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There is, it's called debit cards, but Stripe et al. "simplified" pricing by charging a percentage regardless of card type instead of the traditional interchang

There is, it's called debit cards, but Stripe et al. "simplified" pricing by charging a percentage regardless of card type instead of the traditional interchange-plus pricing. Merchant banks "used to" make money by tacking on fixed fees, i.e. a set-up fee, terminal fee, monthly fee, etc, but then Stripe came along and provided (1) a better dev experience, (2) better onboarding, and (3) simplified pricing.

jimbob45 8d ago
You have to wait for the investigation to complete to receive compensation if you’re hit by fraud on a debit card. Credit cards don’t share that issue. If you’re poor or living paycheck-to-paycheck, debit cards are potentially a risk to your livelihood.
- seabre 8d ago
  As someone who has been hit with fraud on a debit card and a credit card, the process to recover money from fraud on a credit card is so much easier and more hassle-free than a debit card. The big difference is that with a debit card, it's your money that is hit by fraud. The debit card is basically just a proxy. You have to go file a police report. You have to hope the bank will give you the money back. When the credit card gets hit, it's the credit card company's money and they will seemingly chase the fraud to the ends of the earth to recover it.
  - avianlyric 8d ago
    This depends heavily on the country you’re in. In the UK banks are required to refund you within a single business day if they don’t have any evidence that the customer isn’t trying to defraud the bank themselves. They try to squirm out of that of course. But in general getting your money back isn’t too tricky even with a debit card.
    - seabre 8d ago
      Oh yeah. I should definitely caveat: I am in the US. I think banks here are required to cap your loss to $50 USD if you report unauthorized fraud within two business days. But still, the onus is on you. Meanwhile, virtually all credit cards in the US offer $0 liability protection. Which means at most you pay nothing.
      - arjvik 8d ago
        2 business days is a lot more strict than credit cards, which at the very least would not blink an eye at 2 weeks.
        labcomputer 8d ago
        Er what? You don’t even pay for the fraudulent credit card transactions in the first place! There’s no money for them to return!
  - thechao 8d ago
    > The big difference is that with a debit card, it's your money that is hit by fraud. I kind of disagree. I think what's happened is the bank would prefer you to believe that. Imagine I kept my money at the bank, and deposited $10000 with the teller. Immediately afterward a robber follows in and steals that $10000 from the teller. Does the bank say "oh no Mr. TheChao! A robber stole your $10000!". I mean, no? The bank got robbed. Just because the bank's digital security is more tied one-to-one to dollars and its easier for a robber to steal from "my till" doesn't mean it was me who was robbed. It's the bank's job to stop that.
    - Hardwired8976 8d ago
      Eh when you deposit money with a teller, it gets added to your account, which is in physical terms probably just a big storage and a database who has how much. But in the case of debit card, the card ties the money to your account. It is actually that. It's as if someone would steal from a personal safe at the bank.
      - lxgr 8d ago
        Except that you have strong statutory rights and commercial agreements between your bank and the card networks making it very likely that you’ll be made whole.
        dqv 7d ago
        > likely > will Which is why the credit card is still the better option. Especially given that the max liability on a credit card is always $50 if caught within the first 60 days, while the max liability on a debit card is $50 only if caught within the first two days, then up to $500 if reported after up to 60 days. They may post a provisional credit when I report the fraud on the debit card or they can wait up to 10 days to do so. With a credit card, no money has left my account and I get the final say on whether I want to part ways with my real money. If the bank really wants to fuck me over by saying it's not fraud, I get to make it as unprofitable as possible for them, which includes forcing them to sue me if they really want the money. I will take the ding to my credit report and a lawsuit over actual money taken directly out of my account any day.
  - lxgr 8d ago
    I don’t thing Regulation E allows banks to require a police report before processing an unauthorized payment, nor can they outright refuse to do so. Practically, Reg E is essentially as strong as Reg Z.
    - dqv 7d ago
      > Practically, Reg E is essentially as strong as Reg Z. Not even practically, but that's beside the point. The point is that with regulation E, I am potentially put in a position where I have to work to get my money back; I have to file a lawsuit against the bank if I think their determination is wrong (and that's assuming there isn't an arbitration provision, but many people don't realize they agreed to binding arbitration). With regulation Z, the bank has to work to get their money back. They have to file the lawsuit against me if they really want the money. And it's $0 liability under many circumstances mandated through the regulation, not just a revocable promise from the bank.
      - lxgr 7d ago
        > With regulation Z, the bank has to work to get their money back. Yes, but you potentially have to work to get your credit back. > And it's $0 liability under many circumstances mandated through the regulation, not just a revocable promise from the bank. Debit card liability is also largely mandated to be $0 under card scheme rules.
  - rootusrootus 7d ago
    This is where you find out which banks suck, and which do not. I will say that while USAA is a long ways from perfect, when someone swiped my wife's debit card and took $5000 from our checking account, they put that money back within a day while the investigation was pending. No police report necessary, either.
- kevin_thibedeau 8d ago
  I've always had fraudulent debit charges automatically reverted. Typically the bank's fraud detection disables the card and you clear up the matter on the phone. Or they call you to verify if a suspicious charge outside your profile was actually yours. The banks aren't required to do this but they can choose to provide this level of service.
  - bijowo1676 8d ago
    the cc fraud (and fraud protection) is THE main selling point of Visa/MC credit cards. it is that different treatment of debit/cc fraud that pushes people towards high fee cc. it is cc fraud protection that justifies high cc processing fees. without cc fraud there is no need in visa/mc duopoly.
    - pocksuppet 7d ago
      I thought the main selling point was that they work almost anywhere. Whereas my EFTPOS card only works in Australia, my Girocard only works in Germany and my Pix account only works in Brazil.
- ryall 8d ago
  Weird take, credit card debt is much more of a risk to that demographic than debit cards ever will be
- abdullahkhalids 8d ago
  The underlying problem is that the whole concept of cards is insane. Basically, you go around telling every shopkeeper the code for your safe, and ask them to take however much cash you owe them out of the safe. Sane ways to organize payments: - Merchant gives you a bill-id. You input it into your bank website - where you see the bill amount being charged. You accept, and bank pays merchant. - You give merchant your card number (that's the only information - no expiry, no ccv, no name). A notification pops up on your bank website asking if you want to pay what the merchant is requesting. You accept. - You go to your bank website and obtain a random number, either allowing a single transaction or a recurring transaction. You give the merchant the number. After merchant charges it, no other merchant can charge the same number.
  - KptMarchewa 8d ago
    > You go to your bank website and obtain a random number, either allowing a single transaction or a recurring transaction. You give the merchant the number. After merchant charges it, no other merchant can charge the same number. That's basically how Blik works in Poland. With the exception being that the number is random 6 digits randomly generated when you open the app, that is active for ~2 minutes. So you don't deal with the issue of very long and error prone numbers to copy. Much better way to pay online. https://en.wikipedia.org/wiki/Blik https://en.wikipedia.org/wiki/Blik
  - lxgr 8d ago
    Cards have supported strong, positive cardholder authentication at the POS (chip and PIN) and online (3DS) since the 90s. It’s entirely the US credit card industry and its regulating bodies’ fault that it has made neither mandatory in the way that e.g. the EU did, and is in fact fighting any attempt to do so tooth and nail (please think of the conversion rate!!)
    - dizhn 7d ago
      Can you guys still write a check at the supermarket checkout? No pin credit cards are small potatoes next to personal checks in terms of weirdness. But I wish we had that trust culture everywhere.
- pyreko 8d ago
  Eh... I guess YMMV, at least for a low amount it took me literally an afternoon, I just froze my card, walked to the bank, explained the issue, and they refunded me on the spot (also switched out the card for a new one). They said technically it could be clawed back after investigation but they never did.
milesskorpen 8d ago
Also debit cards run by smaller credit unions charge credit-card like fees (and then are used by fintechs to earn fees while making it harder to pass those fees on to end users).
- ianhawes 8d ago
  Hah! Good to know, makes total sense.
karlosvomacka 8d ago
For US readers - in my country in europe I'd say that 95% of people have only debit card, not credit card. it's very not common to have a credit card here. Card payments are extremely common, but everyone uses debit card.
- avianlyric 8d ago
  The EU caps all card interchange fees at 0.3% for credit cards and 0.2% for debit, which is an order of magnitude lower than some of the fees in the US. That’s why you don’t see the same kinds of credit card deals in the EU compared to the US.
  - adrian_b 8d ago
    I think that there was a recent HN thread that linked to an article which argued that the credit card system of USA has the purpose of taking money from the poor and giving them to the rich, and the estimated amount of the money transferred in this way was huge. The EU limits for card fees prevent this in Europe, which is very good.
    - derektank 8d ago
      Wouldn’t it be simpler for European countries to simply raise the VAT and redistribute the proceeds to poor people, rather than regulate the interchange fees if the concern is inequality
      - post-it 8d ago
        Your solution sounds significantly more complicated actually.
        derektank 7d ago
        In what way? There are many sources of inequality. Trying to play whack a mole with each one seems much more laborious than simply deciding how much inequality you want in society, and then setting it with the tax code
losvedir 8d ago
Debit cards aren't that, in practice, because as you say they typically get the same 3% fee whenever I've asked. Toast and other point of sale networks just charge it based on the network and not the card type. But even so, I still prefer the credit card instrument, used as a "charge card". For those that don't know, a "charge card" is common with businesses and is expected to be paid off every month. But it helps with managing your cashflow - e.g. you can keep your money in a savings account all month and make one transaction at the end - and it keeps your actual money from being at risk of fraud. Most Europeans seem confused with how Americans use credit cards for everything, but about half of us use them as charge cards, paying them off every month. That is a benefit, so I can see paying a small percentage for it, but I don't think that benefit alone justifies the 3-5% of a transaction that credit cards charge now.
- LeBit 8d ago
  As a Canadian , I thought that was the expected de facto way of using credit cards: you pay everything with it so you get rewards (ie money) at the end of the year as a function of how much you used the card during the year. At the end of the month, you pay whatever the outstanding balance is, otherwise you pay high interests.
  - zaphirplane 8d ago
    There are fees thou and i cant imagine they are losing out as a business
  - rootusrootus 7d ago
    Many of us use it exactly that way, though the rewards (in my personal experience) are immediate as soon as a transaction clears and not yearly. Carrying a revolving balance is a quick way to spiral into bankruptcy because the rates are so high (and the minimum payment is typically 1% of the balance).
  - the_af 7d ago
    I thought this was how credit cards were used the world over. It's certainly how I use them. How do Americans use them that differs from this? Color me confused. (Also: installments. They are often the norm in my country, but I understand they are less common for Americans).
numpad0 8d ago
Debit cards still go through the same credit card infrastructure. The practical difference at this point is whether the card company backend defer payment until collection date for the benefit of customers, or don't wait and just call APIs on the spot. There's a whole "internet" of credit card infra that lets you pay using those numbers on the card like they are phone numbers. Stripe don't do handle their own payment, they just wrap someone else's API, and pay them in percentages and dollars per API calls(idk about the ones behind Stripe, but I think I saw somewhere that those middlemen often charge both? Egregious, but they're literally old boys money men and they have lots of leverages against you). What are truly different to credit/debit card systems are things like PayPal, Apple/Google and such gift cards with scratch areas, and Chinese QR payment apps. Those are the ones that don't (always) go through the CC ecosystem.
- cobbzilla 7d ago
  Stripe connects directly to Visa/MC, there’s nothing “behind them” in terms of some other card processor API they’re wrapping. Stripe is a credit and debit card processor (and also a card issuer). They are NOT a bank, but do control some BINs (notably 4242 which is used for the famous test card 4242x4)
- ghosty141 7d ago
  PayPal and Apple Pay use my debit card so they somewhat do use it.
- masom 7d ago
  Not necessarily, in Canada there's a separate network/infrastucture named [Interact](https://www.interac.ca/en/ https://www.interac.ca/en/). All the banks are on it and most merchants have terminals that supports it. It had chip and pin ahead of credit cards, and has lower fees. That's what powers our e-transfers, no need for venmo or other systems.
titanomachy 8d ago
Most stripe transactions do use cost-plus pricing. The flat pricing is popular with smaller businesses, but larger companies graduate from it pretty quickly.
DANmode 7d ago
Fun fact: Visa owns some of Stripe.
fragmede 7d ago
why is simplified in quotes? Knowing you'll get $x - 2.9% and 30 cents is simplified compared to having to find out what kind of card was used, what their interchange rate is, What your rate on that is. Debit cards have a low interchange rate, but it's offset by the cards with rates higher than 2.9%. Stripe is taking on a risk that your customers aren't all going to use a chase sapphire reserve and thus cost stripe 4.5% when stripe is only charging 2.9%. If you're large enough, Stripe offers IC+, interchange plus, where you get complexified pricing, if desired.

jimbob45 8d ago

You have to wait for the investigation to complete to receive compensation if you’re hit by fraud on a debit card. Credit cards don’t share that issue. If you’re poor or living paycheck-to-paycheck, debit cards are potentially a risk to your livelihood.

seabre 8d ago
As someone who has been hit with fraud on a debit card and a credit card, the process to recover money from fraud on a credit card is so much easier and more hassle-free than a debit card. The big difference is that with a debit card, it's your money that is hit by fraud. The debit card is basically just a proxy. You have to go file a police report. You have to hope the bank will give you the money back. When the credit card gets hit, it's the credit card company's money and they will seemingly chase the fraud to the ends of the earth to recover it.
- avianlyric 8d ago
  This depends heavily on the country you’re in. In the UK banks are required to refund you within a single business day if they don’t have any evidence that the customer isn’t trying to defraud the bank themselves. They try to squirm out of that of course. But in general getting your money back isn’t too tricky even with a debit card.
  - seabre 8d ago
    Oh yeah. I should definitely caveat: I am in the US. I think banks here are required to cap your loss to $50 USD if you report unauthorized fraud within two business days. But still, the onus is on you. Meanwhile, virtually all credit cards in the US offer $0 liability protection. Which means at most you pay nothing.
    - arjvik 8d ago
      2 business days is a lot more strict than credit cards, which at the very least would not blink an eye at 2 weeks.
      - labcomputer 8d ago
        Er what? You don’t even pay for the fraudulent credit card transactions in the first place! There’s no money for them to return!
- thechao 8d ago
  > The big difference is that with a debit card, it's your money that is hit by fraud. I kind of disagree. I think what's happened is the bank would prefer you to believe that. Imagine I kept my money at the bank, and deposited $10000 with the teller. Immediately afterward a robber follows in and steals that $10000 from the teller. Does the bank say "oh no Mr. TheChao! A robber stole your $10000!". I mean, no? The bank got robbed. Just because the bank's digital security is more tied one-to-one to dollars and its easier for a robber to steal from "my till" doesn't mean it was me who was robbed. It's the bank's job to stop that.
  - Hardwired8976 8d ago
    Eh when you deposit money with a teller, it gets added to your account, which is in physical terms probably just a big storage and a database who has how much. But in the case of debit card, the card ties the money to your account. It is actually that. It's as if someone would steal from a personal safe at the bank.
    - lxgr 8d ago
      Except that you have strong statutory rights and commercial agreements between your bank and the card networks making it very likely that you’ll be made whole.
      - dqv 7d ago
        > likely > will Which is why the credit card is still the better option. Especially given that the max liability on a credit card is always $50 if caught within the first 60 days, while the max liability on a debit card is $50 only if caught within the first two days, then up to $500 if reported after up to 60 days. They may post a provisional credit when I report the fraud on the debit card or they can wait up to 10 days to do so. With a credit card, no money has left my account and I get the final say on whether I want to part ways with my real money. If the bank really wants to fuck me over by saying it's not fraud, I get to make it as unprofitable as possible for them, which includes forcing them to sue me if they really want the money. I will take the ding to my credit report and a lawsuit over actual money taken directly out of my account any day.
- lxgr 8d ago
  I don’t thing Regulation E allows banks to require a police report before processing an unauthorized payment, nor can they outright refuse to do so. Practically, Reg E is essentially as strong as Reg Z.
  - dqv 7d ago
    > Practically, Reg E is essentially as strong as Reg Z. Not even practically, but that's beside the point. The point is that with regulation E, I am potentially put in a position where I have to work to get my money back; I have to file a lawsuit against the bank if I think their determination is wrong (and that's assuming there isn't an arbitration provision, but many people don't realize they agreed to binding arbitration). With regulation Z, the bank has to work to get their money back. They have to file the lawsuit against me if they really want the money. And it's $0 liability under many circumstances mandated through the regulation, not just a revocable promise from the bank.
    - lxgr 7d ago
      > With regulation Z, the bank has to work to get their money back. Yes, but you potentially have to work to get your credit back. > And it's $0 liability under many circumstances mandated through the regulation, not just a revocable promise from the bank. Debit card liability is also largely mandated to be $0 under card scheme rules.
- rootusrootus 7d ago
  This is where you find out which banks suck, and which do not. I will say that while USAA is a long ways from perfect, when someone swiped my wife's debit card and took $5000 from our checking account, they put that money back within a day while the investigation was pending. No police report necessary, either.
kevin_thibedeau 8d ago
I've always had fraudulent debit charges automatically reverted. Typically the bank's fraud detection disables the card and you clear up the matter on the phone. Or they call you to verify if a suspicious charge outside your profile was actually yours. The banks aren't required to do this but they can choose to provide this level of service.
- bijowo1676 8d ago
  the cc fraud (and fraud protection) is THE main selling point of Visa/MC credit cards. it is that different treatment of debit/cc fraud that pushes people towards high fee cc. it is cc fraud protection that justifies high cc processing fees. without cc fraud there is no need in visa/mc duopoly.
  - pocksuppet 7d ago
    I thought the main selling point was that they work almost anywhere. Whereas my EFTPOS card only works in Australia, my Girocard only works in Germany and my Pix account only works in Brazil.
ryall 8d ago
Weird take, credit card debt is much more of a risk to that demographic than debit cards ever will be
abdullahkhalids 8d ago
The underlying problem is that the whole concept of cards is insane. Basically, you go around telling every shopkeeper the code for your safe, and ask them to take however much cash you owe them out of the safe. Sane ways to organize payments: - Merchant gives you a bill-id. You input it into your bank website - where you see the bill amount being charged. You accept, and bank pays merchant. - You give merchant your card number (that's the only information - no expiry, no ccv, no name). A notification pops up on your bank website asking if you want to pay what the merchant is requesting. You accept. - You go to your bank website and obtain a random number, either allowing a single transaction or a recurring transaction. You give the merchant the number. After merchant charges it, no other merchant can charge the same number.
- KptMarchewa 8d ago
  > You go to your bank website and obtain a random number, either allowing a single transaction or a recurring transaction. You give the merchant the number. After merchant charges it, no other merchant can charge the same number. That's basically how Blik works in Poland. With the exception being that the number is random 6 digits randomly generated when you open the app, that is active for ~2 minutes. So you don't deal with the issue of very long and error prone numbers to copy. Much better way to pay online. https://en.wikipedia.org/wiki/Blik https://en.wikipedia.org/wiki/Blik
- lxgr 8d ago
  Cards have supported strong, positive cardholder authentication at the POS (chip and PIN) and online (3DS) since the 90s. It’s entirely the US credit card industry and its regulating bodies’ fault that it has made neither mandatory in the way that e.g. the EU did, and is in fact fighting any attempt to do so tooth and nail (please think of the conversion rate!!)
  - dizhn 7d ago
    Can you guys still write a check at the supermarket checkout? No pin credit cards are small potatoes next to personal checks in terms of weirdness. But I wish we had that trust culture everywhere.
pyreko 8d ago
Eh... I guess YMMV, at least for a low amount it took me literally an afternoon, I just froze my card, walked to the bank, explained the issue, and they refunded me on the spot (also switched out the card for a new one). They said technically it could be clawed back after investigation but they never did.

milesskorpen 8d ago

Also debit cards run by smaller credit unions charge credit-card like fees (and then are used by fintechs to earn fees while making it harder to pass those fees on to end users).

ianhawes 8d ago
Hah! Good to know, makes total sense.

karlosvomacka 8d ago

For US readers - in my country in europe I'd say that 95% of people have only debit card, not credit card. it's very not common to have a credit card here. Card payments are extremely common, but everyone uses debit card.

avianlyric 8d ago
The EU caps all card interchange fees at 0.3% for credit cards and 0.2% for debit, which is an order of magnitude lower than some of the fees in the US. That’s why you don’t see the same kinds of credit card deals in the EU compared to the US.
- adrian_b 8d ago
  I think that there was a recent HN thread that linked to an article which argued that the credit card system of USA has the purpose of taking money from the poor and giving them to the rich, and the estimated amount of the money transferred in this way was huge. The EU limits for card fees prevent this in Europe, which is very good.
  - derektank 8d ago
    Wouldn’t it be simpler for European countries to simply raise the VAT and redistribute the proceeds to poor people, rather than regulate the interchange fees if the concern is inequality
    - post-it 8d ago
      Your solution sounds significantly more complicated actually.
      - derektank 7d ago
        In what way? There are many sources of inequality. Trying to play whack a mole with each one seems much more laborious than simply deciding how much inequality you want in society, and then setting it with the tax code

losvedir 8d ago

Debit cards aren't that, in practice, because as you say they typically get the same 3% fee whenever I've asked. Toast and other point of sale networks just charge it based on the network and not the card type. But even so, I still prefer the credit card instrument, used as a "charge card". For those that don't know, a "charge card" is common with businesses and is expected to be paid off every month. But it helps with managing your cashflow - e.g. you can keep your money in a savings account all month and make one transaction at the end - and it keeps your actual money from being at risk of fraud. Most Europeans seem confused with how Americans use credit cards for everything, but about half of us use them as charge cards, paying them off every month. That is a benefit, so I can see paying a small percentage for it, but I don't think that benefit alone justifies the 3-5% of a transaction that credit cards charge now.

LeBit 8d ago
As a Canadian , I thought that was the expected de facto way of using credit cards: you pay everything with it so you get rewards (ie money) at the end of the year as a function of how much you used the card during the year. At the end of the month, you pay whatever the outstanding balance is, otherwise you pay high interests.
- zaphirplane 8d ago
  There are fees thou and i cant imagine they are losing out as a business
- rootusrootus 7d ago
  Many of us use it exactly that way, though the rewards (in my personal experience) are immediate as soon as a transaction clears and not yearly. Carrying a revolving balance is a quick way to spiral into bankruptcy because the rates are so high (and the minimum payment is typically 1% of the balance).
- the_af 7d ago
  I thought this was how credit cards were used the world over. It's certainly how I use them. How do Americans use them that differs from this? Color me confused. (Also: installments. They are often the norm in my country, but I understand they are less common for Americans).

numpad0 8d ago

Debit cards still go through the same credit card infrastructure. The practical difference at this point is whether the card company backend defer payment until collection date for the benefit of customers, or don't wait and just call APIs on the spot. There's a whole "internet" of credit card infra that lets you pay using those numbers on the card like they are phone numbers. Stripe don't do handle their own payment, they just wrap someone else's API, and pay them in percentages and dollars per API calls(idk about the ones behind Stripe, but I think I saw somewhere that those middlemen often charge both? Egregious, but they're literally old boys money men and they have lots of leverages against you). What are truly different to credit/debit card systems are things like PayPal, Apple/Google and such gift cards with scratch areas, and Chinese QR payment apps. Those are the ones that don't (always) go through the CC ecosystem.

cobbzilla 7d ago
Stripe connects directly to Visa/MC, there’s nothing “behind them” in terms of some other card processor API they’re wrapping. Stripe is a credit and debit card processor (and also a card issuer). They are NOT a bank, but do control some BINs (notably 4242 which is used for the famous test card 4242x4)
ghosty141 7d ago
PayPal and Apple Pay use my debit card so they somewhat do use it.
masom 7d ago
Not necessarily, in Canada there's a separate network/infrastucture named [Interact](https://www.interac.ca/en/ https://www.interac.ca/en/). All the banks are on it and most merchants have terminals that supports it. It had chip and pin ahead of credit cards, and has lower fees. That's what powers our e-transfers, no need for venmo or other systems.

titanomachy 8d ago

Most stripe transactions do use cost-plus pricing. The flat pricing is popular with smaller businesses, but larger companies graduate from it pretty quickly.

DANmode 7d ago

Fun fact: Visa owns some of Stripe.

fragmede 7d ago

why is simplified in quotes? Knowing you'll get $x - 2.9% and 30 cents is simplified compared to having to find out what kind of card was used, what their interchange rate is, What your rate on that is. Debit cards have a low interchange rate, but it's offset by the cards with rates higher than 2.9%. Stripe is taking on a risk that your customers aren't all going to use a chase sapphire reserve and thus cost stripe 4.5% when stripe is only charging 2.9%. If you're large enough, Stripe offers IC+, interchange plus, where you get complexified pricing, if desired.