News: Online Payment Shifting from Credit to Debit, Jupiter Report Finds

[Jimmy Cooper]

Article:
Online Payment Shifting from Credit to Debit, Jupiter Report Finds
Source: Internet Retailer

Snippet:
"As in the offline world, consumers are shifting from credit to debit payment online, with debit transaction volume expected to surpass credit transactions online by 2007. That has important implications for online merchants and card issuers, according to a new report from Jupiter Research, 'U.S. Online payments Forecast, 2005 to 2010.'"

Talking Points:
Do you currently accept debit card payments? What percentage of your orders are with debit? Have you seen this increase over the past year or so?

[Pamela Hazelton]

I think a lot of this has to do with paying for something directly, rather than using revolving credit.

I, for one, however, would never use my Debit card online. My credit card I can turn off. But punching a PIN online, well, it's more time consuming to have to get the money put back into the bank account.

[David Pontius]

I'm not sure if there's a way to tell the difference between debit and credit transactions online, we don't accept PIN transactions (is that even possible online?).
The only issue we've had is people doing an authorization on a debit card holds the funds in their checking account. If they cancel the transaction, the funds are still held, unless their bank is willing to drop the hold.
Also, if Verisign has the notorious "Select Failure", a person can put multiple holds on their debit/credit card. When it happens on a debit card, people get really upset.

[Southlander]

You can't really (at least not easily) do true PIN debit online. In the B&M world the devices into which you enter your PIN code actually encrypt the PIN at that point. On a modern, proper setup, no other device between the PIN pad and the processor (not even the POS platform which communicates the data) can decode the PIN. Hence the generally perceived "better" security. PIN goes in securely at the pad, and comes out securely at the processor. Nothing in between sees it.

The PIN pads are only encrypted by authorized companies (like TASQ). They are tamper-proof. Attempting to access the inside will destroy the loaded encryption. Again, this controlled process heightens the security.

The pads are also only encrypted for the exact platform the processor uses (ie the network debit platform). So you can't simply use any PIN pad for any processor/processing network without having it re-injected with the proper encryption software. In an actual retail store this limitation is fine since the retailer only uses their particular processor and their pads are set up for that. But when you shop online you are accessing various retailers that use various networks. Yet you'd have one device on your side?

So if you were to theoretically copy this model in the online shopping world, how would you? The banks and card companies are not going to let you key your valuable PIN code directly into your PC knowing that any number of things can compromise its security and get that data. Moreover, they are not going to even let anything other than certified devices communicate the data to them. And having some kind of "certified" device that hooks to a PC and works on all processor's networks seems unlikely. And if if it was possible, is the average home user going to try to go through anything like that? I doubt it. Who would supply them the device and at what cost?

Much easier just to use those "one time use" disposable card numbers that you can generate (like at discovercard.com). Essentially these are one time PIN codes if you think about it.

My guess is the article is referring to "offline" or signature secured debit. You can already do this. To the website it is the same as a Visa/MC transaction, but the card is linked to your checking account (ie a check card).

Personally I agree with Pamela. I always only use a real credit card online. I know the banks "protect" accounts, but why go through that hassle if you do not have to. After all, even a temporary unexpected deduction from your checking account can cause other big problems like bounced mortgage payments and such!

Sean

[gordman]

Re: News: Online Payment Shifting from Credit to Debit, Jupiter Report Finds

That's a big change, it's true there might be some problems about that but and it sounds complicated. Business people cannot afford to wait, they need cursive payment programs. I don't worry about this because i know financial system is very flexible and provides right solutions. I guess what we need now is reliable Online Check Systems that can ensure maximum safety and transparency in transactions.

[gordman]

Re: News: Online Payment Shifting from Credit to Debit, Jupiter Report Finds

That's a big change, it's true there might be some problems about that but and it sounds complicated. Business people cannot afford to wait, they need cursive payment programs. I don't worry about this because i know financial system is very flexible and provides right solutions. I think what we need now is relaible Online Check Systems that can ensure maximum safety and transparency in transactions.

[maison09]

Re: News: Online Payment Shifting from Credit to Debit, Jupiter Report Finds

Thank you so much for your sharing

maison de credit

[Biffy]

Re: News: Online Payment Shifting from Credit to Debit, Jupiter Report Finds

Another growing trend I'm seeing is the use of trusted authorities to process payments so that the card number is never given to the merchant. PayPal, Google Checkout and now Amazon are prime examples of this. Currently over 30% of all transactions are now handled by trusted authorities and the ratio is growing.

A study 2 weeks ago reported that Americans view identity theft and credit card fraud as bigger threats than terrorism.

[Rick Wilson]

Re: News: Online Payment Shifting from Credit to Debit, Jupiter Report Finds

My credit card I can turn off. But punching a PIN online

Pamela, I believe what Jupiter is saying is the use of Debit Cards tied to your checking account with Visa or Mastercard symbols on them which you use just like a credit card.

Americans are starting to spend real cash out of their accounts and less credit.

In all the payment demo's I've ever seen there's no such thing as using a PIN online (other than proof of concepts where you have a pin pad attached to your computer).