Consumer Payment Card News

Debit Rights

A surprising 42% of Americans believe that retailers should have the right to require the use of a PIN with a debit card purchase. Since many banks hit consumers with a transaction fee for using a PIN with a purchase, and since some banks offer special rewards for not using a PIN, the finding is truly baffling. The informal homepage poll is not scientific, however, prior polls have very closely tracked the results of formal surveys. The rising number of Americans who believe retailers should force customers to use a payment card in a certain way may be the result of a recent campaign by the National Retail Federation, Food Marketing Institute, and the International Mass Retailers Association. The groups have appealed to consumers to stop using debit cards like credit cards. The retailers say consumers should be careful when they use debit cards so that they don’t get “fooled” into making a choice that ends up adding, what is, in effect, a “hidden tax of roughly two percent on every purchase.” Meanwhile, the trial date for an antitrust lawsuit over debit card fees and business practices is set for the end of April. VISA and MasterCard, the defendants, have launched their own campaign to reinforce the value to consumers of their “Honor All Cards” rule. In a widely published commentary, Professor Paul Rothstein of Georgetown University, says VISA ands MasterCard-branded debit cards, which enable consumers to use a PIN or a signature to make purchases, do not violate federal antitrust laws. Rothstein says the correct application of antitrust law is to leave the power to choose with the people who carry the cards and pay the bills.

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