Debit Cards v Credit Cards

  spuds 13:06 17 Dec 2005

A very interesting point was mentioned by one of the forum members recently, regarding how a well known building society was offering their debit cards.It would appear as though this particular building society was providing possible protection under Section 75 of the Consumer Credit Act.This all seems to stem from cards displaying the Visa logo and using additional Visa procedures.

It as always been stated that any purchases are best protected by credit card payments due to credit consumer laws, and debit cards have no or very little protection for the consumer.Taking this matter further, I contacted both Visa International and one of my own banking outlets, Barclays Bank in this case.Due to the nature of the inquiry, I had to make contact for advice from a more senior level, as local level management were unable to provide the exact answers.

In the case of Barclays Bank, they state that Section 75 of the Credit Consumer Act will not apply to their Connect debit card, as Section 75 only covers Visa credit cards not Visa debit cards [As one building society got this wrong!].

The correspondence that I received then mentions that under Visa regulations you would possibly be protected, in the case of Barclays Connect debit card,as an example, for goods not received, faulty goods or promised refunds not received. This would all be covered under the Chargeback Rights.

So it would appear that using debit cards are not the disaster that seems to be suggested with purchases and safeguards, especially on things like the increase of internet sales.Of course this would all depend on your bank, building society or financial arrangements.And in this case whether your providers use Visa International,with the Visa logo imprinted on your cards. Perhaps contact and a few written questions with your own bank etc may give you peace of mind for the future.Personally, I have known of people, who have given up all hope of help and refunds, when using a debit card,especially when things have gone terribly wrong. This information could perhaps be a new salvation in disguise, but I would still strongly suggest that you continue to make purchases via credit cards or special financial agreements, that have full cover of Section 75, as it stands at present.It could still be very interesting to find out what other banks and building societies regulations,thoughts and considerations on the usage and protection provisions with their debit and credit cards arrangements.

  Wilham 13:38 17 Dec 2005

Has this just come about because Delta debit cards now are called Visa debit cards?

I think the distinction between Debit and Credit is still there. Debit means you are asking a bank to immediately pay a debt for you. In doing so you acknowledge your obligations to settle the debt.

Credit cards imply you are asking a bank to lend you the means to pay for goods or services in advance. The Freedie Laker case established the bank in doing so carried some responsibility for the soundness of the transaction.

What spuds rightly draws to our attention is the bonus offer of a form of insurance against fraud now given by some banks for debit payments. Not to be sneezed at of course, but more limited in liability than credit cards.

  Wilham 13:48 17 Dec 2005

Freddie of Laker Airways. Prepaid passengers using credit cards were first to be refunded when receivers were called in.

  961 13:55 17 Dec 2005

The advice must always be to use a credit card

However, Visa International do require banks offering their debit cards (any debit card with the Visa symbol) to offer chargeback facilities to a customer who finds goods are not supplied or to the standard promised

Some UK banks will be pretty unhelpful here, because it costs them money. However, it is certainly the case that those paying with a Visa debit card can, if they persist, obtain refunds

  dmc727 16:52 17 Dec 2005

And importantly, don’t forget Section 75 only covers transactions above £100 and not more than £30,000.

The Government OFT site says……..

# “if you pay by credit card you can claim your money back from the card company if the seller fails to honour the contract, or the item is faulty or if the seller wrongly describes it or if the supplier goes out of business with your money before the item is delivered

# if you are buying an item costing over £100 and you are asked for a deposit, consider paying the deposit by credit card

# you have protection whether you buy in the UK from a shop, by mail-order, by telephone or internet - the protection is the same

# you are not covered by Section 75 if you use a debit or charge card.”

Outside Section 75 it appears you are relying on the goodwill of the organisation(s) concerned.

  spuds 17:54 17 Dec 2005

'Outside Section 75 it appears you are relying on the goodwill of the organisation(s)concerned'

I agree with that statement fully, and in my experience I have never known any banking institution to offer goodwill unless pressured to do so.In this particular case and resulting posting, I was rather concerned that the only way forward to seek further advice, was by consultation via head office routing, as branch level did not have 'the necessary authority' to answer this type of question.Contacting Visa International was a much simpler affair, with virtually instant results.

Perhaps I should mention that I have used Section 75, when a particular bank [not Barclays] became very un-cooperative in their actions in resolving a problem.And this experience became a very good learning curve for me at the time.The final outcome of that event, was a full apology from an higher level with further rewards. Had I not pursed the matter, I would have been in a situation of 'never knowing'.

Personally I would still regard this issue as a grey area, and no doubt each bank, building society or finance provider will have their own procedures and interpretations. I would still suggest for peace of mind, each individual seeks written advice on this matter from their debit card providers.Who know's, perhaps your debit card provider may also be the provider of very good news.

  Diemmess 18:49 17 Dec 2005

Being a simple soul, and usually very cautious about which card to use I never use my big bank debit card on the Internet even though it says Visa on it, it clearly says DEBIT card.

So far exclusive use of the CREDIT card (says he clutching large baulk of timber)has settled the transaction and one case of stonewalling a refund offer, was settled in my favour after their letter to the company.
The reply was covered in implications that if there was a change in the factors involved I would be debited once more, but that was years ago.

As long as it is a visa card, then it has similar protection to credit cards. This matter has been aired several times on B.B.C.2's working lunch programme.

  spuds 19:59 17 Dec 2005


Exactly, and this is why I am offering this suggestion, via the goodwill of this forum, that each individual check with their own debit card company who use Visa facilities. The person that was contacted at Visa International seemed to also agree on this point.

The point Wilham made regarding previous Delta now transfered to Visa could be worthy of further consideration.

  dmc727 20:20 17 Dec 2005

Interesting! I have both a Switch debit card and a Visa debit card and without doubt they have different conditions of use.

For example, I have used them to purchase foreign currency at the Post Office with different results. There was no charge using my Switch card but a “credit card type” charge using the Visa debit card.

Looked up Working Lunch there is indeed clarification on the point. Here:

click here

  Stuartli 21:13 17 Dec 2005

As the forum member probably responsible for the information about Visa debit cards (my Halifax Switch debit card is now the Visa type after its regular automatic renewal), I came across the fact that it offers similar cover to credit card equivalents that was posted by Halifax's own Press Officer on another forum.

My own view is that it is a very welcome development as people use debit cards far more often than credit cards and the inclusion of the latter's protection is a valuable one.

But, as has been pointed out, it's best to check with your bank first - the Halifax website appears to have no details about the protection offered by a Visa debit card it may issue.

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