisk 2y ago

>With debit card (...), you don't have dispute protections. In Europe you do. There's no reason this can't be the case in the US too.

kelnos 2y ago
We do in the US, too. GP is misinformed. What is correct, though, is that while you wait for a credit card dispute process to be resolved, you have not spent any money, and still have that money in your bank account. But if you want to dispute a debit card charge, that money is gone until the dispute is (hopefully) resolved in your favor. The only way to regulate that problem away is to require debit-card-issuing banks to preemptively return the money to an account immediately after the account holder disputes a charge, which... I dunno, maybe that's not a terrible idea. Or maybe it is.
ywvcbk 2y ago
> In Europe you do Sort of.. generally in Europe chargebacks are still pretty rare in general and convincing your bank to make one is non-trivial and takes a lot of time
- nolok 2y ago
  ... What? In France I can vouch that both personally and professionally, a charge back at caisse d'épargne, banque populaire, société générale or crédit agricole will take you less than 5 minutes on the phone. I would be interested to know which country and bank gave you a hard time to do charge back
  - addandsubtract 2y ago
    I've had to file 2 chargebacks so far with N26. First one took two weeks, and was possibly resolved by the merchant refunding me after getting pressured. And the second one I filed a month ago and hasn't even been confirmed to be investigated into.