Consumer purchase battle over defaults

Barry Ritholtz takes note of an ongoing battle between retailers and credit card companies over the processing fee that credit card companies take from retailers with each consumer purchase.

An increasing number of stores have changed their default card settings to “Debit” from “Credit.”

I first noticed this during a visit to Target. I swiped my bank debit card — also a Visa — thru the machine. Sometime ago, the default setting was Credit, but now it seems the default setting was Debit.

So too is the default setting at the Supermarket. If you wanted cash back, you previously had to select Debit, than punch in a dollar amount. Now, the default is debit, and you are automatically asked if you want cash back (some consumer groups advocate sticking with credit over debit).

Addendum: @ Jon. Hilarious.

Addendum Too: Reader David Glenn passes this observation along: “Lately the price of gasoline advertised along I-95 in the northeastern U.S. can be a low (for here) $1.64. But when you pull up to the tank, the default price is a cash only price. The credit card price might be $1.79 or higher for regular. The default option has switched from credit to cash, but the advertised price has not kept up!”

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  • Donnie

    It took me two trips to the store to figure out how to get my ING Direct Debit card to ring up as credit (I needed to make Credit purchases to fulfill promotional requirement to get $50 from ING Direct). You have to hit “Cancel” when asked to put in your PIN for the debit transaction, to make it into a credit transaction. This is non-intuitive (not bad, necessarily). It is good for the store, and doesn’t harm the customer.

    • Vincent van der Lubbe

      A propos default: could you change the order of the words in the sentence “changed their default card settings to “Debit” from “Credit.” to “from “Credit” to “Debit”. It makes it easier as a default :-)

  • Tom McCann

    Most store’s prefer customers pay by direct debit rather than by credit. Payment by direct debit does not incur a fee for the retailer (unlike credit payments) and the transfer of funds into the retailers bank account is essentially immediate (again, unlike credit payments). So in this case, the default to a direct debit payments is better for the retailer and not necessarily bad for the customer.

  • Jon

    …giving new meaning to ‘credit default swap’…

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