Why do some bullion sellers not take debit card payments?

Can anyone shed light on why dealers as well as the Perth Mint refuse to take payments via debit cards?

Here is what the Perth Mint says:

"Under no circumstances can debit cards be used as a Payment Method for phone and online transactions."

 

Why would a debit card have higher fees then a credit card? I would have thought they would be the same or less for a debt card.

I'm also interested to know the answer to this question.

 

Fraud and charge-back risks.

 

but charge-backs can also be done on credit cards. Fraud would be the same on say both visa credit and debit cards wouldn't it?

 

how do you verify an atm card? to make sure the card holder is the one who place the order
where is the proof of payment
the terms of use is different
debit cards machine may cost more? and you need one for each bank???

 

I'm not sure all payment gateways differentiate between debit and credit cards. That is the merchant doesn't get to determine that only debit cards can be used.

I guess there's also fees too.

 

Thanks for every one who suggested a theory to explain this. willrocks question is quite interesting because it raises the issue of compliance. What is to stop the client using a debit card, do payment systems recognise the difference between a debit and credit card?

The Perth Mint allows almost every form of payment, including credit cards, but not debit cards.

The Perth Mint statement suggests that they can't police compliance - note PM wording:

"Under no circumstances can debit cards be used as a Payment Method for phone and online transactions."

If they could tell the difference they would have simply said something along the lines :

Please note that debit cards can not be used as a Payment Method for phone and online transactions.

Why does the Perth Mint and traders not explain why not debit cards?

 

"Why does the Perth Mint and traders not explain why not debit cards?"

PM got the GOLD, they make the rules

 

I've tried using debit cards for travel too but the web site picks it up and won't let it get processed. Also, upon checking into a hotel they always ask for a swipe of your credit card as security. I thought I'd be smart and thought ok, I'll give them my visa debit card (one that I have only $2 in) and if they try to charge me for something I didn't buy they won't get away with it. Guess what, it gets picked up at reception, sorry sir this card is a debit card and you must use a credit card.

I am only guessing here but maybe a valid credit card with a sizeable limit is a better guarantee for the merchant than a debit card that might have only $2 in it. But then again Visa debit works on the visa system so surely they could run checks on balances. Any bankers out there?

 

A few bullion places I've been to have said the opposite, they will only accept debit and not credit. Also a lot of other shops also had this policy and only want to use debit. I think all up I've only ever come across 2 places that said the they don't accept debit.

 

That makes sense for a hotel, as they want to make sure they can bill you at a later time in case something happened. But with a shop where you are buying upfront it makes no sense, either you have enough money to buy the item or you don't and they wont give you the item.

Also is an eftpos card considered a "debit" card? or is a debit card only one that is processed through something like Visa?

 

May be the retailers on this forum have sworn a secrecy pact to keep this anomaly a mystery. Come on retailers, demystify why credit is better than debit in bullion transactions. Leo and Silverling made the argument for credit cards in hotel reservations clear, but most of us are still scratching our head about bullion transactions?

 

There's a couple of reasons bullion dealers don't take cards.

Firstly, there's the additional costs. Card payment costs to the merchant can range from 0.2% to 1.5%, which is fine if you're selling something with a 40% markup like a jeans or a sandwich press but not so fine if you're making 1% on several ounces of gold. Of course there's always the "just pass it on to the customer" argument but if 1% of $10,000 is $100 then the deal can easily go from pretty good to pretty average. It's generally not worth it for the dealer to introduce an extra layer of complexity into their order flow. There are usually other fees involved in addition to the per-transaction/value fee as well.

Secondly, the rules on charge-backs are complicated and "CNP" (card not present) transactions are particularly risky for the merchant. If you get a charge-back for an order with a 5% margin, you're doing the next 20 orders "for free" just to make up for the loss.

On one hand, charge-backs are great for consumers because they protect against dodgy merchants, but on the other hand they don't protect merchants from dodgy consumers. Even if the customer isn't dodgy, they've been conditioned to report any problems with purchases and just let their bank/card issuer take care of it, so in that respect people have become a bit lazy.

(I've had customers say "something went wrong with the payment" and showed me the receipt where it clearly states that the transaction has been automatically reversed. I say "it's fine, you weren't charged" and then a few days later I get a charge-back because they reported it "just in case" and then I have to spend time arguing with the payment processor and pointing out that I never received the funds being claimed so I'm not giving the money back when I never had it in the first place. Then we have to get into terminal log reports and a bunch of other time wasting stuff).

Charge-backs can occur up to 120 days after the transaction has taken place, so it's a long time to wait to find out if you actually really have that money or whether it's at risk.

Basically, it's just not worth the hassle for the dealer: cards are expensive, complicated and risky which is pretty much the exact opposite of what dealers are trying to achieve. It's bullion. Treat it as cash. You give me your cash, I give you my cash at the agreed rate and everyone's happy.

 

Thanks Big A.D. for the card risk clarification for bullion, but can you shed light on the credit vs debit card distinction for bullion.

 

Well, credit cards are what they say they are: a credit facility. In many respects, that's philosophically incompatible with bullion.

The Visa/Mastercard networks are not the same as the EFTPOS network (hardly anyone knows the difference) so trying to disable the facility to process a Visa credit card while sill allowing a Mastercard debit card to be processed is not easy, particularly when the card companies have spent the last 20 years saying "you can use the debit card anywhere you see our logo". Honestly, nobody's that interested in knowing how it all works so the two dozen different permutations of credit/debit/EFTPOS/chip&PIN/swipe&pin/CNP/Paywave/Paypass/online/offline/bank issued/third-party issued/whatever doesn't really mean anything.

It's basically just "do you take cards?" Yes or no.

The amount of stuffing around you have to do with payment gateways and Visa/Mastercard network rules means it's really not worth getting into for the dealers, particularly when there's perfectly good alternatives that are just as fast and offer cleared funds that can't be taken back if the customer leaves their package sitting next to the mailbox for a week before it gets stolen.

 

But the OP is saying Perth Mint DO accept Visa/Mastercard credit, but not Visa/Mastercard debit.

 

I don't know, but I suspect their lawyers, business managers and compliance officers have reasons.

There's an 876 page rule book for the Visa network here if anyone wants to have a stab at figuring it out: https://www.visa.com.au/dam/VCOM/download/about-visa/visa-rules-public.pdf

The RBA recently introduced rules banning excessive card surcharges and if the cost of processing debit cards is significantly different from credit cards then the Perth Mint might have just decided to force people to use cheaper options.

 

I have never bought bullion (so feel free to tell me I don't know what I am talking about) but i suspect the devil is in the detail "PHONE and ONLINE".
having spent 6 years in retail hell, we saw policies about PHONE transactions that were a firm no to any over the phone card payment. It was about preventing fraud. We would say, "you need to physically bring the card into the shop, sorry". Credit vs Debit, I suspect the charge back would be very difficult for a fraud sale on debit.

 

From my experience bigger bullion shops happy with credit cards or debit cards but will charge a percentage on top. Smaller shops want cash or eftpos even accept Westfield vouchers if store in westfields.

 

But this does not explain Perth Mint or Ainslie Bullion policy. Neither allow debit cards but allow restricted use of credit cards. Perth Mint allows credit card payment for products made on the telephone for less than AUD 5,000 and Ainslie Bullion accepts credit card [not debit] for its 10% deposit to secure web trades:

"Payment is easily completed by firstly making a 10% deposit of your total purchase by credit card" AB

Still a mystery !