Reminder to all commenters that Europe is not a single homogeneous country and somewhat diverse in various things, including payments and finance. Credit cards are definitely a thing in many European countries.
In my corner of the world, credit cards were for buying stuff on the internet and travelling outside the EU. Now the net has evelved enough to accept our normal means of payment. I always feel insecure when using a credit card.
As a US-ian I feel exactly that way when using a debit card.
A credit card, if misused, can run up your balance and then you dispute, and don't pay anything until it's resolved. A debit card, if misused, can drain your account and leave you penniless until it's resolved.
I always find it funny that americans think the button to oppose a payement doesn't exists on my banking app because I have a debit card and not a credit card.
> the lag time between hitting the button and getting your money back can be weeks.
Nope, it's as soon as the bank is aware. In your rush to correct me, you failed to understand that there are simply better customers protection here which make a product such as a credit card mostly useless.
Pretty sure that debit chargebacks lead to an instant credit (by regulation).
I'm almost tempted to test it right now but I am pretty sure I did this once and it took under 1 day
Ok now I asked a chatbot for how this is regulated. The answer was wrong as expected but it happened to mention the applicable regulation which can be looked up at gesezte-im-internet.de
It's mostly about who possesses the money. With debit, the money is transferred. With credit, the money is scheduled for transfer, subject to my approval.
This has basically nothing to do with it. A bank deposit is a liability of the bank, and possession is not a useful lens here.
What matters are the legal and contractual rights and obligations you have against the card issuer. In the US, these are historically different for credit cards (Fed Regulation Z) and debit cards (Regulation E), but since it's now effectively the same two schemes running it all and imposing their additional liability protections (largely motivated by considerations of brand perception, which would suffer if the same logo sometimes confers weaker protections).
The main practical difference nowadays is that in the case of debit cards, you're out your own money for a few days, while with credit cards, the only thing that temporarily suffers is your open-to-buy/line of credit.
> The main practical difference nowadays is that in the case of debit cards, you're out your own money for a few days, while with credit cards, the only thing that temporarily suffers is your open-to-buy/line of credit
Right, and this is GGP's main point
The risk to a debit card user in the US is higher because the money you need to pay your rent or mortgage may temporarily disappear due to fraud, and may take longer to resolve than your deadline with your landlord. When using a credit card, that risk is not on you.
The risk isn't bank transfers to your bank for your mortgage. The risk is card skimmers at a gas station or whatever. The theft isn't when you pay your rent, the theft is something preventing you from paying your rent, due to some totally unrelated prior transaction.
I think the risk is higher in the US compared to Europe because Europe was way faster to roll out chip stuff, whereas in the US it's still somewhat common to have to use the mag stripe.
Ah, I see. This is about the prevailing consumer protections. In the US, debit is not treated with nearly as much privilege as the EU. While credit signals debt in the EU, debit signals poor financial situation in the US, since credit enjoys protections debit does not.
The fraud detection of the card processors is effective and they will disable a debit card before that happens. I've always had the money returned automatically the few times I've had one compromised.
Same fraud systems monitor credit cards except in the American case you get at worst 1% cash back so 1% off the purchase price of everything and if something does happen, and regardless of protections fraud still occurs, it’s the bank’s money that is gone and not yours.
Separately the EU is a large collection of states and each one has its varying levels of participation and sophistication with payment processing. Apple and Google Pay are both widely used and that won’t change, and by and large there’s no good reason for Europeans to not accept American credit cards so they’ll continue to do so.
Anyone telling you differently either doesn’t have the slightest idea what they’re talking about or they’re just caught up in a pointless anti-American fervor. Even in countries such as France American Express is accepted in more places.
Accepting cards from US-controlled schemes is not an issue at all. The geopolitical issue is not having any alternative, and these US schemes being the only way to pay even in domestic transactions.
Almost nobody considered this a problem until a few years ago, but the relevant EU stakeholders got pretty rattled recently [1], and my prediction is that this particular bell can't be un-rung.
They are aware of it, but there is so much US dependency that its very difficult to reverse course let along unto what has been done. The EU's age verification app will only work on Google or Apple controlled phones. A lot of payments are done on phones. A lot of other things depend on phones too - my local bus company (in the UK) requires its mobile app for some types of tickets. I have had to use phone based ID verification already.
Well it doesn’t matter whether it’s un-rung. Europe can develop payments tech, folks visiting continue to operate like they normally do. The US is increasingly accepting payment mechanisms and cards from other providers too. Continued competition is good here all else being close to equal.
Each nation or economic block or alliance or whatever will have to decide which kinds of products and services they’ll want to protect or build in-house. While the EU lambasted the United States when it began taking measures to do what the EU is doing now, it’s encouraging to see the EU change course and start to protect its industries, though who knows how effective that will be. China is looming large over the EU, Germany in particular.
Yep, that's why I always used CC and pay in full(until it become much more logical to pay the minimum and accumulate interest that is lower than the inflation).
It's much better to be indebted when buying something simply because if something goes wrong its much easier to convince someone to take their thing back when you haven't paid yet than trying to convince someone to send your money back and accept a return.
I've never seen a CC with an APR below 20%, which inflation has never hit in the US. But the logic is sound as long as your income is tracking inflation.
In US, maybe. In Turkey before the general election in 2023 the rates were kept so ridiculously low that you could have taken cash out of your CC and put the money in the savings account in the same bank and make money out of the arbitrage. Everyone did it, having good credit meant license to print free money, IIRC it was %2-%3 per month tax free net profit on the credit you took on your CC limit.
Visa isn't a party to your contract with your card issuing bank. Your bank is responsible for filing a dispute, representing it properly, and (according to applicable law and/or as a good business practice for somebody that wants to retain your business) potentially reimbursing you out of pocket if a given transaction has issuing bank fraud liability.
Sure, but the fees I pay for go to Visa for, among others, combatting fraud and credit card cloning. I filled up my bank’s paperwork, I don’t know the inner details of their relationship with Visa.
That's interesting argument. Here it is usual to have a daily limit on debit cards. You can not spend more money than that, so a thief can not drain your account. Also many banks give you multiple accounts (you can transfer between them instantly). The debit card is connected to only one of them, so if you keep part of your money on the other account, that couldn't be touched even if the card payment limit has technical issues.
Multiple accounts (both debit and credit) are normal in the US as well, but I have never heard of a debit account here that has a daily spending limit.
Sounds like the US and Euro systems work fine within their own borders. Solutions designed for one make less sense in the context of the other.
It gets interesting when the two system interacts. Friends visiting the US told me that at the POS terminal they had to choose credit card despite paying with a Visa/Mastercard debit card issued by an European bank.
By the way, here banks even have daily bank / wire transfer limit that can be changed only by a personal visit to a branch, so even if your online banking credentials are stolen, the attacker can not empty your account.
> Friends visiting the US told me that at the POS terminal they had to choose credit card despite paying with a Visa/Mastercard debit card issued by an European bank.
The "credit" button in the US really means "use the Visa/Mastercard network and don't ask me for a PIN", as opposed to "feel free to ask me for my PIN and route the transaction over one of a dozen or so US domestic debit networks". The question doesn't even make sense for non-US debit cards.
And that doesn’t always work. For example, at a Chevron petrol station in California in the middle of nowhere we tried several European credit and debit cards, and nothing worked. At the end, the guy working there helped us with some prepaid option at the counter. He didn’t believe us until he tried himself that really none of our cards worked.
But the situation is way better than 5+ years ago. Back then, almost every second purchase of ours had some problem with our cards in the US. Now, we had like one or two in more than a week.
But of course, some car rental companies still pretend that they are generous that they allow debit cards. Not just in the US.
Cards and accounts often allow the owner to set those limits for e.g. withdrawals or transfers etc. There's often a separate limit for home country and abroad. They're there to limit damage that might be caused by user error or stolen cards or something like that. (Or just to provide peace of mind.)
Wells Fargo for the longest time had a daily spending limit on its Check Cards and a daily withdrawal limit. If you had a Debit (not check card) your “spending limit” was your withdrawal limit.
If you tried to make a purchase above the spending limit it was a hassle. I am old tho.
Unfortunately, the reality is that rather than your card being directly misused by a "shady" company, it's more likely that most companies you transact with do not have perfect security and will suffer a data breach that may expose your payment information.
Pretty much all of the EU had Visa- and Mastercard-branded debit cards since the turn of the millennium, so one has been able to buy stuff from the net and travel abroad without use of a credit card for decades now.
As an outsider: which countries lean which way? I'm curious how things trend where and I didn't even really know that debit was used by a majority in certain places (Countries? Regions? Historical based delimiters?).
Germany is very debit-card oriented (with no interest of switching). The Netherlands seems similar. Eastern Europe and the Balkans are also mostly debit-card oriented, but people seem more open to switching to credit cards (if they can get one - especially the younger generation).
Ireland and the U.K. seem much more credit-card oriented than rest of Europe. Turkey is also very CC oriented (kinda strange - was not expecting that).
In the UK people predominantly use debit cards but credit cards are widely available. Everyone gets a debit card with any current account (i.e. non-savings account). In March this year there were 2.3 billion debit card transactions vs 400 million credit card transactions according to this:
The preferential treatment of credit cards for certain transactions influences how they're used in the UK.
Suppose in January two people Carol and Dave bought a £250 August flight to Paris from some outfit that didn't do a great job hedging their fuel prices. Carol used her credit card, Dave used his Debit card. UK law says Carol's flight was bought by her bank, after all her bank handed over the money, Carol is on the hook to pay them back but didn't directly pay. But Dave bought his ticket, the bank isn't responsible.
Today the airline fails because their fuel costs blew up. UK law says Carol should be able to get her money back from the bank because they bought this ticket and now it won't work -- this is called "Section 75". Dave may have some protections via other consumer protection rules, but he's more likely to end up losing out.
The best chance for Dave might be "Chargeback" which is a card scheme which might let Dave tell his bank that he now wishes he didn't pay for the ticket. It's not very likely to work because January is a long time ago and so the bank will probably argue that Dave should have realised earlier that he didn't want to make this transaction. Because this flight touches the EU there are a bunch of extra protections which might help, none of them is as simple as Section 75.
The Section 75 protections mean Brits who are credit-worthy tend to pay for large purchases on a [credit] card even if they intend to pay it off immediately.
For what is worth, a few years ago, I was able to chargeback a significant furniture order after the company collapsed. It is indeed at the bank's discretion and my bank didn't really advertise the process, but the people in branch pointed me to the right place and the process was no fuss.
So, no, you do not have the same legal protection as Section 75, but it is always worth a try.
> The Section 75 protections mean Brits who are credit-worthy tend to pay for large purchases on a [credit] card even if they intend to pay it off immediately.
And Visa and Mastercard's global zero liability provisions protect everybody with a debit card, so de facto the difference is no longer relevant.
That said, some banks are pretty bad at making use of their dispute rights with the networks. I've seen several German issuers actually refuse to file "service not provided" disputes in case of a large airline bankruptcy a few years ago. (German bankruptcy managers can be somewhat intimidating rhetorically, but fortunately their personal opinions have no bearing on banking/payment laws.)
There's no reason Section 75 protections couldn't be extended to debit cards, except that in the mid-1970s banks were lobbying very hard for credit cards to become more legitimised and S75 was the successful result.
The banks took on a little bit of risk and in return unlocked a free money generator.
On the contrary debit cards are revenue-neutral or even loss-making for them
It used to be like that in Germany, it changed quite a bit. My debit card now is refused more often than my master card when I’m in Germany. I do tend to stay in large cities and not in the country side though, so my perspective is not a statistic.
But it definitely changed massively during Covid. Before Covid shops refusing _any_ card where still common (again, large cities is my spectrum) and debit card were accepted vastly more often than credit card.
Italy is also super oriented on debit cards. People call them "credit card" because they don't know the difference, or even "Bancomat" which is the brand name of the most used Italian debit card network.
Italians don't really care about credit cards, they just want to pay with their "Bancomat" card.
Debit cards would still be used a lot more commonly than credit cards in Ireland. The UK is, I think, slightly different, due to a slightly unusual situation with disputes.
Some providers in the UK issue debit cards with limited interest-free overdraft and charge back features. So they are basically credit cards if you squint your eyes enough.
India has about a billion debit cards, but people mostly use them for ATM cash withdrawals, if that (banks used to give them by default during account opening, but have stopped this since UPI came into the picture). Only a single-digit percentage of people use credit cards, but they use them often and for relatively high-value transactions. The rewards game in the credit card space is slowly but surely reaching US levels, and they are associated more with stability and credit-worthiness since banks don't hand them out like candy, and India is, until recently, a debt-averse nation to revolve balances.
Mostly people use UPI, which is equivalent to debit cards given that amounts go directly from one bank to another. But UPI also supports some credit cards and lines, so there's that.
You are of course free to extrapolate your experience from a single European country to the whole continent, but it's still not a coherent argument for or against anything.
I don't think anywhere does. In general, cards in Europe don't really give significant rewards (because interchange, paid ultimately by the merchant, is capped at 0.3%, whereas in the US it can be upwards of 3% for certain high-end cards). The only reason that people who don't need the credit line use them in the US is the rewards schemes.
One should also bear in mind that the technical difference between Debit and Credit cards is quite blurry in the EU. Like, a card can officially be of the Debit kind, but have all the features of a Credit card enabled. Which is actually and typically the case.
And for example in Ukraine the situation is exactly the opposite: cards issued are typically Credit cards, but with all features of credit cards turned off which effectively makes them debit cards.
Americans use credit cards and rarely debit cards because here the terms on debit cards are so much worse (for contesting charges, etc), so debit cards never really caught on for anything more than withdrawing cash.
In the US, users of debit cards are assumed to be uncreditworthy, because debit cards in the US have such bad T&C's that poor credit score is the main reason folks use them here.
The article uses the term credit card for apparently no reason, because Visa and Mastercard also support debit cards. The EU is probably more concerned about Visa and Mastercard payment networks being under the control of American leaders.
Not everyone. We use both and mostly credit card for online payments that we pay off at the end of the month. It has a limit and it is easier deal with potential fraud vs a debit card where your own money goes. But does it matter? All my debit cards are Visa and Mastercard anyway.
And even when you have a credit card, it might act like a debit card (every payment shows as debit in your banking app, even if you really pay on the 10th of the month or something).
The problem as I see it is that you pay your credit card bill only once a month which gives you no bearing on your effective balance. This is mostly a problem for lower and middle income people who live from paycheck to paycheck.
> makes no sense to pay right away when you can pay with no interest 15 days later on average.
Why in a pray tell would you favor late payment? Why would I create myself a chore for an end of a month if I can just pop a card, pay and see the transaction in e-banking right away? If it is auto-charge by the end of month, why not charge it right away?
You are gaining absolutely nothing.
> In an inflationary fiat currency system it's always better to defer payment assuming you can manage your cashflow and you're living hand to mouth
What are you talking about here. We are talking about people paying with euros.
Say you spend €1000 per month. If you use a credit card, you can earn interest on that for an month and only need the money in your current account on the day you pay.
So at 5% annual interest that’s about €4. So yes it’s not huge, but that’s every month for your whole life and it compounds over time.
The benefit is small (it won’t make or break your finances) but real.
That’s what I mean by “inflationary fiat currency” - you are paying in something that constantly loses value. Therefore rationally, it makes sense to pay as late as possible.
In some sense everything is actually slightly cheaper if you buy it on a credit card and pay it off a month later
> Why would I create myself a chore for an end of a month
Do they not have direct debit where you live?
>If it is auto-charge by the end of month, why not charge it right away?
Because there's no way I'm going to keep anywhere close to that much money on my debit card? Because the credit card won't get randomly locked while I'm trying to pay a 40k euro hotel room bill in Asia? Or if it does, I can switch to another credit card or deal with reasonable customer service.
If you're only making small payments, of course it doesn't matter. If you're regularly spending significant amounts of money, doing so with a debit card will be a huge pain in the ass and an unnecessary risk.
Notably, the IRS refused COVID relief applications using a debit card for identity. Stupid as fuck policy considering they're all connected to the main two credit processors.
Some Europeans meaning people in Germany? Most people have debit cards from our normal banks here, credit cards are generally associated with companies like Revolut or Klarna, as they push ads for getting credit cards.
The legislation has been in the works for years now (not fully approved just yet). It’s why many US banks all are trying to get around issuers any way possible now.
I am admittedly having trouble finding where I’ve seen it brought up, but some online forums I lurk on for finance have had stories of people being denied from using specifically Visa Infinite branded credit cards. There’s also been stories of businesses not accepting Chase cards flat out, which I assume is to also curb the higher costs they incur from the premium Chase cards.
Europe has long had laws in place that have hard caps set at 0.3% and 0.2% respectively for credit or debit cards. The US has been milking this with uncapped 3.0%+ fees, which is why the credit cards there drive so much profit - at the expense of every business owner.
In the US, having debt is seen as a good thing, as long as you stay current on payments. Not having debt gives you a lower credit score than having debt, which send kind of fucked up to me.
That's a common misconception. Credit score is positively correlated with paying on time, having high available credit relative to usage, and the age of your oldest credit account.
However, using more of your cards' limit (a high debt utilization ratio) actually reduces your score.
On-time payments are only one factor in your score. Depending on the model it may only account for 20-30% of the score. Using your cards a few times a year may satisfy the criteria. You don't have to take on any debt to have a high credit score.
can 100% confirm this on a personal level, outside of mortgage I have no credit card balances (I use CC extensively but always pay the full balance) and have had 835+ score for years now.
Yes. They want you to have the mortgage and the cards, and the record of paying them on time. If you had no mortgage and never had the credit cards, your score would be much lower.
which is in fact a massive pain in the ass, because car rentals and hotels often require credit cards to make reservations (at least in my experience...)
I've heard stories like "fine, we'll take your debit card, but only if you also pay a non-reimboursable $$$ deposit in cash" for car rental. (Mostly in central/eastern Europe.)
(From what I was told, the thing in favor of a credit card is that the rental agency can put a hold on the security deposit for much longer than on a debit card: a few weeks vs a few days).
I only use CC, to earn airline points (based in Sweden). But I always pay the entire amount due at the end of the interest-free period, so I never pay interest.
I also like the fact that using a CC comes with better buyer protection than debit cards.
Rest of the world: most of us figured out how to use credit as a tool without tumbling into a spending pit. Takes a bit of discipline, sure but not impossible.
"I use debit because I can manage my finances" reads as "I don't trust myself with credit." If credit is a trap you have to avoid, that's not the flex you think it is.
It's a tool. Some people use it. Some people are scared of it.
Credit Cards improve your working capital position, interest free. Most people do not understand finance which is why debit cards are the "safer" choice.
If one is capable of managing one's finances (and paying the card off in full every month), credit cards are a useful tool. They're a problem if one can't manage one's finances.
It is interesting that both options of either not using CC entirely or using CC but paying it off by the end of the month are equivalent, but you’ve somehow reframe the second ine as some virtuous skill one have to master (I’m not just buying bread, I’m also managing my finances by repaying the value of it in full by the end of the month to avoid being charged for interest and simultaneously improving my credit score).
Business model of banks in regard to CC are preying on people not paying it all in full for various reasons.
Financially, they're not equivalent. If you buy your bread on credit, you get an interest-free loan, and benefit from the time value of the money that you otherwise would have paid immediately. As you correctly point out, this value comes from those fleeced by the arrangement. If my comment attributed any moral valence to the two options, that was unintentional.
That only works if you keep less money than your monthly spend in high interest accounts. I always have a cushion on the account linked to the card. The only benefit of credit in the US is rewards cards that transfer wealth from those with poor discipline and financial illiteracy.
If you can manage your finances then delaying all purchase payments by 30 days for 0% interest is a no brainer. And then all the other perks that come with some cards, like accruing some small percentage of your transactions as points, extended warranty protection, ability to request charge backs if necessary, etc.
And most Europeans that have a credit-card need to pay them off at the end of the month. Technically they are charge cards. Unlike a traditional credit card, a charge card does not allow you to carry a revolving balance.
> The main difference between credit cards in Europe and in the US is that poor people can't get them here.
Nah, really the main difference is that the EU caps interchange (paid ultimately by the merchant) at 0.3%, whereas it can be upwards of 3% in the US for high-end cards. Without big interchange earnings, there's little reason for issuers to push credit cards, and they're less attractive to consumers (interchange pays for 'reward' schemes).
I was denied credit card after changing jobs. I did have some student debt, but small amount on small payment and rates were low. Also had other credit card but not high limit. Nothing in negative credit history.
Did get the same card a few months later after probationary period. But yeah even without significant existing debt you can get denied in Europe.
Let's not pretend that predatory lending is not a thing in at least some EU countries as well, just because it takes other forms (installment payments, buy now pay later etc.), but as a general trend, I'd agree that it's much less common.
I have to pay it off each month unless I want the high interest rates (20%? Not sure, a direct debit clears it monthly after payday and the 1% cashback is credited each year
How does digital euro replace credit cards? That's basically the same as direct debit. It doesn't address the reason why I use credit cards.
I use credit cards as a proxy for my bank accounts. I know that my issuing bank will protect me from all fraud so I don't have to worry about losing money if I buy something from a fraudulent merchant. I also know I can do things like chargebacks if I have to.
None of this is addressed by digital currency, it's basically like using cash which is haphazard today when there are so many scams everywhere around the world.
In EU most people use direct debit. The term "credit card" is almost synonymous with debit. Chargebacks theoretically exists but they are more complicated, I don't know anyone who ever did that.
Maybe in the past, but nowadays you can call your bank for a charge back or you have an option in the banking apps
I do have to say though, that with customer protection laws we have it has never happened to hear about a friend getting a charge back from the bank, usually you go to the seller first (or the platform if you got scammed) and you get refunded there
I’m European and protection laws are nice to have but if a shop doesn’t refund you those laws don’t automatically give you your money back. That is where a credit-card comes in handy. I don’t know any bank that offers this protection on a debit-card.
Yes, but even then you can usually go to the bank, at least in italy despite not being called chargeback you can ask a refund for scams or similar issues. More modern fintech banks give you this option directly in the app, otherwise you might need to chat with an operator
At least here I see online that there's the possibility to do so (even with debt cards). However, I guess that with a credit card it is going to be less annoying for you, or any way easier for you, since it's their money on the table and not yours
I'm talking about italy btw
Edit I also think that prepaid cards here are what have less protection
I have some Irish friends. And Ireland seems similar to the US when it comes to credit card usage (vs debit). I assume that is because Ireland is heavily influenced by US and UK banking habits.
On other hand, Germans only use debit cards.
> And Ireland seems similar to the US when it comes to credit card usage (vs debit).
That's definitely not the case. Many people would have credit cards, but there's a lot less incentive to actually use them than there is in the US, because the interchange (paid ultimately by the merchant) is capped at 0.3% in the EU (whereas in the US it can be upward of 3% on high-end cards). The interchange pays for the 'reward' schemes that US card issuers provide, largely. Without those, why bother?
I've a credit card, but I essentially never use it, except when visiting the US (where some vendors actually refuse debit cards, or at least used to).
Where'd you find that stat? I can't find any stats which break out spend by debit and credit card for Ireland, but what I can find is that (as of 2024), there were 7.95 million active debit cards and 1.58 million active credit cards in Ireland (which has 5.2 million people). Given that, the 40% stat seems implausible.
How do you deal with fraud and people cleaning out your bank account money rather than OPM of a credit card company? Just have enough spare cash for a burner checking account and wait for the fraud reversal?
In the US you'll almost always get your money back if someone defrauds your debit card but you could be in for a painful time if you depend on the money in that checking account until it gets fixed.
Banks suck it up, but fraud is likely a lot less prevalent because 3D Secure is mandatory for online transactions and chip and PIN were ubiquitous way before the US seemed to have started using it.
The US still hasn't started using PINs for all credit and most debit transactions, and at this point it doesn't look like it ever will.
Apple and Google Pay are just as (if not more) secure anyway for the majority of transactions, and a long tail of US restaurants, hotels, corporate card issuers, rental car agencies etc. will simply never change their legacy flows. There are just too many incumbent stakeholders.
It’s a pity that US regulators can’t manage to mandate that the dinosaurs get with the times as fraud seems to me to be an enormous burden to US consumers.
Even if fraud victims get their money back, firstly it must be an admin headache and then merchants have to cover fraud losses/insurance costs and thus mark up all their prices to make sure they do, so everyone is subsidising the fraudsters.
I presume it’s lobbying that would/does thwart any attempts at any such regulation.
As someone outside of the US I would like to be able to largely ignore this problem as just affecting people over there, but unfortunately it spills into the rest of the world.
When I last had fraud on my card it was through an online US merchant, because, like most US online merchants, they don’t use 3D secure. If they did then blocking the transaction for me would have been as simple as pressing the “it’s fraud” option when my phone would have received a “do you want to allow this transaction of $X for Y in the US?” that my bank’s 3D secure system normally sends to me.
Hopefully Apple and Google Pay will eventually help things over there.
Yes, I think most people have several accounts, or at least a main and a "spare money" account. If you can prove a fraud the law mandates the bank to back it up. In EU bank apps there are often many warnings and popups when authorizing a transaction. Also in EU you can get a refund of any digitally made purchase, by law you can send back the item for 30 days.
Chargeback always seemed strange to me and never needed it. Fraud should be reported and handled at the root, not by making digital transfers into some magic disappearing money.
SEPA Direct debit still has a confirmation from the account holder. You usually see the pending transaction before it clears and can block it. Some banks (dreadful and hated bunq for example) require an active confirmation from the account holder before it is allowed to clear. Some have a setting hidden somewhere that sets the policy to autoaccept or something else.
I haven't ever seen illegitimate direct debit. I guess you need to have an actual business to issue direct debit orders and bank will show you the door and freeze your money if you start doing funny things. I guess.
Probably the dreadful R word has something to do with it, go figure.
On cards we also have limits and the only time I saw something happening was after being unfortunate enough to pass through ~~the ghet~~ the glorious capital of our continental Empire, majestic city of Brussels. That time the bank tried their best to call me.
> I guess you need to have an actual business to issue direct debit orders and bank will show you the door and freeze your money if you start doing funny things. I guess.
You are guessing right. To receive direct debit transactions, your bank typically forces you into an insurance contract to cover disputed transactions, plus they block a minimum balance on your account, plus they require some overview of your company assets, in case the former two measures aren't enough. No chance to get direct debit approved as a private person or small company. And the amounts you can receive, as well as the number of transactions will be limited to your insurance coverage. And if there are more than a very small number of disputes, you are done.
Which is why for small businesses, direct debit is only viable through some intermediary, if at all.
I don't think people keep all their money on a single account.
I have 20 in my bank (different savings, some foreign currency accounts, etc.), and only one is tied to my debit card. I move money there when I need it.
Opening another account number is just few clicks away. There is a limit for it also.
Do you mean debit cards? With very few exceptions, you can't pay with direct debit in-store, and for online payments at merchants that don't know/trust you yet as a customer it's also pretty uncommon.
Yeah, it's uncommon, but bank wire does exist, and while (like cheques) it's typically used for paying rent / utilities / sending money to non-businesses, it does seem to become more common since it was improved to be 'instant' ?
What are you talking about? When have you last been to Europe!? Of course you can pay with debit cards all over Europe, every card terminal accepts them!
Online the same, you just use your card details like a credit card, the payment system is the same for years now anyway - thats the whole point of initiatives like this digital euro and Wero!
Direct debit is not the same as debit card. You can pay in physical stores with debit card but not with direct debit (which does not involve a card at all).
As a side note, in some countries, it is actually possible to initiate a direct debit at the POS (since cards sometimes contain enough information to recover the IBAN, mostly for historical reasons), but this has significant risks for the merchant and is usually not worth the hassle as debit card fees are very low anyway.
What number are you entering online? If it's not an IBAN but something starting with a 4 or 5, you're very likely using Visa or Mastercard, or possibly a domestic scheme. This is not the same thing at all as a direct debit, which nowadays runs on SEPA Direct Debit rails.
The Digital Euro does not exist yet, and Wero is yet another scheme (settling via SEPA instant credit transfers, I believe, but that's more of an implementation detail and doesn't change the fact that it is its own scheme with its own rules).
Where do you live in Europe? This has simply not been my experience at all in France, Germany, UK, Italy and Spain so far. Online shops most of all don’t take debit at all and bricks and mortar shops will accept credit more often than debit. Again, my experience. And I prefer to pay with debit because I know the shop will pay less fees. I get refused at Starbucks, random shops in train stations, etc.
Do you really pay online, like flight tickets, with your debit card, that works? I try regularly, it never works.
In shops the main issue is that the terminal they use can only read Apple Pay credit cards. If you’re using you’re banking app to pay wirelessly, it may fail to work with some merchants.
It’s not that they don’t want to accept it, the physical card would probably work (I don’t physical cards anymore), but the system is rigged to favor credit cards it seems.
> Do you really pay online, like flight tickets, with your debit card, that works? I try regularly, it never works.
Which country is your card from? Many countries used to have their own weird debit card schemes, which often worked... erratically online. This is now rare, and even where it persists (eg Germany, with girocard), cards tend to be dual branded.
Unless they have a direct agreement with a credit card company, most payment providers will give one-size-fits-all blended rate about 2.7% per transaction, even if it's debit.
This is incorrect; 2.7% sounds like a US merchant fee. Most payment providers have considerably lower fees for EU merchants. Larger merchants can generally get lower fees by negotiating with their payment provider (this is the case for both EU and US merchants). Having direct agreement with a network _is_ somewhat a thing, but mostly in the US, where the network's fees are less regulated.
You’re talking about scheme or interchange fees? In any case, it’s much lower. I think only business cards are still an exception in Germany. Interchange fees are capped at .2 or .3% and scheme fees are much smaller.
I use a German bankcard and it will cost less to the merchant, that is the reason credit card were refused for such a long time. Covid broke this, as contactless was preferred and bankcard were not available for payment on smartphones at the time.
> How does digital euro replace credit cards? That's basically the same as direct debit. It doesn't address the reason why I use credit cards.
Exactly, it is just their latest marketing move to have people accept it.
I was in a meeting at the ECB 6 years ago, the digital euro was high priority and we were supposed to see the first pilot 5 years ago.
The project is actually older and I saw schematic of the system and screenshot and the management interface 6 years ago. It was developed by a German company.
I am not sure why we are not using it right now... it can either be:
- the urgency, like upcoming financial collapse, disappeared,
- the bank lobbied so hard they killed the previous design,
I was wondering about this. I wonder if there are insurance products to close this gap? Or maybe some banks offer accounts with different kinds of purchase protection.
I'm with you. While I'm no fan of the risk involved with missing a CC payment, there's a mountain of difference between credit and debit when it comes to fraud. It's literally you trying to get your money back (debit) versus some giant corporation trying to get _its_ money back (credit).
There are still protections from the bank/visa/mastercard network.
Somebody somehow stole my card credentials (online i think) and managed to get money out of my debit account through some obscure way without 2FA. The money disappeared but transactions showed up as “uncleared” and after few days i had money back. My bank said that i have to wait for the transactions to clear before they can start the transaction dispute because now it's in network hands.
It’s fancy instant payments, which most of the developed world already has. The question is which unnecessary intermediaries do you continue to remove as you refactor legacy financial infra.
Credit card rails are expensive legacy rails, that part of the stack is the target to disrupt in this context. In the context of the digital euro, you can think of it as a demand deposit account backed by the central bank (as most fiat deposit accounts are in some way) that is portable between banks, like you’d move a US investment account that can hold securities between brokers with ACATS at the clearinghouse.
The exact technical details aren’t terribly relevant imho, just that the EU has found the will to implement a superior value storage and transfer system, a benefit of which is avoiding US entities and infra. I have intentionally simplified for the layman audience, and understand if you take issue with my simplification.
Your comment history shows a decidedly anti EU sentiment, including against EU sovereignty (https://news.ycombinator.com/item?id=48515118, for example), make of that what you will.
> How come the EU is making a "digital sovereignty" push? Why are only EU people allowed to compete for EU services? Are there no evil people in the EU?
I like tech that improves efficiency (disintermediating unnecessary US commercial payment processors) and decouples from proven threat actors and nation state aggressors, that is my interest on this topic, ymmv.
So you're really using credit cards as a proxy for a consumer-friendly (at least with regard to fraud/disputes) payments product.
Credit cards being more consumer friendly than bank transfers is usually an artifact of the concrete implementation, not the abstract concept. In many EU/SEPA countries, returning a direct debit is much easier than a chargeback in the US, for example. In some countries, people even consider credit cards as less secure because filing a chargeback takes marginally longer with most banks (and requires a letter as opposed to a single click in online banking).
If the digital euro is to succeed, it'll of course have to compete with cards on the usability side as well.
It's not just the chargeback process; it is that fraud actually removes money your account potentially causing other payments, like your mortgage, to default. With a credit card you have a month to get things straightened out before a payment is due.
This differs a lot by country and customer. For example, in Germany, without a fixed income, you’ll usually not get access to an overdraft loan.
In the US, overdraft is generally considered a very bad thing (almost worse than the idea of credit to Germans!) and a failure of the accountholder to “balance their (figurative, today) checkbook”, and the idea of an overdraft limit as a line of credit with a defined interest rate does not exist at all.
Yes, I was highlighting the difference with the US system.
Another difference is that if you know someone's account number, you can send them money but not take any out of their account. I understand it's more or less the other way round in the US.
In many European countries, "anybody" can take money out of your account, but you can return a direct debit for up to 13 weeks in case of unauthorized payments, and for 8 weeks for no reason whatsoever (including you just feeling like spending the money on something else).
Practically, the bank allowing a merchant to submit direct debits takes on significant credit risk as a result, so they grant that permission pretty carefully, similarly to how card processing merchant accounts require some level of trust.
For a lot of Americans the credit card system is another tax on being poor:
People with stable jobs and good credit qualify for no-fee credit cards with rewards / cashback. As a consumer you benefit financially from having a credit card. Those elsewhere in the thread worried about "debt" - you just set to auto-withdrawl the entire balance of the card every month from your bank account. Now you have free money. I can't think of a reason not to take advantage of this system in some way.
But people with unstable jobs and poor credit help subsidize these "higher-end" credit cards when they pay high interest rates on their because they missed payments or hold a balance over multiple months. For those people credit cards could help with monthly cashflow issues but are essentially a scam and not much better than payday loans.
Yet another system that American consumers are kind of forced to participate in that's a sort of tragedy of the commons (high-reward cards wouldn't exist without the exploitation of other people not savvy enough to avoid high interest and fees)
With autopay, you end up with two months of utilization stacked up. Even with a higher limit, you'll be penalized versus paying off completely like a charge card.
There is no such thing as free money, you're paying for it somehow. Maybe higher processing fees, maybe beggars on the streets and a society out of whack.
I don't have numbers for you, but I do know that every European I know is much more worried about card fraud than the Americans I know. One quick example is that the Europeans get very nervous when the waiter takes the credit card away from the table in the U.S.. This is just not done in Europe because there is a (at least perceived) history of skimming in much of Europe.
One big difference is that in the U.S. cardholders are largely protected from credit card fraud (not debit card fraud), so the card vendors have to take the risk and so have robust anti-fraud measures (both before and after payment). Largely it is the merchants who have to prove that there was no fraud. Whereas in Europe the burden of evidence (not proof) is with the cardholder.
Taking a card away from the table is weird for us because it's not what we do here so it becomes suspicious. Even so skimming is much less of a problem since chip and pin were introduced. Nobody I know has had any issues with fraud. We also require 2fa for online purchases.
There's also a large difference between counties. In the Nordics its ubiquitous, I haven't carried or needed cash for almost 20 years. Meanwhile Germany has barely started to use cards.
US card fraud rate is significantly higher than in the EU. In 2015 it was about 0.042% in the EU, vs 0.1388% for the US. The 2021 rates for the EU fell to ~0.028%.
You get nervous about giving your card to a waiter because you’re in a foreign place with a nonsense payment system worst than most developing countries and it’s not something you’re ever asked to do anywhere else.
Yes, because handing over your card to a stranger is considered a fairly crazy thing to do in most countries other than the US, as cards require PIN entry for most transactions (which actually does meaningfully prevent in-person card fraud).
In the US, you simply have no choice if you want to eat in a restaurant, so people are used to it. I'd expect total skimming rates to be higher in the US, since magnetic stripe transactions have been phased out in effectively all other countries. People don't care because they don't directly pay for the resulting fraud out of pocket. As a society, of course everybody still pays for it.
> Largely it is the merchants who have to prove that there was no fraud
No, in-store, it's the issuing bank that's liable, even in the US (unless the card is PIN-preferring, which is usually only true for foreign cards).
> One quick example is that the Europeans get very nervous when the waiter takes the credit card away from the table in the U.S.. This is just not done in Europe because there is a (at least perceived) history of skimming in much of Europe.
... No. It's just not done in Europe because it is _not permitted_. Chip and pin was made mandatory decades ago, and for that the cardholder must be present. It's not unreasonable to be disconcerted when something which just doesn't happen in your experience (the waiter takes your card away!) happens.
Skimming is also mostly now a US thing, as non-US cards no longer require a magnetic stripe at all (the only US has a stay of execution; Mastercard plans to completely phase out magstripes by 2033, and I think Visa is similar).
The US has _far_ more card fraud than the EU (about $15bn vs $1.5bn/year), largely for technological reasons (the US doesn't require, and many issuers don't even support, chip and pin, or 3dsecure, and of course there's the magstripe thing, though most card fraud is online these days where 3dsecure is more relevant).
> Whereas in Europe the burden of evidence (not proof) is with the cardholder.
This is the case for chip and pin transactions. It would generally _not_ be the case for foreign non-chip-and-pin transactions, though cardholders may not necessarily be aware of this.
How much you wanna bet that digital euro implementations will in practice depend on two US corporations? The EUDI wallet implementations being rolled out seem to so far. (Apple and Google, in case it wasn't obvious.)
I am still not quite sure how this would affect my day-to-day (private) payment experience transaction cost etc.
But is has strategic value for Europe:
> [...] European dependencies in critical technologies. A digital euro could mitigate these developments in the medium term if the infrastructure is mainly operated by European companies and if European payment service providers manage to achieve a leading position in the evolving ecosystem for digital euro services.
Well they already know me. I make about one small payment per quarter in cash, everything else via phone, card or bank transfer.
So I don’t see the day-to-day difference with digital euro, except that the backend seems to have fewer intermediaries (and maybe lower cost for the merchant?). Also it would work in more than one country which is good.
"Digital Euro"... Do people realize that maybe 90% of money is already digital, i.e. sitting as bytes and numbers on banks' computers ?
It seems to me that the actual problem that the EU is trying to solve it to find a tech managed by the ECB but that leaves space for the banks to keep existing in payment. They make a significant amount of money from Visa/Mastercard payments.
But we don't need payment terminals anymore: phones and QR-Codes are enough. We don't need Visa or Mastercard: just route payment instructions from payee's bank to payer's bank.
In Europe, we actually already have instant-payment through the SEPA network (i.e. IBAN transactions).
> We don't need Visa or Mastercard: just route payment instructions from payee's bank to payer's bank.
That sounds simple, but yet is basically nowhere as a payment infrastructure.
Various countries have their own low friction payments, like Norways' Vipps; we "just" (hah) need to combine them into one European Voltron of payments.
Can someone tell me why the EU doesn’t develop something like RuPay?
Indian UPI gets mentioned a lot, but when Visa, Mastercard didn't agree with data sovereignty rules among other rules, India quickly developed RuPay [0]. Now most debit cards in India are RuPay. CCs stand at 18% share.
They also integrate seamlessly to UPI.
Why doesn’t the EU consider something like that? They want to jump direct to digital currencies? Is that it? Something else?
[0]: Data rules came in 2017/18, RuPay was developed in 2012 iirc. But it got unprecedented push after the rule.
Wero is more UPI-ish than RuPay-ish. RuPay is just a local card scheme (Europe has a bunch of these on a national level, but attempts at an EU-level one have largely gone nowhere).
The largest payment systems in the world, in China [1] [2], India [3], Brazil's Pix [4] etc, leverage QR codes and other non card primitives for moving value. You can encode EMV [5] in a QR code [6].
> Wero doesn’t seem to be that. Am I missing something? Does making a new direct alternative to Visa/MC doesn’t make sense for the EU? If so, why?
To avoid US government control of your payments and US corporate payment processor extraction of value via your payment flows. How do you avoid someone else controlling your infra? You instantiate, operate, and maintain your own infra. Brazil runs their instant payment system Pix for ~$10M/year, for example. The cost is very reasonable to do so.
Cards (as implemented in the US at least, i.e., with individual purchases not confirmed by the cardholder) are a relic of a different time in many ways.
If you're building out a brand new system, why not make use of the computing device with input/output capabilities (that can be used to confirm amount, payee etc.) almost everybody already has in their pocket/purse anyway and instead rely on merchants being honest and only taking what they're owed out of your account without your confirmation?
Of course physical cards will also play some role in any future EU payment system, if for nothing other than resiliency (a card works without any battery and is cheap to keep in a drawer or suitcase as a backup for a stolen phone) and sovereignty (note who makes most phones' operating systems and runs their attestation providers).
> If you're building out a brand new system, why not make use of the computing device with input/output capabilities
There is no sovereign EU mobile OS. Adding a hard dependency to Android/iOS is removing one US hard dependency in your payment stack to add another. So, physical cards are a must until there is a European mobile OS with widespread adoption (i.e. never).
Unfortunately, the EU approach here has been not only adding this iOS/Android hard dependency, but also locking it down with crap like device attestation to make sure that it is impossible to use their "sovereign" systems without a US corporation (Google/Apple) certified device. They are actively hostile to alternatives like Lineage or Graphene for instance.
> If you're building out a brand new system, why not make use of the computing device with input/output capabilities (that can be used to confirm amount, payee etc.) almost everybody already has in their pocket/purse anyway and instead rely on merchants being honest and only taking what they're owed out of your account without your confirmation?
Because I'd like to be able to pay for things even if my phone is out of battery. I'd also like my grandma to be able to pay for stuff without bringing her phone to the store.
Don't get me wrong, I like being able to pay with just my phone. But I'd like a fallback option (in theory, cash is this too, and I do carry that, but it's used to rarely these days).
ATM cards are still safer than mobile based payments.
Elderly fraud in the US, scam/fraud calls and digital arrests in India are made possible by social engineering attacks and duping people.
For ATMs, if one has online transactions turned off (default option when you get a new card in India for most if not all cards), it is impossible. One has to walk to an ATM in a crowded place, insert the card, enter a PIN, and can only then withdraw money.
> ATM cards are still safer than mobile based payments.
> For ATMs, if one has online transactions turned off (default option when you get a new card in India for most if not all cards), it is impossible. One has to walk to an ATM in a crowded place, insert the card, enter a PIN, and can only then withdraw money.
So you're really saying that not being able to transact cashlessly at all is safer than being able to do so? I'd agree, but it's also somewhat inconvenient.
Oh yeah, let's put our financial sovereignty in the hands of American companies who have been fined repeatedly by the EU for breaking various laws. Seriously, if you have a problem with MasterCard and Visa, I can't imagine how you could NOT have a problem with Alphabet and Apple.
Wero isn’t a physical card if I am getting this right.
RuPay is.
You get a physical cc/dc with RuPay as provider instead of MC/Visa.
If I am not missing something, Wero is not that.
That is what I wanted to know: why not a traditional, homegrown card that is a direct 1-to-1 alternative of MC/Visa cards? Does that not make sense for the EU now? Why?
> why not a traditional, homegrown card that is a direct 1-to-1 alternative of MC/Visa cards
Because the European market is fragmented. France, Italy, Germany, etc all have some sort of established localized payment system and in some states like Ireland and the Netherlands are entirely dependent on Visa.
There is no "pan-European" bank and individual states still care about their sovereignity. France will continue to back and support BNP and Credit Agricole against Germany's Deutsche Bank (and vice versa). The only solution at that point is to just bypass the whole problem and just go directly with mobile payments.
Additionally, China, India, and Brazil began building their DPD stack in the 2000s but European states didn't start until the last 2-3 years.
If you were starting from scratch today, though, would you really re-invent credit cards? There was at some point I think a vague plan for a European debit card network (at least one of the national debit card network actually supports foreign issuers on a technical level, though I don't think in practice this was ever implemented), but really, why use the card format, beyond "well, this is already a thing"?
Probably something like it. 99% of my transactions are card / tap payments. The last thing I need on my main bank statement is 100s of small transactions - bucketing these into a separate "account" is 3/4 of the point of using a credit card for me - the alternative is entirely separate "cash" like account the only difference then would be paying in advance vs paying in arrears (I do both).
It's simple: banks don't want the people they've fleeced to realise that they no longer have a role in the present age. If you let legal tender be exchanged directly via a central bank (which is semi-public by nature), banks lose a huge amount of liquidity that fuels fractional-reserve banking through loans made to generate massive amounts of cash, and without these, the banks are bust.
In many countries, at least some banks are nationalized. India’s biggest bank SBI (State Bank of India) is a PSU (Public Sector Undertaking).
UPI still connects with bank accounts.
My question was about something else: why EU doesn’t try and develop a homegrown card provider? It would provide exactly what MC/Visa does. Are we beyond that point in terms of technological advancement? Some other reason?
> why EU doesn’t try and develop a homegrown card provider? It would provide exactly what MC/Visa does
They have. A combination of petty squabbling and the lack of any real value proposition has always killed it. To have any chance of succeeding in the EU a new system needs to be something that no-one currently provides, because consumers are unlikely to adopt something that isn't clearly better than what they currently have, but more importantly no EU country is going to adopt a different EU country's system.
Also clears the way to control how the digital euros can be spent.
No thanks.
Ideal/Wero is good.
Use my credit cards for larger online payments. Mainly because it has insurance and makes it easy to dispute something.
Last year a large Swedish clothing brand didn’t deliver 400 euros worth of clothing. They said they did. I have nothing. Customer service unhelpful. I disputed it with the bank where I have the credit card. The same day it was fixed.
I'd rather have a democratically elected government in control than an unelected company that actively uses its power to censor things it doesnt like. [0]
Except that parts of the union are not democratic at all.
And in this specific case I kinda of agree with what they banned. And they are definitely not the only ones. Lots of financial institutions block these kind of things.
The EU has less democratic accountability than I would like, but it is there. National governments have been brought down over their poor choices at the EU level. Even if you think Visa/MC made the right decisions in these cases, the fact that they're being made by private companies accountable to no-one should worry you.
Wero is good? The company which is only reachable by snail mail, whose services are only accessible through devices running operating systems from the American megacorporations Alphabet and Apple (both known for being fined repeatedly by the EU for breaking various laws)? If that's what passes for good, I'd hate to see what you would call mediocre, let alone bad.
This has been de facto true for a while, not that it improves the situation. Various EU countries have legal limits for the size of cash transactions, requiring you to do it via a bank.
The idea that people have private property does seem to be something governments are incredibly keen to erode.
i hope the thing they roll out is a straight copy of pix from brazil. its fast, reliable, cheaper than debit cards and private (not anonymous but only the central bank can see your info). no corporations involved outside of support contracts and no stupid limits to make banks happy like this new proposal.
and there should be a right to use all payment methods in the constitution or whatever the eu equivalent is. all stores must accept digital euro and physical stores also accept cash. crypto shouldnt be a part of the system but protected from being made illegal in any member state, privacy coins especially.
This seems different than a credit card account though? I buy everything with my credit cards because I don't want to swipe my bank card at random merchants.
Credit Card usage is really different between those regions. While I lived in EU, I rarely used credit cards (even paying online works with debit cards). But in Canada/US, I almost exclusively pay with credit cards now when shopping. Although in fairness it took me a few years to get in the habit of using credit cards and 'collecting points'.
A vast majority of card transactions in the EU are done via debit card. Credit card accounts for only around 25% vs debit. And the only place I've swiped my card was once, in the US, about 15 years ago.
If this is true then what will this new "digital Euro" change about the reliance on US credit cards? It seems that the 25% of people that are swiping US credit cards are doing it for the convenience and benefits of using a credit card. Will this digital euro change that?
The headline is probably written for an American audience, or for brevity.
It should say "Digital euro clears key hurdle as EU seeks to break free from U.S. debit and credit card processors". Most debit cards in the EU are either Visa or Mastercard, although there used to be more local/national systems.
European banks offer the credit, but the payments infrastructure currently goes through US companies. The first step is to get those payment processors out of the picture.
In Brazil, which is further along in the transition to digital cash, PIX already supersedes debit cards. Some banks already offer deferred PIX payments, wherein the merchant receives the money right away and the buyer pays their bank later, with interest. The central bank is also developing a "pix with guarantee", which will compete with credit cards: payment would be agreed to be settled at a later date, with the bank guaranteeing that the merchant will receive the money.
Debit cards usually also use the Mastercard or Visa payment networks.
Even though I and the supermarket I go to are both part of SEPA and I can issue a bank transfer that will clear ~instantly, today cashless payments still involve EMV for various reasons.
A bank card is a type of card. Credit cards and debit cards are both bank cards. Prepaid cards are another type.
With any type of bank card, there's a bank that guarantees to a merchant that they will later receive a payment. With a debit card, the guarantee is backed by money you have on deposit. With a credit card, it's backed by the bank's money, which is higher risk for the bank.
Two US companies, VISA and Mastercard, have big networks for processing transactions with bank cards. These networks act as intermediaries to connect merchants (who want to accept payments) and banks (who issue cards) together. It's much simpler for a merchant to send a request to (say) VISA than to figure out which bank issued each customer's card. The payment networks also define, publish, and enforce standards and rules for the payment process.
These networks aren't banks. But they are, in a sense, bank card companies because they are part of the bank card system.
So in other words, European consumers have an account at a European bank that issues them a card they can use for purchases at European businesses, but US networks connect it all together.
Visa and Mastercard are both US companies and they issue both debit and credit cards. If you have a UK or EU bank account with a Visa or Mastercard, regardless of currency or whether it's debit or credit, you are still ultimately reliant on US companies to clear transactions every time you use it. That's what the EU want to reduce.
it's about the payment processors, not the card type, though the article makes it confusing by mentioning credit cards as it's really not about that at all
Read the FAQ, it's about no longer relying on US payment processors for handling transactions in a different country that may not support your country's payment system
This is not an issue in Europe (and really in most if not all countries other than the US at this point), since both credit and debit cards require a PIN for all non-trivial payment amounts.
Are you in the EU or the US? The US has very different laws than the EU; specifically, in the US, credit card rewards and fraud protection strongly encourage credit card usage.
On an article like this, I encourage anyone giving an opinion based on their own experience to say what country it's from. (Or have this in their profile.)
I am hoping this could be utilized by those living in the US who also don't want to use the dollar. The surveillance has grown too large and I don't trust my own money. The IRS requires all transactions sent to them if they total $600 or more on a payment app. Why would I want my money in US dollar when the Euro has vastly more robust protections and less corruption?
> The IRS requires all transactions sent to them if they total $600 or more on a payment app
I regret to inform you that your tax obligations don't disappear just because they're in a different currency. Worse, because you're a US national, they don't disappear even if you're physically in a different country.
I don't understand why you need a "digital Euro" since debit card transactions are already "digital", and widespread in Europe (Girocard, Carte Bleu, etc.)?
This sounds more like a cross-EU unified payment system/mechanism rather than a "digital currency" (which already exists).
AFAIK the ECB wants to have both things. Digital Euro being a CBDC could open up a lot of possibilities, but they want an unified payment system, too, and that would be a nice first job for digital Euro.
I must be missing something because I still don't understand what differentiates a "Digital Euro" from "Euro stored in digital form". They're essentially the same. The reason why crypto currencies are different is the mechanisms by which they are exchanged (i.e., blockchain) or how they are issued (i.e., mining). The ECB already has control over how the Euro is exchanged and issued. The only thing a digital euro does is eliminate the cash aspect but these days that's a small amount, and they could also achieve by gradually retiring cash and shrinking the available amount (like Sweden has done).
The difference is more a financial or legal thing, than a technical one.
From an users' perspective paying with digital Euro would work more-or-less the same as you pay today with card, bank transfer or something based on QR codes. But it will have very different guarantees and trusts behind the scene.
Today you don't really think about keeping your money in a bank and paying with card as a different thing than having physical cash, because banks and payment services have very strict regulations and insurance schemes. Banks rarely goes bankrupt and even if they do, most of the people are not affected, because they get back their money from deposit insurance.
Banks can create money from thin air (without the approval of the central bank) and lend it to you (and destroy when you pay your loan back), they can not do that with Digital Euro.
Everybody would be able to convert all their Digital Euro to banknotes at the same time, but that would bankrupt any commercial bank.
Banks can deny your request to open an account or provide payment services to you (e.g. what happened with the ICC judge), you can own Digital Euro without having a bank account.
Banks pay interest for using your money (and the risk you take), this could even be negative that means some people even willing to loose money if they can have Euro instead of their original currency. Banks wouldn't be able to use your Digital Euro, you wouldn't get any interest on it.
Digital Euro (the same way as physical cash), is a legal tender, money in bank and card payments are not.
The value of Digital Euro doesn't depend on your bank, the numbers on your bank account could worth nothing if your bank goes bankrupt, central banks can not go bankrupt.
Digital Euro (for a limited amount) could be exchanged directly between two peers like physical cash (offline, without connection to internet or any bank).
Some people argue that it is just for more government surveillance and control, but the government already could access your bank and card transactions and freeze or confiscate your money.
I hope that they don't fall into the same trap that a lot of EU projects fall in to: only solving one problem.
My VISA card is not only a convenient payment method, it also forces ATM operators to give me cash without any extra fees. In Germany the EC card used to be THE way of paying with a card but you had to go to the ATMs of your bank, otherwise there would be sometimes pretty ridiculous fees. The kicker was that the fees were set by your home bank.
Add to that the ease of use online as well as in shops and it's easy to see that this is not going to be easy. I do root for them though, to do better than Wero.
What does your visa card do to force them to not charge fees?
I still see atm fees over here in the us, so it can't just be being visa. I would guess some regulation but you could get that applied to the digital euro too probably?
I've seen VISA cards with several banks in France where there is commission after 1 to 3 monthly ATM so I'd be doubtful about VISA having such as requirement.
As far as i know, your Visa provider pays for the bank ATM fee and they do this with the motivation that you pay with your Credit Card which then basically makes the merchents pay it through the credit card transaction fee which at the end you pay anyway.
I do use my credit card everywere and i'm sure ingdiba is also saving money due to not having offices/ATMs everywhere, but i wouldn't mind if something in the background changes and we can replace Visa/Mastercard with something from the EU.
It is indeed ridiculous. In the UK all bank cash machines are free no matter which bank you're from. My Girocard charges me 7€ for out of house withdrawals.
I'd rather they didn't waste time worrying about ATM's. I have used one once in the last 5 years. Almost everywhere I visit regularly doesn't even take cash now. The problem being every requirement you add to something like this is probably years of development time given it's the government(s) involved.
My Danish bank imposed a fee on using an ATM from another bank, until my income was high enough to make me a "premium" customer, then these fees were removed. The card didn't change.
I don't know why but my bank offers a VISA debit card and an EC card. I can use the VISA card on every ATM without fees and it doesn't cost me extra. The EC card has extra fees for when I want to get cash with it. I have seen other banks do the same. I think I heard that this is a VISA thing but maybe I'm wrong or misheard.
This sounds like "government issue Revolut". Which would be... low-key nice? Not a nefarious scheme, not a revolutionary future of money, just something to replace a certain part of your financial life without tying it to a commercial entity. Which might be appealing to the anti-capitalism segment of Europeans.
I theory it should be more. The ECB claims you will be able to hold and spend a (limited amount of) digital euro offline (without internet connection).
> The approval of draft rules by the economic committee of the European Parliament comes after three years of wrangling between the ECB and banks, which have been concerned about deposit outflows and lost revenues and sought to limit the scope of the project.
This kind of thing is why I'm optimistic both about Bitcoin and fiat currencies in third world countries like Brazil and India.
Pros: break the duopoly of Visa and Mastercard. Convenient. Low fees.
Cons: in a couple of years, a well-meaning but idiotic EU official will try to restrict what you can buy with Digital Euros and demand that the police keep tabs on your purchases. You know, to “protect the children.”
Not really. Euro cash today is paper / plastic banknotes and metal coins. Your account in the bank is not really cash you own, it is more like the banks liability towards you.
If your bank fail, you loose the money you held in the bank (except the insured amount). If you have some cash, that's independent from any private company, and it must be accepted everywhere. Digital Euro should have the advantages of cash and the comfort of electronic payments, too.
This is interesting and poignant less because of the digital currency aspect and more because of the geopolitics. In a world where technology touches everything, tech itself becomes political.
The boulder that is de-Americanization has rolled too far downhill now and gained too much momentum; it can no longer be stopped.
The two thirds of Americans who either voted for Trump or couldn't be bothered to vote against him because they aReN't PoLiTiCaL are going to have to come to terms with their new place in the world one way or another. The US is no longer seen as a stable military partner[0], nor a stable economic partner as evidenced by TFA. It's easy to blame Trump but he is merely a symptom of the root cause, which is the attitudes shared by a huge number of Americans.
America will cease to be (and in some cases already has ceased to be) the world's epicenter of geopolitical soft power, scientific innovation, and financial clout. Treaties to which the US is a signatory are not worth the paper they're printed on. The foundations have already been laid, and the de-Americanization trend can't be stopped. For a people so accustomed to feeling like a privileged special class of world citizens, I honestly wonder if the American psyche can handle it. Probably we'll see a wave of people who "never supported Trump in the first place", just like tons of Germans were "never Nazis in the first place" once it became socially unpalatable.
So, congrats, I guess. At least you guys got some people with brown skin deported.
Don't underestimate how much in bed are many of the european politicians/oligarchs with US neocon class. Trump is also problem for them. If Trump gets replaced by some moderate neocon on wave of “good old times” every one of these lobbied politicians will jump back hail comming of the golden age, buy everything american again and delete all this sovereignity out of the sky.
Trump moved overton window so much we will be fed story about how we shall be glad for the corrupted but not vulgar politicians that do barely minimum.
>If Trump gets replaced by some moderate neocon on wave of “good old times” every one of these lobbied politicians will jump back hail comming of the golden age, buy everything american again and delete all this sovereignity out of the sky.
I don't think so. In fact I think you, like the American delegation in the article I linked to, are dramatically underestimating the degree to which a lot of US allies feel betrayed.
Yeah. This is also a threshold thing. There was a reluctance to accept that the US isn't as big a deal as it once was. The numbers weren't good during Obama's presidency†, but there wasn't much reason to ask "Is this still OK?" a decade ago and plenty of reasons to avoid stirring. Trump provided an impetus to ask the question in a circumstance where the numbers continue to look worse and there's political will to re-assess.
† The US has far too much debt, far too much poverty (despite all those billionaires) and it doesn't look great by comparison to peer nations on lots of fronts such as health access and educational attainment.
I'm not gonna use CBDC because they'll get hooked up to digital id, no matter what they're "promising" right now. This is just another shitcoin no one asked for.
That's a clear case of perfect being the enemy of good. Are CBDC privacy friendly? No, but it's better than 100% of the credit cards currently being used in Europe being part of the network of two big US companies.
In real critical systems, that seldom happens. Satisficing is the recipe for disaster. The current disastrous "world" is built on imperfect systems, "what could possibly go wrong" style.
It takes full work to create an acceptable instrument.
You are mentioning an improvement over credit cards - we would like to have a payment system acceptable by - say, the more "attentive", "discriminative" members of this community.
Contextually, clearly, "widely accepted electronic money with privacy" - as since a few years I cannot make transactions online as all the decent ways are gone.
You cannot call "perfect being the enemy of good" something like "the former solution punched you in the face, this punches in the guts" - it's still "punches".
The contextual solution from the eu only affects those who accepted those credit cards - and already that is a special (while overwhelming) chunk of the population, since today they are mostly those who accepted NFC on financial cards (we don't).
In general, "perfect" is required - because today "acceptable" is not granted and it is crucial part of the details.
> Giving Europe independence from US payments processors is a huge deal and very necessary
You do realize that US payement processor like Visa & MasterCard rely on chip technology from French company (Gemalto, now part of Thales), so these companies aren't independent from EU to start with.
Getting independence from the networks themselves, you only need to create a local competitor ...
And those has been existing for multi-decades in each country. E.g. Carte Bleue(France) Bancomat (Italy), Bizum (Spain), SIBS (Portugal) etc.
Just merge those into a bigger more ambitious network
"EuroPA" is exactly that effort. A digital euro is completely orthogonal to that effort.
Crazy people don't see how dystopian and dangerous the concept of a centralized digital currency is...
GDPR could have been great, if it was actually enforced in the way it was intended. Cookie banners and dark patterns are not actually allowed, but without enforcement, it's basically meaningless.
IMO the biggest issue is that the member states are individually required to set up agencies to police this. This makes perfect sense for local companies, but is meaningless against large entities that operate across the entire EU.
Large entities (companies right?) take that very serious. Its the other way around, small companies might not be aware of.
Nonetheless, i have seen in a very small company that we changed the behaviour of a camera which then only turned on when the action expected it and not before.
And in a very big company you alway have to fullfill it as a product standard.
You can report issues to your local watchdog. That takes quite some time, given the large amount of companies that do not follow the law, but it is enforced
GDPR fixes at least some actors. There is no solution for all actors especially bad ones. But many big actors will take steps to be in compliance. Which is lot more actors than without such regulation. Perfect being enemy of better.
And at least now developers can have reasonable reason to ask do we actually need to store this or do we want to store it. Before that would have been stonewalled.
Credit cards in Europe are a form of very short term credit: you spend and pay the entire balance on the next month. The is very different from the model in the US, which is designed to keep you in debt forever.
Horrible idea. It's a step towards single-tier banking like in the Soviet Union, where the central bank takes the role of commercial banks. There's no other reason for this than surveillance and control.
There already exists multiple EU-wide payment systems handled by commercial banks. They just need to step up their game a little bit to get rid of Visa and Mastercard, which provide all the debit and credit cards.
??? Doesn't Europe already have Wero (iDEAL in Netherlands)? That's a system for making online payments. Money gets directly debited from your bank account.
I've always found credit cards stupid. You just want to pay for something, and then suddenly you have a debt. You shouldn't be in debt when you can clearly pay with money you have. Credit card companies advertise with "super easy payments" and "buy now pay later" but at the same time the government warns all the time that "lending money costs money". Also, if your credit card number and CVC get leaked, then anybody can steal any amount of money, and your only recourse is to regularly check your statements and warn the bank within a month. Whereas with Wero/iDEAL you must authorize the exact transaction at that exact amount.
Supposedly, Americans have these "credit card rewards" loyalty program things. Doesn't exist in Europe. You can only pay, you don't get any bonuses. Which makes the only reason to have a credit card is to be able to pay in web shops that don't accept Wero/iDEAL.
I assume you never really interacted with the credit card world? E.g. most banks in Germany will give you a credit card that automatically deducts the outstanding debt at the end of the month, you can't really collect debt over time.
In addition I can deposit money on my credit card, so effectively I never have to be in debt if I don't want to. I just have to charge it up which is done in like 3 seconds in the banking app. It can even be automated.
Credit cards serve the same purpose as loans: they allow you to make a purchase in advance of expected income. There’s a reasonable civic argument that this kind of loan should be tightly regulated to stop people from ruining themselves, but the basic economics work fine for millions of Americans who pay their credit cards on time (or otherwise consider a balance acceptable given their purchasing plans).
(I don’t think the fraud distinction you’re making is as stark in practice: in the US, you’re less exposed to fraud with credit since it’s the creditor’s money, not yours. Reversing a debit transaction in the US is somewhat more involved, albeit for not-good reasons concerning the US’s aging financial infrastructure.)
The way I understand it the Digital Euro doesn't compete with Wero. It's a way for the European Central Bank to emit money in digital form. In theory that doesn't require bank accounts, and can support offline transactions. It's a pretty different concept, more like a new form of money.
Wero, SEPA, and the digital euro are complementing each others
Almost all EU credit cards are automatic debit at the end of the month, i.e. carrying over balance is not even possible. You will simply be over-drafted on the linked debit account and charged a fee + steep interest if you spend more then you have. Typically until the overdraft is resolved, no further debit card payments can be made.
The only reasons to use a CC in EU are:
- online payments where CC is the only accepted form of payment
- delay payments until after receiving wage
- hotels, car rentals, and other places that lock an amount on your card
- extra insurance provided by some more premium cards (VISA Gold etc)
Ever since 3-D Secure (2FA for CC transactions, beyond the CCV code), you have been liable for any transaction that was validated by it. Your bank may still do a chargeback as a courtesy, but that's not guaranteed.
I don't think it's primarily about being scared of debt, it's just a weird, unnecessary step in-between. I have a credit-card and even I don't understand why I should prefer it over my debit card
Setting weird rewards/cash back things aside, which is the main incentive for folks to use it over debit card in most places:
It's not fully unnecessary step in-between when fraud is involved.
If someone hacks you/deceives you and somehow they got $5000 from your debit card, then your bank account is $5000 smaller. That can impact your ability to pay rent, or whatever you needed those $5000 for.
If it's via credit card, you have a decent amount of time to contest and resolve the issue.
the disputed amount should effectively be removed from your balance or offset by a temporary provisional credit until the investigation is completed
Transactions are protected by 2FA, they have to steal your phone and know your bank password. Whereas with credit cards, you have a single shared secret (number + CVC) with all merchants. Just one merchant needs to leak it.
That's not a myth and your story doesn't invalidate what I said. Never said Debit card aren't protected
Between the time [some money stolen] and [bank gave my money back] your checking account balance was lowered by the amount stolen.
With a credit card, your checking account isn't directly affected.
Both are protected, the difference is your effective checking account balance in the time window between the time the money is stolen and the money is recovered.
I've never understood this mentality. It's like walking through a dangerous neighborhood knowing that you have excellent health insurance. If you get stabbed, you'll probably recover very well, but why take the risk?
I can understand going into debt to buy a house, but I can't understand going into debt to buy a can of tuna. Why take an unnecessary risk?
Data shows they aren't that scared of debt, in fact some European countries have higher household debt than US, notably: Switzerland, Sweden and UK. It's pretty telling that Klarna is a Swedish company.
Paying with credit card gives you at least some leverage when a merchant doesn't hold their end of the deal. Good luck getting your money back with iDEAL (it's not possible right now).
Reminder to the people reading this thread and overall comments, that in Europe everyone uses Debit Cards instead of Credit Cards.
Credit Card in Europe is very much associated with Debt.
Reminder to all commenters that Europe is not a single homogeneous country and somewhat diverse in various things, including payments and finance. Credit cards are definitely a thing in many European countries.
In my corner of the world, credit cards were for buying stuff on the internet and travelling outside the EU. Now the net has evelved enough to accept our normal means of payment. I always feel insecure when using a credit card.
As a US-ian I feel exactly that way when using a debit card.
A credit card, if misused, can run up your balance and then you dispute, and don't pay anything until it's resolved. A debit card, if misused, can drain your account and leave you penniless until it's resolved.
I always find it funny that americans think the button to oppose a payement doesn't exists on my banking app because I have a debit card and not a credit card.
In your rush to dunk on Americans you misunderstood the comment.
Everyone in America is perfectly aware that the "dispute" button exists.
Trouble is, the lag time between hitting the button and getting your money back can be weeks. With a credit card you are out zero money.
> the lag time between hitting the button and getting your money back can be weeks.
Nope, it's as soon as the bank is aware. In your rush to correct me, you failed to understand that there are simply better customers protection here which make a product such as a credit card mostly useless.
Not beating the pretentious European stereotype.
Big if true.
Pretty sure that debit chargebacks lead to an instant credit (by regulation).
I'm almost tempted to test it right now but I am pretty sure I did this once and it took under 1 day
Ok now I asked a chatbot for how this is regulated. The answer was wrong as expected but it happened to mention the applicable regulation which can be looked up at gesezte-im-internet.de
§ 675u BGB - requires immediate credit for unauthorized card payments
§ 675x BGB - chargeback in 10 days for direct debit transactions (lastschrift)
https://www.gesetze-im-internet.de/bgb/__675x.html
I guess this is just germany but I vagely remember a payment processor eu directive that this is probably implementing (PSD)
-> Yes. It is article 73 and 76 of PSD
https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CEL...
So this holds EU wide for all banks.
This was literally 15 mins of googling (well duckduck ing) on the train.
Now there still could be counterveiling evidence and ianal etc, so use grain of salt. Gotta get off now.
It's mostly about who possesses the money. With debit, the money is transferred. With credit, the money is scheduled for transfer, subject to my approval.
https://en.wikipedia.org/wiki/Possession_is_nine-tenths_of_t...
This has basically nothing to do with it. A bank deposit is a liability of the bank, and possession is not a useful lens here.
What matters are the legal and contractual rights and obligations you have against the card issuer. In the US, these are historically different for credit cards (Fed Regulation Z) and debit cards (Regulation E), but since it's now effectively the same two schemes running it all and imposing their additional liability protections (largely motivated by considerations of brand perception, which would suffer if the same logo sometimes confers weaker protections).
The main practical difference nowadays is that in the case of debit cards, you're out your own money for a few days, while with credit cards, the only thing that temporarily suffers is your open-to-buy/line of credit.
> The main practical difference nowadays is that in the case of debit cards, you're out your own money for a few days, while with credit cards, the only thing that temporarily suffers is your open-to-buy/line of credit
Right, and this is GGP's main point
The risk to a debit card user in the US is higher because the money you need to pay your rent or mortgage may temporarily disappear due to fraud, and may take longer to resolve than your deadline with your landlord. When using a credit card, that risk is not on you.
Why would this risk be higher in the US than in Europe? Europeans usually pay their rent/mortgage using bank transfers too.
The risk isn't bank transfers to your bank for your mortgage. The risk is card skimmers at a gas station or whatever. The theft isn't when you pay your rent, the theft is something preventing you from paying your rent, due to some totally unrelated prior transaction.
I think the risk is higher in the US compared to Europe because Europe was way faster to roll out chip stuff, whereas in the US it's still somewhat common to have to use the mag stripe.
Ah, I see. This is about the prevailing consumer protections. In the US, debit is not treated with nearly as much privilege as the EU. While credit signals debt in the EU, debit signals poor financial situation in the US, since credit enjoys protections debit does not.
The fraud detection of the card processors is effective and they will disable a debit card before that happens. I've always had the money returned automatically the few times I've had one compromised.
Same fraud systems monitor credit cards except in the American case you get at worst 1% cash back so 1% off the purchase price of everything and if something does happen, and regardless of protections fraud still occurs, it’s the bank’s money that is gone and not yours.
Separately the EU is a large collection of states and each one has its varying levels of participation and sophistication with payment processing. Apple and Google Pay are both widely used and that won’t change, and by and large there’s no good reason for Europeans to not accept American credit cards so they’ll continue to do so.
Anyone telling you differently either doesn’t have the slightest idea what they’re talking about or they’re just caught up in a pointless anti-American fervor. Even in countries such as France American Express is accepted in more places.
Accepting cards from US-controlled schemes is not an issue at all. The geopolitical issue is not having any alternative, and these US schemes being the only way to pay even in domestic transactions.
Almost nobody considered this a problem until a few years ago, but the relevant EU stakeholders got pretty rattled recently [1], and my prediction is that this particular bell can't be un-rung.
[1] https://www.theguardian.com/law/2026/feb/18/international-cr...
They are aware of it, but there is so much US dependency that its very difficult to reverse course let along unto what has been done. The EU's age verification app will only work on Google or Apple controlled phones. A lot of payments are done on phones. A lot of other things depend on phones too - my local bus company (in the UK) requires its mobile app for some types of tickets. I have had to use phone based ID verification already.
Well it doesn’t matter whether it’s un-rung. Europe can develop payments tech, folks visiting continue to operate like they normally do. The US is increasingly accepting payment mechanisms and cards from other providers too. Continued competition is good here all else being close to equal.
Each nation or economic block or alliance or whatever will have to decide which kinds of products and services they’ll want to protect or build in-house. While the EU lambasted the United States when it began taking measures to do what the EU is doing now, it’s encouraging to see the EU change course and start to protect its industries, though who knows how effective that will be. China is looming large over the EU, Germany in particular.
Yep, that's why I always used CC and pay in full(until it become much more logical to pay the minimum and accumulate interest that is lower than the inflation).
It's much better to be indebted when buying something simply because if something goes wrong its much easier to convince someone to take their thing back when you haven't paid yet than trying to convince someone to send your money back and accept a return.
I've never seen a CC with an APR below 20%, which inflation has never hit in the US. But the logic is sound as long as your income is tracking inflation.
Your second paragraph is accurate.
In US, maybe. In Turkey before the general election in 2023 the rates were kept so ridiculously low that you could have taken cash out of your CC and put the money in the savings account in the same bank and make money out of the arbitrage. Everyone did it, having good credit meant license to print free money, IIRC it was %2-%3 per month tax free net profit on the credit you took on your CC limit.
The two times someone cloned my credit card were a) while travelling in the US; b) complaints that VISA didn’t refund. So there’s that.
Visa isn't a party to your contract with your card issuing bank. Your bank is responsible for filing a dispute, representing it properly, and (according to applicable law and/or as a good business practice for somebody that wants to retain your business) potentially reimbursing you out of pocket if a given transaction has issuing bank fraud liability.
Sure, but the fees I pay for go to Visa for, among others, combatting fraud and credit card cloning. I filled up my bank’s paperwork, I don’t know the inner details of their relationship with Visa.
That's interesting argument. Here it is usual to have a daily limit on debit cards. You can not spend more money than that, so a thief can not drain your account. Also many banks give you multiple accounts (you can transfer between them instantly). The debit card is connected to only one of them, so if you keep part of your money on the other account, that couldn't be touched even if the card payment limit has technical issues.
Multiple accounts (both debit and credit) are normal in the US as well, but I have never heard of a debit account here that has a daily spending limit.
Sounds like the US and Euro systems work fine within their own borders. Solutions designed for one make less sense in the context of the other.
It gets interesting when the two system interacts. Friends visiting the US told me that at the POS terminal they had to choose credit card despite paying with a Visa/Mastercard debit card issued by an European bank.
By the way, here banks even have daily bank / wire transfer limit that can be changed only by a personal visit to a branch, so even if your online banking credentials are stolen, the attacker can not empty your account.
> Friends visiting the US told me that at the POS terminal they had to choose credit card despite paying with a Visa/Mastercard debit card issued by an European bank.
The "credit" button in the US really means "use the Visa/Mastercard network and don't ask me for a PIN", as opposed to "feel free to ask me for my PIN and route the transaction over one of a dozen or so US domestic debit networks". The question doesn't even make sense for non-US debit cards.
> they had to choose credit card
And that doesn’t always work. For example, at a Chevron petrol station in California in the middle of nowhere we tried several European credit and debit cards, and nothing worked. At the end, the guy working there helped us with some prepaid option at the counter. He didn’t believe us until he tried himself that really none of our cards worked.
But the situation is way better than 5+ years ago. Back then, almost every second purchase of ours had some problem with our cards in the US. Now, we had like one or two in more than a week.
But of course, some car rental companies still pretend that they are generous that they allow debit cards. Not just in the US.
Cards and accounts often allow the owner to set those limits for e.g. withdrawals or transfers etc. There's often a separate limit for home country and abroad. They're there to limit damage that might be caused by user error or stolen cards or something like that. (Or just to provide peace of mind.)
Wells Fargo for the longest time had a daily spending limit on its Check Cards and a daily withdrawal limit. If you had a Debit (not check card) your “spending limit” was your withdrawal limit.
If you tried to make a purchase above the spending limit it was a hassle. I am old tho.
Normally you don't have your savings connected to a debit card.
Maybe you don't.
In the US it's common for much of one's money to be in a checking account, the same one to which your debit card is effective.
The solution is not to misuse your card. Don't do business with shady companies- problem solved.
Unfortunately, the reality is that rather than your card being directly misused by a "shady" company, it's more likely that most companies you transact with do not have perfect security and will suffer a data breach that may expose your payment information.
Pretty much all of the EU had Visa- and Mastercard-branded debit cards since the turn of the millennium, so one has been able to buy stuff from the net and travel abroad without use of a credit card for decades now.
As an outsider: which countries lean which way? I'm curious how things trend where and I didn't even really know that debit was used by a majority in certain places (Countries? Regions? Historical based delimiters?).
Germany is very debit-card oriented (with no interest of switching). The Netherlands seems similar. Eastern Europe and the Balkans are also mostly debit-card oriented, but people seem more open to switching to credit cards (if they can get one - especially the younger generation).
Ireland and the U.K. seem much more credit-card oriented than rest of Europe. Turkey is also very CC oriented (kinda strange - was not expecting that).
In the UK people predominantly use debit cards but credit cards are widely available. Everyone gets a debit card with any current account (i.e. non-savings account). In March this year there were 2.3 billion debit card transactions vs 400 million credit card transactions according to this:
https://www.ukfinance.org.uk/data-and-research/data/card-spe...
The preferential treatment of credit cards for certain transactions influences how they're used in the UK.
Suppose in January two people Carol and Dave bought a £250 August flight to Paris from some outfit that didn't do a great job hedging their fuel prices. Carol used her credit card, Dave used his Debit card. UK law says Carol's flight was bought by her bank, after all her bank handed over the money, Carol is on the hook to pay them back but didn't directly pay. But Dave bought his ticket, the bank isn't responsible.
Today the airline fails because their fuel costs blew up. UK law says Carol should be able to get her money back from the bank because they bought this ticket and now it won't work -- this is called "Section 75". Dave may have some protections via other consumer protection rules, but he's more likely to end up losing out.
The best chance for Dave might be "Chargeback" which is a card scheme which might let Dave tell his bank that he now wishes he didn't pay for the ticket. It's not very likely to work because January is a long time ago and so the bank will probably argue that Dave should have realised earlier that he didn't want to make this transaction. Because this flight touches the EU there are a bunch of extra protections which might help, none of them is as simple as Section 75.
The Section 75 protections mean Brits who are credit-worthy tend to pay for large purchases on a [credit] card even if they intend to pay it off immediately.
For what is worth, a few years ago, I was able to chargeback a significant furniture order after the company collapsed. It is indeed at the bank's discretion and my bank didn't really advertise the process, but the people in branch pointed me to the right place and the process was no fuss.
So, no, you do not have the same legal protection as Section 75, but it is always worth a try.
> The Section 75 protections mean Brits who are credit-worthy tend to pay for large purchases on a [credit] card even if they intend to pay it off immediately.
And Visa and Mastercard's global zero liability provisions protect everybody with a debit card, so de facto the difference is no longer relevant.
That said, some banks are pretty bad at making use of their dispute rights with the networks. I've seen several German issuers actually refuse to file "service not provided" disputes in case of a large airline bankruptcy a few years ago. (German bankruptcy managers can be somewhat intimidating rhetorically, but fortunately their personal opinions have no bearing on banking/payment laws.)
There's no reason Section 75 protections couldn't be extended to debit cards, except that in the mid-1970s banks were lobbying very hard for credit cards to become more legitimised and S75 was the successful result.
The banks took on a little bit of risk and in return unlocked a free money generator.
On the contrary debit cards are revenue-neutral or even loss-making for them
It used to be like that in Germany, it changed quite a bit. My debit card now is refused more often than my master card when I’m in Germany. I do tend to stay in large cities and not in the country side though, so my perspective is not a statistic.
But it definitely changed massively during Covid. Before Covid shops refusing _any_ card where still common (again, large cities is my spectrum) and debit card were accepted vastly more often than credit card.
Italy is also super oriented on debit cards. People call them "credit card" because they don't know the difference, or even "Bancomat" which is the brand name of the most used Italian debit card network.
Italians don't really care about credit cards, they just want to pay with their "Bancomat" card.
Debit cards would still be used a lot more commonly than credit cards in Ireland. The UK is, I think, slightly different, due to a slightly unusual situation with disputes.
In Ireland and the UK, from experience, people use debit cards a lot more than credit cards.
Some providers in the UK issue debit cards with limited interest-free overdraft and charge back features. So they are basically credit cards if you squint your eyes enough.
India has about a billion debit cards, but people mostly use them for ATM cash withdrawals, if that (banks used to give them by default during account opening, but have stopped this since UPI came into the picture). Only a single-digit percentage of people use credit cards, but they use them often and for relatively high-value transactions. The rewards game in the credit card space is slowly but surely reaching US levels, and they are associated more with stability and credit-worthiness since banks don't hand them out like candy, and India is, until recently, a debt-averse nation to revolve balances.
Mostly people use UPI, which is equivalent to debit cards given that amounts go directly from one bank to another. But UPI also supports some credit cards and lines, so there's that.
Only time ever used a credit card was to rent a car in Italy cause they didn't accept debit cards.
> Credit cards are definitely a thing in many European countries
Yes, a thing associated with debt.
I lived in the UK before Brexit, and that would be an example of such.
A lot of people in the UK use credit cards for the extra legal protections, and for cash back and reward schemes.
The UK has pay by bank, which is very like digital cash, and can be used online, but its much less used than cards are.
You are of course free to extrapolate your experience from a single European country to the whole continent, but it's still not a coherent argument for or against anything.
which ones use Credit Cards to a larger degree than Debit Cards, like they do in the US?
I don't think anywhere does. In general, cards in Europe don't really give significant rewards (because interchange, paid ultimately by the merchant, is capped at 0.3%, whereas in the US it can be upwards of 3% for certain high-end cards). The only reason that people who don't need the credit line use them in the US is the rewards schemes.
That's not what GP said. They claimed that "everyone" in Europe uses debit cards, and that's just not true.
Umm, no? Citation needed.
For what? Credit cards existing in Europe and having more than zero users? I trust that Google will serve you well if you really don't believe me.
One should also bear in mind that the technical difference between Debit and Credit cards is quite blurry in the EU. Like, a card can officially be of the Debit kind, but have all the features of a Credit card enabled. Which is actually and typically the case.
And for example in Ukraine the situation is exactly the opposite: cards issued are typically Credit cards, but with all features of credit cards turned off which effectively makes them debit cards.
Great point. N26 “credit” cards are debit cards with embossed letters in them and a CVV for buying online. Same with my Belgian bank.
Note to Europeans:
Americans use credit cards and rarely debit cards because here the terms on debit cards are so much worse (for contesting charges, etc), so debit cards never really caught on for anything more than withdrawing cash.
In the US, users of debit cards are assumed to be uncreditworthy, because debit cards in the US have such bad T&C's that poor credit score is the main reason folks use them here.
The article uses the term credit card for apparently no reason, because Visa and Mastercard also support debit cards. The EU is probably more concerned about Visa and Mastercard payment networks being under the control of American leaders.
We call every card a credit card even if most of them are actually debit.
we dont in spain, we call it "tarjeta de debito" and "tarjeta de credito" or just "la tarjeta" or the card.
And in Italy many people say Bancomat when they want to pay with the card even if they don't have a card with that circuit anymore.
It used to be the "blue card" in France (Carte Bleu)
That network still exists, and can now even be used preferentially over Visa/MasterCard, in particular when paying online.
Not everyone. We use both and mostly credit card for online payments that we pay off at the end of the month. It has a limit and it is easier deal with potential fraud vs a debit card where your own money goes. But does it matter? All my debit cards are Visa and Mastercard anyway.
My debit card is both MasterCard and CB. And a few months ago I noticed that I could pick either network when paying online.
Yep, although a huge % of banks are issuing Visa and MasterCard debit cards as default nowadays.
Amazes me how London lost the plot. 30 years ago access, switch, access etc were common, but visa and mastercard managed to take over.
Switch merged with Maestro, which was owned by Mastercard, to become Switch-Maestro, which eventually became Mastercard Debit.
Yes. Most people here (Austria) use their mastercard debit card to pay cashless. You get them at 14 already IIRC.
And even when you have a credit card, it might act like a debit card (every payment shows as debit in your banking app, even if you really pay on the 10th of the month or something).
That reads like "in Europe" (which is a pretty diverse place? "everyone thinks debit is credit and credit is debit"?
I don't think that's the case.
I'm in Europe and I can't say this is the case at all. I've never heard anyone express such an idea.
Did you grow up in Europe?
I did
It is in germany.
It is a prevalent view among the lower socioeconomic classes.
Among the middle and higher as well.
The problem as I see it is that you pay your credit card bill only once a month which gives you no bearing on your effective balance. This is mostly a problem for lower and middle income people who live from paycheck to paycheck.
Middle and higher income people dont need debt on monthly basis and see not having that debt as personal virtue.
It just makes no sense to not pay things right away.
I would argue the opposite, makes no sense to pay right away when you can pay with no interest 15 days later on average.
In an inflationary fiat currency system it's always better to defer payment assuming you can manage your cashflow and you're living hand to mouth
> makes no sense to pay right away when you can pay with no interest 15 days later on average.
Why in a pray tell would you favor late payment? Why would I create myself a chore for an end of a month if I can just pop a card, pay and see the transaction in e-banking right away? If it is auto-charge by the end of month, why not charge it right away?
You are gaining absolutely nothing.
> In an inflationary fiat currency system it's always better to defer payment assuming you can manage your cashflow and you're living hand to mouth
What are you talking about here. We are talking about people paying with euros.
Say you spend €1000 per month. If you use a credit card, you can earn interest on that for an month and only need the money in your current account on the day you pay.
So at 5% annual interest that’s about €4. So yes it’s not huge, but that’s every month for your whole life and it compounds over time.
The benefit is small (it won’t make or break your finances) but real.
That’s what I mean by “inflationary fiat currency” - you are paying in something that constantly loses value. Therefore rationally, it makes sense to pay as late as possible.
In some sense everything is actually slightly cheaper if you buy it on a credit card and pay it off a month later
> Why would I create myself a chore for an end of a month
Do they not have direct debit where you live?
>If it is auto-charge by the end of month, why not charge it right away?
Because there's no way I'm going to keep anywhere close to that much money on my debit card? Because the credit card won't get randomly locked while I'm trying to pay a 40k euro hotel room bill in Asia? Or if it does, I can switch to another credit card or deal with reasonable customer service.
If you're only making small payments, of course it doesn't matter. If you're regularly spending significant amounts of money, doing so with a debit card will be a huge pain in the ass and an unnecessary risk.
Well in some cases paying with a credit card is the only option.
Notably, the IRS refused COVID relief applications using a debit card for identity. Stupid as fuck policy considering they're all connected to the main two credit processors.
Haven't run into that in Europe.
Some Europeans refer to girocards as "debit cards" and everything else incorrectly as "credit cards"
Some Europeans meaning people in Germany? Most people have debit cards from our normal banks here, credit cards are generally associated with companies like Revolut or Klarna, as they push ads for getting credit cards.
> Some Europeans meaning people in Germany?
I guess, I haven't really kept track, but I've observed this many times from different people.
> credit cards are generally associated with companies like Revolut
That's surprising. Revolut only offers credit cards in a couple of countries, and has only done so for a rather short period of time.
Maybe it was remember I was thinking of, there's a few that push credit card with ads
Slowly coming to a close in the US also.
Some places already of course not accepting Amex, some places not accepting Visa Infinites (CSR, Venture, etc).
The future of banking is direct. The days of free rewards at a loss are gone as premium US cards are nearing the $1,000 AF mark for luxury coupons.
Which places are distinguishing high-fee Visa cards?
The legislation has been in the works for years now (not fully approved just yet). It’s why many US banks all are trying to get around issuers any way possible now.
https://www.redbridgedta.com/us/market-intelligence/the-visa...
I am admittedly having trouble finding where I’ve seen it brought up, but some online forums I lurk on for finance have had stories of people being denied from using specifically Visa Infinite branded credit cards. There’s also been stories of businesses not accepting Chase cards flat out, which I assume is to also curb the higher costs they incur from the premium Chase cards.
Europe has long had laws in place that have hard caps set at 0.3% and 0.2% respectively for credit or debit cards. The US has been milking this with uncapped 3.0%+ fees, which is why the credit cards there drive so much profit - at the expense of every business owner.
Credit Card is everywhere associated with debt
In the US, having debt is seen as a good thing, as long as you stay current on payments. Not having debt gives you a lower credit score than having debt, which send kind of fucked up to me.
That's a common misconception. Credit score is positively correlated with paying on time, having high available credit relative to usage, and the age of your oldest credit account.
However, using more of your cards' limit (a high debt utilization ratio) actually reduces your score.
On-time payments are only one factor in your score. Depending on the model it may only account for 20-30% of the score. Using your cards a few times a year may satisfy the criteria. You don't have to take on any debt to have a high credit score.
can 100% confirm this on a personal level, outside of mortgage I have no credit card balances (I use CC extensively but always pay the full balance) and have had 835+ score for years now.
Yes. They want you to have the mortgage and the cards, and the record of paying them on time. If you had no mortgage and never had the credit cards, your score would be much lower.
I've had a high score with only credit cards and low usage.
That's what it technically is. Credit.
which is in fact a massive pain in the ass, because car rentals and hotels often require credit cards to make reservations (at least in my experience...)
I've almost always found a debit card works in those cases.
I've heard stories like "fine, we'll take your debit card, but only if you also pay a non-reimboursable $$$ deposit in cash" for car rental. (Mostly in central/eastern Europe.)
(From what I was told, the thing in favor of a credit card is that the rental agency can put a hold on the security deposit for much longer than on a debit card: a few weeks vs a few days).
Custom in Europe - where debit cards are the most common - is to settle the hotel bill on check-in.
Obviously. Because why would a rental company turn down > 90% of the customers?
Eu: Most of the people I know use debit rather than credit because we can manage our finances.
I only use CC, to earn airline points (based in Sweden). But I always pay the entire amount due at the end of the interest-free period, so I never pay interest.
I also like the fact that using a CC comes with better buyer protection than debit cards.
Rest of the world: most of us figured out how to use credit as a tool without tumbling into a spending pit. Takes a bit of discipline, sure but not impossible.
"I use debit because I can manage my finances" reads as "I don't trust myself with credit." If credit is a trap you have to avoid, that's not the flex you think it is.
It's a tool. Some people use it. Some people are scared of it.
Credit Cards improve your working capital position, interest free. Most people do not understand finance which is why debit cards are the "safer" choice.
How exactly does “we can manage our finances” follow from picking debit over credit?
Can't go into debt if you don't have a line of credit.
If one is capable of managing one's finances (and paying the card off in full every month), credit cards are a useful tool. They're a problem if one can't manage one's finances.
It is interesting that both options of either not using CC entirely or using CC but paying it off by the end of the month are equivalent, but you’ve somehow reframe the second ine as some virtuous skill one have to master (I’m not just buying bread, I’m also managing my finances by repaying the value of it in full by the end of the month to avoid being charged for interest and simultaneously improving my credit score).
Business model of banks in regard to CC are preying on people not paying it all in full for various reasons.
Financially, they're not equivalent. If you buy your bread on credit, you get an interest-free loan, and benefit from the time value of the money that you otherwise would have paid immediately. As you correctly point out, this value comes from those fleeced by the arrangement. If my comment attributed any moral valence to the two options, that was unintentional.
That only works if you keep less money than your monthly spend in high interest accounts. I always have a cushion on the account linked to the card. The only benefit of credit in the US is rewards cards that transfer wealth from those with poor discipline and financial illiteracy.
If you can manage your finances then delaying all purchase payments by 30 days for 0% interest is a no brainer. And then all the other perks that come with some cards, like accruing some small percentage of your transactions as points, extended warranty protection, ability to request charge backs if necessary, etc.
A person able to manage their finances would have no issue using a credit card.
It makes a lot of sense to avoid them if you know you are incapable of managing your finances, though.
You should learn why people really use credit cards in North America instead of making generalizations.
[dead]
And most Europeans that have a credit-card need to pay them off at the end of the month. Technically they are charge cards. Unlike a traditional credit card, a charge card does not allow you to carry a revolving balance.
This is not true. Plenty of Europeans have credit cards which work exactly like US credit cards.
The main difference between credit cards in Europe and in the US is that poor people can't get them here.
> The main difference between credit cards in Europe and in the US is that poor people can't get them here.
Nah, really the main difference is that the EU caps interchange (paid ultimately by the merchant) at 0.3%, whereas it can be upwards of 3% in the US for high-end cards. Without big interchange earnings, there's little reason for issuers to push credit cards, and they're less attractive to consumers (interchange pays for 'reward' schemes).
I was denied credit card after changing jobs. I did have some student debt, but small amount on small payment and rates were low. Also had other credit card but not high limit. Nothing in negative credit history.
Did get the same card a few months later after probationary period. But yeah even without significant existing debt you can get denied in Europe.
Let's not pretend that predatory lending is not a thing in at least some EU countries as well, just because it takes other forms (installment payments, buy now pay later etc.), but as a general trend, I'd agree that it's much less common.
I have to pay it off each month unless I want the high interest rates (20%? Not sure, a direct debit clears it monthly after payday and the 1% cashback is credited each year
This is very unusual these days.
Can we please cool it with the sweeping "most/all of Europe" assertions? This, just like credit use overall, is also highly country/region specific.
How does digital euro replace credit cards? That's basically the same as direct debit. It doesn't address the reason why I use credit cards.
I use credit cards as a proxy for my bank accounts. I know that my issuing bank will protect me from all fraud so I don't have to worry about losing money if I buy something from a fraudulent merchant. I also know I can do things like chargebacks if I have to.
None of this is addressed by digital currency, it's basically like using cash which is haphazard today when there are so many scams everywhere around the world.
In EU most people use direct debit. The term "credit card" is almost synonymous with debit. Chargebacks theoretically exists but they are more complicated, I don't know anyone who ever did that.
Maybe in the past, but nowadays you can call your bank for a charge back or you have an option in the banking apps
I do have to say though, that with customer protection laws we have it has never happened to hear about a friend getting a charge back from the bank, usually you go to the seller first (or the platform if you got scammed) and you get refunded there
I’m European and protection laws are nice to have but if a shop doesn’t refund you those laws don’t automatically give you your money back. That is where a credit-card comes in handy. I don’t know any bank that offers this protection on a debit-card.
Yes, but even then you can usually go to the bank, at least in italy despite not being called chargeback you can ask a refund for scams or similar issues. More modern fintech banks give you this option directly in the app, otherwise you might need to chat with an operator
At least here I see online that there's the possibility to do so (even with debt cards). However, I guess that with a credit card it is going to be less annoying for you, or any way easier for you, since it's their money on the table and not yours
I'm talking about italy btw
Edit I also think that prepaid cards here are what have less protection
The bank, at least all of mine, will ask for proof that you tried to resolve it first with the seller, so that is why I believe.
Yes, but the EU is quite diverse.
I have some Irish friends. And Ireland seems similar to the US when it comes to credit card usage (vs debit). I assume that is because Ireland is heavily influenced by US and UK banking habits. On other hand, Germans only use debit cards.
> And Ireland seems similar to the US when it comes to credit card usage (vs debit).
That's definitely not the case. Many people would have credit cards, but there's a lot less incentive to actually use them than there is in the US, because the interchange (paid ultimately by the merchant) is capped at 0.3% in the EU (whereas in the US it can be upward of 3% on high-end cards). The interchange pays for the 'reward' schemes that US card issuers provide, largely. Without those, why bother?
I've a credit card, but I essentially never use it, except when visiting the US (where some vendors actually refuse debit cards, or at least used to).
> Without those, why bother?
Peace of mind (that your checking account is not drained)?
How would that happen? Chip and pin has been mandatory for years, as is 3dsecure.
That is not going to help if:
- someone steals your card and PIN
- the merchant turns out to be dishonest (or some misunderstanding) and you want you money back
- you fall for fraud
- the merchant mistakenly charges you, causing an overdraft on your checking account
I am Irish and in my experience most people use debit cards these days. I have a credit card but almost never use it.
I assume this is my “bounded rationality” / “bubble” bias (my impression was based on the people I know and not the full picture)
I checked the stats, and about 40% of purchases in Ireland are made by credit card. In the US, it is around 70%.
Where'd you find that stat? I can't find any stats which break out spend by debit and credit card for Ireland, but what I can find is that (as of 2024), there were 7.95 million active debit cards and 1.58 million active credit cards in Ireland (which has 5.2 million people). Given that, the 40% stat seems implausible.
Honestly shocked its as high as 40%. I assume that's by value not transaction count.
How do you deal with fraud and people cleaning out your bank account money rather than OPM of a credit card company? Just have enough spare cash for a burner checking account and wait for the fraud reversal?
In the US you'll almost always get your money back if someone defrauds your debit card but you could be in for a painful time if you depend on the money in that checking account until it gets fixed.
Banks suck it up, but fraud is likely a lot less prevalent because 3D Secure is mandatory for online transactions and chip and PIN were ubiquitous way before the US seemed to have started using it.
The US still hasn't started using PINs for all credit and most debit transactions, and at this point it doesn't look like it ever will.
Apple and Google Pay are just as (if not more) secure anyway for the majority of transactions, and a long tail of US restaurants, hotels, corporate card issuers, rental car agencies etc. will simply never change their legacy flows. There are just too many incumbent stakeholders.
It’s a pity that US regulators can’t manage to mandate that the dinosaurs get with the times as fraud seems to me to be an enormous burden to US consumers.
Even if fraud victims get their money back, firstly it must be an admin headache and then merchants have to cover fraud losses/insurance costs and thus mark up all their prices to make sure they do, so everyone is subsidising the fraudsters.
I presume it’s lobbying that would/does thwart any attempts at any such regulation.
As someone outside of the US I would like to be able to largely ignore this problem as just affecting people over there, but unfortunately it spills into the rest of the world.
When I last had fraud on my card it was through an online US merchant, because, like most US online merchants, they don’t use 3D secure. If they did then blocking the transaction for me would have been as simple as pressing the “it’s fraud” option when my phone would have received a “do you want to allow this transaction of $X for Y in the US?” that my bank’s 3D secure system normally sends to me.
Hopefully Apple and Google Pay will eventually help things over there.
2FA on online transactions, secure PIN authentication for in-person purchases.
These reduce the level of fraud, and the banks cover the rest.
The basic stuff (online shop not delivering, going bankrupt etc) are covered for debit cards in a similar way as credit cards in other countries.
I've never had a fraudulent transaction myself, and it's over 20 years since I first had a debit card — with a chip and PIN.
Yes, I think most people have several accounts, or at least a main and a "spare money" account. If you can prove a fraud the law mandates the bank to back it up. In EU bank apps there are often many warnings and popups when authorizing a transaction. Also in EU you can get a refund of any digitally made purchase, by law you can send back the item for 30 days.
Chargeback always seemed strange to me and never needed it. Fraud should be reported and handled at the root, not by making digital transfers into some magic disappearing money.
SEPA Direct debit still has a confirmation from the account holder. You usually see the pending transaction before it clears and can block it. Some banks (dreadful and hated bunq for example) require an active confirmation from the account holder before it is allowed to clear. Some have a setting hidden somewhere that sets the policy to autoaccept or something else.
I haven't ever seen illegitimate direct debit. I guess you need to have an actual business to issue direct debit orders and bank will show you the door and freeze your money if you start doing funny things. I guess.
Probably the dreadful R word has something to do with it, go figure.
On cards we also have limits and the only time I saw something happening was after being unfortunate enough to pass through ~~the ghet~~ the glorious capital of our continental Empire, majestic city of Brussels. That time the bank tried their best to call me.
> I guess you need to have an actual business to issue direct debit orders and bank will show you the door and freeze your money if you start doing funny things. I guess.
You are guessing right. To receive direct debit transactions, your bank typically forces you into an insurance contract to cover disputed transactions, plus they block a minimum balance on your account, plus they require some overview of your company assets, in case the former two measures aren't enough. No chance to get direct debit approved as a private person or small company. And the amounts you can receive, as well as the number of transactions will be limited to your insurance coverage. And if there are more than a very small number of disputes, you are done.
Which is why for small businesses, direct debit is only viable through some intermediary, if at all.
Never had fraud on my credit or debit cards, and with 3D Secure it's difficult to pull off (basically 2FA for all online credit card purchases).
But I did have someone fraudulently making direct debit transfers from my bank account. My bank cleaned that up within three business days
can you give an example of being defrauded? I don't really know what people mean when they say that.
The only place I (as an EU citizen) ever came in contact with direct fraud was in... US.
It's not much of an issue within the EU area. The banks tend to offer insurance products for people who want to cover that risk.
These insurances are the greatest sales trick of all time: Banks selling you something they're legally required to provide for free already.
I don't think people keep all their money on a single account. I have 20 in my bank (different savings, some foreign currency accounts, etc.), and only one is tied to my debit card. I move money there when I need it. Opening another account number is just few clicks away. There is a limit for it also.
Single account sounds more like a boomer thing.
Do you mean debit cards? With very few exceptions, you can't pay with direct debit in-store, and for online payments at merchants that don't know/trust you yet as a customer it's also pretty uncommon.
Yeah, it's uncommon, but bank wire does exist, and while (like cheques) it's typically used for paying rent / utilities / sending money to non-businesses, it does seem to become more common since it was improved to be 'instant' ?
What are you talking about? When have you last been to Europe!? Of course you can pay with debit cards all over Europe, every card terminal accepts them!
Online the same, you just use your card details like a credit card, the payment system is the same for years now anyway - thats the whole point of initiatives like this digital euro and Wero!
Direct debit is not the same as debit card. You can pay in physical stores with debit card but not with direct debit (which does not involve a card at all).
Yes, that's what I was getting at.
As a side note, in some countries, it is actually possible to initiate a direct debit at the POS (since cards sometimes contain enough information to recover the IBAN, mostly for historical reasons), but this has significant risks for the merchant and is usually not worth the hassle as debit card fees are very low anyway.
What number are you entering online? If it's not an IBAN but something starting with a 4 or 5, you're very likely using Visa or Mastercard, or possibly a domestic scheme. This is not the same thing at all as a direct debit, which nowadays runs on SEPA Direct Debit rails.
The Digital Euro does not exist yet, and Wero is yet another scheme (settling via SEPA instant credit transfers, I believe, but that's more of an implementation detail and doesn't change the fact that it is its own scheme with its own rules).
Most people in the EU use debit cards, they additionally use direct debit specifically for utilities, gym memberships, etc.
Where do you live in Europe? This has simply not been my experience at all in France, Germany, UK, Italy and Spain so far. Online shops most of all don’t take debit at all and bricks and mortar shops will accept credit more often than debit. Again, my experience. And I prefer to pay with debit because I know the shop will pay less fees. I get refused at Starbucks, random shops in train stations, etc.
That is not correct. You may be thinking of a prepaid card or something like vpay. Debit cards are accepted practically everywhere.
Do you really pay online, like flight tickets, with your debit card, that works? I try regularly, it never works.
In shops the main issue is that the terminal they use can only read Apple Pay credit cards. If you’re using you’re banking app to pay wirelessly, it may fail to work with some merchants.
It’s not that they don’t want to accept it, the physical card would probably work (I don’t physical cards anymore), but the system is rigged to favor credit cards it seems.
> Do you really pay online, like flight tickets, with your debit card, that works? I try regularly, it never works.
Which country is your card from? Many countries used to have their own weird debit card schemes, which often worked... erratically online. This is now rare, and even where it persists (eg Germany, with girocard), cards tend to be dual branded.
I never had a credit card. I cannot remember having an issue paying with debit cards.
Which country is your debit card issued to?
Maybe it’s specific to Germany, France
It is. I guess that it's more of an issue for banks in smaller countries ? (But how come SEPA is not more widely used even for B2C sales then ?)
Sounds like the digital euro might also have been designed to help with these issues ?
I live in Europe and been to many countries, only have a debit card, so not sure what you are talking about here.
Unless they have a direct agreement with a credit card company, most payment providers will give one-size-fits-all blended rate about 2.7% per transaction, even if it's debit.
This is incorrect; 2.7% sounds like a US merchant fee. Most payment providers have considerably lower fees for EU merchants. Larger merchants can generally get lower fees by negotiating with their payment provider (this is the case for both EU and US merchants). Having direct agreement with a network _is_ somewhat a thing, but mostly in the US, where the network's fees are less regulated.
You’re talking about scheme or interchange fees? In any case, it’s much lower. I think only business cards are still an exception in Germany. Interchange fees are capped at .2 or .3% and scheme fees are much smaller.
I use a German bankcard and it will cost less to the merchant, that is the reason credit card were refused for such a long time. Covid broke this, as contactless was preferred and bankcard were not available for payment on smartphones at the time.
They might be talking about a girocard https://en.wikipedia.org/wiki/Girocard
> How does digital euro replace credit cards? That's basically the same as direct debit. It doesn't address the reason why I use credit cards.
Exactly, it is just their latest marketing move to have people accept it.
I was in a meeting at the ECB 6 years ago, the digital euro was high priority and we were supposed to see the first pilot 5 years ago.
The project is actually older and I saw schematic of the system and screenshot and the management interface 6 years ago. It was developed by a German company.
I am not sure why we are not using it right now... it can either be:
- the urgency, like upcoming financial collapse, disappeared,
- the bank lobbied so hard they killed the previous design,
- the EU is just insanely incompetent.
I was wondering about this. I wonder if there are insurance products to close this gap? Or maybe some banks offer accounts with different kinds of purchase protection.
I'm with you. While I'm no fan of the risk involved with missing a CC payment, there's a mountain of difference between credit and debit when it comes to fraud. It's literally you trying to get your money back (debit) versus some giant corporation trying to get _its_ money back (credit).
There are still protections from the bank/visa/mastercard network.
Somebody somehow stole my card credentials (online i think) and managed to get money out of my debit account through some obscure way without 2FA. The money disappeared but transactions showed up as “uncleared” and after few days i had money back. My bank said that i have to wait for the transactions to clear before they can start the transaction dispute because now it's in network hands.
It’s fancy instant payments, which most of the developed world already has. The question is which unnecessary intermediaries do you continue to remove as you refactor legacy financial infra.
Credit card rails are expensive legacy rails, that part of the stack is the target to disrupt in this context. In the context of the digital euro, you can think of it as a demand deposit account backed by the central bank (as most fiat deposit accounts are in some way) that is portable between banks, like you’d move a US investment account that can hold securities between brokers with ACATS at the clearinghouse.
https://news.ycombinator.com/item?id=48415854 (recent subthread with some related context)
Global instant payment system map: https://www.pymnts.com/wp-content/uploads/2025/05/PYMNTS-Rea... [pdf]
>It’s fancy instant payments
That's a massive oversimplification, and doesn't even address the OP's point that directly challenges this.
Lot of errors in your post.
Not to mention the fact that you confuse Mastercard and Visa for "credit card rails" further underscores this.
The exact technical details aren’t terribly relevant imho, just that the EU has found the will to implement a superior value storage and transfer system, a benefit of which is avoiding US entities and infra. I have intentionally simplified for the layman audience, and understand if you take issue with my simplification.
Your comment history shows a decidedly anti EU sentiment, including against EU sovereignty (https://news.ycombinator.com/item?id=48515118, for example), make of that what you will.
> How come the EU is making a "digital sovereignty" push? Why are only EU people allowed to compete for EU services? Are there no evil people in the EU?
I like tech that improves efficiency (disintermediating unnecessary US commercial payment processors) and decouples from proven threat actors and nation state aggressors, that is my interest on this topic, ymmv.
So you're really using credit cards as a proxy for a consumer-friendly (at least with regard to fraud/disputes) payments product.
Credit cards being more consumer friendly than bank transfers is usually an artifact of the concrete implementation, not the abstract concept. In many EU/SEPA countries, returning a direct debit is much easier than a chargeback in the US, for example. In some countries, people even consider credit cards as less secure because filing a chargeback takes marginally longer with most banks (and requires a letter as opposed to a single click in online banking).
If the digital euro is to succeed, it'll of course have to compete with cards on the usability side as well.
It's not just the chargeback process; it is that fraud actually removes money your account potentially causing other payments, like your mortgage, to default. With a credit card you have a month to get things straightened out before a payment is due.
As long as you don't go too far below zero, payments will go through. This may differ a bit per country.
This differs a lot by country and customer. For example, in Germany, without a fixed income, you’ll usually not get access to an overdraft loan.
In the US, overdraft is generally considered a very bad thing (almost worse than the idea of credit to Germans!) and a failure of the accountholder to “balance their (figurative, today) checkbook”, and the idea of an overdraft limit as a line of credit with a defined interest rate does not exist at all.
Yes, I was highlighting the difference with the US system.
Another difference is that if you know someone's account number, you can send them money but not take any out of their account. I understand it's more or less the other way round in the US.
In many European countries, "anybody" can take money out of your account, but you can return a direct debit for up to 13 weeks in case of unauthorized payments, and for 8 weeks for no reason whatsoever (including you just feeling like spending the money on something else).
Practically, the bank allowing a merchant to submit direct debits takes on significant credit risk as a result, so they grant that permission pretty carefully, similarly to how card processing merchant accounts require some level of trust.
Your transactions aren't tied to some provider in New York blocking you over night?
Which provider in New York are you referring to?
Please elaborate.
For a lot of Americans the credit card system is another tax on being poor:
People with stable jobs and good credit qualify for no-fee credit cards with rewards / cashback. As a consumer you benefit financially from having a credit card. Those elsewhere in the thread worried about "debt" - you just set to auto-withdrawl the entire balance of the card every month from your bank account. Now you have free money. I can't think of a reason not to take advantage of this system in some way.
But people with unstable jobs and poor credit help subsidize these "higher-end" credit cards when they pay high interest rates on their because they missed payments or hold a balance over multiple months. For those people credit cards could help with monthly cashflow issues but are essentially a scam and not much better than payday loans.
Yet another system that American consumers are kind of forced to participate in that's a sort of tragedy of the commons (high-reward cards wouldn't exist without the exploitation of other people not savvy enough to avoid high interest and fees)
With autopay, you end up with two months of utilization stacked up. Even with a higher limit, you'll be penalized versus paying off completely like a charge card.
There is no such thing as free money, you're paying for it somehow. Maybe higher processing fees, maybe beggars on the streets and a society out of whack.
We just don't have that much fraud instead.
I don't have numbers for you, but I do know that every European I know is much more worried about card fraud than the Americans I know. One quick example is that the Europeans get very nervous when the waiter takes the credit card away from the table in the U.S.. This is just not done in Europe because there is a (at least perceived) history of skimming in much of Europe.
One big difference is that in the U.S. cardholders are largely protected from credit card fraud (not debit card fraud), so the card vendors have to take the risk and so have robust anti-fraud measures (both before and after payment). Largely it is the merchants who have to prove that there was no fraud. Whereas in Europe the burden of evidence (not proof) is with the cardholder.
Taking a card away from the table is weird for us because it's not what we do here so it becomes suspicious. Even so skimming is much less of a problem since chip and pin were introduced. Nobody I know has had any issues with fraud. We also require 2fa for online purchases.
There's also a large difference between counties. In the Nordics its ubiquitous, I haven't carried or needed cash for almost 20 years. Meanwhile Germany has barely started to use cards.
US card fraud rate is significantly higher than in the EU. In 2015 it was about 0.042% in the EU, vs 0.1388% for the US. The 2021 rates for the EU fell to ~0.028%.
You get nervous about giving your card to a waiter because you’re in a foreign place with a nonsense payment system worst than most developing countries and it’s not something you’re ever asked to do anywhere else.
It's seem completely crazy to me to give your card to a waiter.
Yes, because handing over your card to a stranger is considered a fairly crazy thing to do in most countries other than the US, as cards require PIN entry for most transactions (which actually does meaningfully prevent in-person card fraud).
In the US, you simply have no choice if you want to eat in a restaurant, so people are used to it. I'd expect total skimming rates to be higher in the US, since magnetic stripe transactions have been phased out in effectively all other countries. People don't care because they don't directly pay for the resulting fraud out of pocket. As a society, of course everybody still pays for it.
> Largely it is the merchants who have to prove that there was no fraud
No, in-store, it's the issuing bank that's liable, even in the US (unless the card is PIN-preferring, which is usually only true for foreign cards).
> One quick example is that the Europeans get very nervous when the waiter takes the credit card away from the table in the U.S.. This is just not done in Europe because there is a (at least perceived) history of skimming in much of Europe.
... No. It's just not done in Europe because it is _not permitted_. Chip and pin was made mandatory decades ago, and for that the cardholder must be present. It's not unreasonable to be disconcerted when something which just doesn't happen in your experience (the waiter takes your card away!) happens.
Skimming is also mostly now a US thing, as non-US cards no longer require a magnetic stripe at all (the only US has a stay of execution; Mastercard plans to completely phase out magstripes by 2033, and I think Visa is similar).
The US has _far_ more card fraud than the EU (about $15bn vs $1.5bn/year), largely for technological reasons (the US doesn't require, and many issuers don't even support, chip and pin, or 3dsecure, and of course there's the magstripe thing, though most card fraud is online these days where 3dsecure is more relevant).
> Whereas in Europe the burden of evidence (not proof) is with the cardholder.
This is the case for chip and pin transactions. It would generally _not_ be the case for foreign non-chip-and-pin transactions, though cardholders may not necessarily be aware of this.
How much you wanna bet that digital euro implementations will in practice depend on two US corporations? The EUDI wallet implementations being rolled out seem to so far. (Apple and Google, in case it wasn't obvious.)
The goal is to detach your transaction from a new York based point of failure.
Here is a more technical description: https://link.springer.com/article/10.1007/s12525-025-00822-7
I am still not quite sure how this would affect my day-to-day (private) payment experience transaction cost etc.
But is has strategic value for Europe:
> [...] European dependencies in critical technologies. A digital euro could mitigate these developments in the medium term if the infrastructure is mainly operated by European companies and if European payment service providers manage to achieve a leading position in the evolving ecosystem for digital euro services.
Some more: https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse...
> how this would affect my day-to-day (private) payment experience
You will need to pass KYC at every counter.
Well they already know me. I make about one small payment per quarter in cash, everything else via phone, card or bank transfer.
So I don’t see the day-to-day difference with digital euro, except that the backend seems to have fewer intermediaries (and maybe lower cost for the merchant?). Also it would work in more than one country which is good.
"Digital Euro"... Do people realize that maybe 90% of money is already digital, i.e. sitting as bytes and numbers on banks' computers ?
It seems to me that the actual problem that the EU is trying to solve it to find a tech managed by the ECB but that leaves space for the banks to keep existing in payment. They make a significant amount of money from Visa/Mastercard payments.
But we don't need payment terminals anymore: phones and QR-Codes are enough. We don't need Visa or Mastercard: just route payment instructions from payee's bank to payer's bank.
In Europe, we actually already have instant-payment through the SEPA network (i.e. IBAN transactions).
> We don't need Visa or Mastercard: just route payment instructions from payee's bank to payer's bank.
That sounds simple, but yet is basically nowhere as a payment infrastructure.
Various countries have their own low friction payments, like Norways' Vipps; we "just" (hah) need to combine them into one European Voltron of payments.
That is the goal of Wero
Can someone tell me why the EU doesn’t develop something like RuPay?
Indian UPI gets mentioned a lot, but when Visa, Mastercard didn't agree with data sovereignty rules among other rules, India quickly developed RuPay [0]. Now most debit cards in India are RuPay. CCs stand at 18% share.
They also integrate seamlessly to UPI.
Why doesn’t the EU consider something like that? They want to jump direct to digital currencies? Is that it? Something else?
[0]: Data rules came in 2017/18, RuPay was developed in 2012 iirc. But it got unprecedented push after the rule.
They are, it’s called Wero. It is a stopgap, and sits on top of SEPA.
Goodbye Visa and Mastercard: 130M Europeans switching to sovereign payment - https://news.ycombinator.com/item?id=48207004 - May 2026 (777 comments)
Wero – Digital payment wallet, made in Europe - https://news.ycombinator.com/item?id=47038965 - February 2026 (132 comments)
Europe's Banks Launch Wero Payments to Dislodge Visa, Mastercard - https://news.ycombinator.com/item?id=41666833 - September 2024 (88 comments)
Unofficial Wero Adoption Tracker - https://www.werotracker.eu/
https://en.wikipedia.org/wiki/Single_Euro_Payments_Area
Wero is more UPI-ish than RuPay-ish. RuPay is just a local card scheme (Europe has a bunch of these on a national level, but attempts at an EU-level one have largely gone nowhere).
Is Wero something you can hold in your hands?
RuPay is just like Visa/Mastercard in the sense you get physical cards that you can use at ATMs, use at ecomm sites, etc.
Wero doesn’t seem to be that. Am I missing something? Does making a new direct alternative to Visa/MC doesn’t make sense for the EU? If so, why?
The largest payment systems in the world, in China [1] [2], India [3], Brazil's Pix [4] etc, leverage QR codes and other non card primitives for moving value. You can encode EMV [5] in a QR code [6].
> Wero doesn’t seem to be that. Am I missing something? Does making a new direct alternative to Visa/MC doesn’t make sense for the EU? If so, why?
To avoid US government control of your payments and US corporate payment processor extraction of value via your payment flows. How do you avoid someone else controlling your infra? You instantiate, operate, and maintain your own infra. Brazil runs their instant payment system Pix for ~$10M/year, for example. The cost is very reasonable to do so.
[1] https://old.reddit.com/r/AskAChinese/comments/1qgq6ya/why_di...
[2] https://www.brookings.edu/articles/chinas-digital-payments-r...
[3] https://easebuzz.in/explainers/upi/upi-qr-code/
[4] https://dev.to/woovi/how-does-pix-qrcode-work-5e3k
[5] https://en.wikipedia.org/wiki/EMV
[6] https://www.w3.org/2020/Talks/emvco-qr-20201021.pdf
Cards (as implemented in the US at least, i.e., with individual purchases not confirmed by the cardholder) are a relic of a different time in many ways.
If you're building out a brand new system, why not make use of the computing device with input/output capabilities (that can be used to confirm amount, payee etc.) almost everybody already has in their pocket/purse anyway and instead rely on merchants being honest and only taking what they're owed out of your account without your confirmation?
Of course physical cards will also play some role in any future EU payment system, if for nothing other than resiliency (a card works without any battery and is cheap to keep in a drawer or suitcase as a backup for a stolen phone) and sovereignty (note who makes most phones' operating systems and runs their attestation providers).
> If you're building out a brand new system, why not make use of the computing device with input/output capabilities
There is no sovereign EU mobile OS. Adding a hard dependency to Android/iOS is removing one US hard dependency in your payment stack to add another. So, physical cards are a must until there is a European mobile OS with widespread adoption (i.e. never).
Unfortunately, the EU approach here has been not only adding this iOS/Android hard dependency, but also locking it down with crap like device attestation to make sure that it is impossible to use their "sovereign" systems without a US corporation (Google/Apple) certified device. They are actively hostile to alternatives like Lineage or Graphene for instance.
Yes, I acknowledged that in my second paragraph.
> If you're building out a brand new system, why not make use of the computing device with input/output capabilities (that can be used to confirm amount, payee etc.) almost everybody already has in their pocket/purse anyway and instead rely on merchants being honest and only taking what they're owed out of your account without your confirmation?
Because I'd like to be able to pay for things even if my phone is out of battery. I'd also like my grandma to be able to pay for stuff without bringing her phone to the store.
Don't get me wrong, I like being able to pay with just my phone. But I'd like a fallback option (in theory, cash is this too, and I do carry that, but it's used to rarely these days).
Okay, thanks. I get it.
ATM cards are still safer than mobile based payments.
Elderly fraud in the US, scam/fraud calls and digital arrests in India are made possible by social engineering attacks and duping people.
For ATMs, if one has online transactions turned off (default option when you get a new card in India for most if not all cards), it is impossible. One has to walk to an ATM in a crowded place, insert the card, enter a PIN, and can only then withdraw money.
Millions in India use debit cards this way.
> ATM cards are still safer than mobile based payments.
> For ATMs, if one has online transactions turned off (default option when you get a new card in India for most if not all cards), it is impossible. One has to walk to an ATM in a crowded place, insert the card, enter a PIN, and can only then withdraw money.
So you're really saying that not being able to transact cashlessly at all is safer than being able to do so? I'd agree, but it's also somewhat inconvenient.
Oh yeah, let's put our financial sovereignty in the hands of American companies who have been fined repeatedly by the EU for breaking various laws. Seriously, if you have a problem with MasterCard and Visa, I can't imagine how you could NOT have a problem with Alphabet and Apple.
Sometimes it's worth reading the whole comment you're replying to.
This is literally what the article is about - Digital Euro and Wero are two competing solutions that are debated right now.
Wero isn’t a physical card if I am getting this right.
RuPay is.
You get a physical cc/dc with RuPay as provider instead of MC/Visa.
If I am not missing something, Wero is not that.
That is what I wanted to know: why not a traditional, homegrown card that is a direct 1-to-1 alternative of MC/Visa cards? Does that not make sense for the EU now? Why?
> why not a traditional, homegrown card that is a direct 1-to-1 alternative of MC/Visa cards
Because the European market is fragmented. France, Italy, Germany, etc all have some sort of established localized payment system and in some states like Ireland and the Netherlands are entirely dependent on Visa.
There is no "pan-European" bank and individual states still care about their sovereignity. France will continue to back and support BNP and Credit Agricole against Germany's Deutsche Bank (and vice versa). The only solution at that point is to just bypass the whole problem and just go directly with mobile payments.
Additionally, China, India, and Brazil began building their DPD stack in the 2000s but European states didn't start until the last 2-3 years.
> why the EU doesn’t develop something like RuPay
We used to have Europay, which competed with Visa and MasterCard. But it merged with MasterCard in 2002.
If you were starting from scratch today, though, would you really re-invent credit cards? There was at some point I think a vague plan for a European debit card network (at least one of the national debit card network actually supports foreign issuers on a technical level, though I don't think in practice this was ever implemented), but really, why use the card format, beyond "well, this is already a thing"?
> would you really re-invent credit cards
Probably something like it. 99% of my transactions are card / tap payments. The last thing I need on my main bank statement is 100s of small transactions - bucketing these into a separate "account" is 3/4 of the point of using a credit card for me - the alternative is entirely separate "cash" like account the only difference then would be paying in advance vs paying in arrears (I do both).
It's simple: banks don't want the people they've fleeced to realise that they no longer have a role in the present age. If you let legal tender be exchanged directly via a central bank (which is semi-public by nature), banks lose a huge amount of liquidity that fuels fractional-reserve banking through loans made to generate massive amounts of cash, and without these, the banks are bust.
In many countries, at least some banks are nationalized. India’s biggest bank SBI (State Bank of India) is a PSU (Public Sector Undertaking).
UPI still connects with bank accounts.
My question was about something else: why EU doesn’t try and develop a homegrown card provider? It would provide exactly what MC/Visa does. Are we beyond that point in terms of technological advancement? Some other reason?
> why EU doesn’t try and develop a homegrown card provider? It would provide exactly what MC/Visa does
They have. A combination of petty squabbling and the lack of any real value proposition has always killed it. To have any chance of succeeding in the EU a new system needs to be something that no-one currently provides, because consumers are unlikely to adopt something that isn't clearly better than what they currently have, but more importantly no EU country is going to adopt a different EU country's system.
It took some time but RuPay branded CCs are also available. I have been using them for the last 2-3 years at least. They work, mostly, with UPI.
Some merchants disable RuPay CC payments even when they don't get charged merchant fees till the payment crosses the INR 2K threshold.
Strangest thing is when I can pay the guy pushing a handcart around selling vegetables using a RuPay CC while a medical store refuses to accept it.
The medical store is cooking the books.
100%.
My colleague's father runs medical store. He apparently cooks the books too.
Also clears the way to control how the digital euros can be spent.
No thanks.
Ideal/Wero is good.
Use my credit cards for larger online payments. Mainly because it has insurance and makes it easy to dispute something.
Last year a large Swedish clothing brand didn’t deliver 400 euros worth of clothing. They said they did. I have nothing. Customer service unhelpful. I disputed it with the bank where I have the credit card. The same day it was fixed.
I'd rather have a democratically elected government in control than an unelected company that actively uses its power to censor things it doesnt like. [0]
[0] https://www.theguardian.com/world/2025/jul/29/mastercard-vis...
Except that parts of the union are not democratic at all.
And in this specific case I kinda of agree with what they banned. And they are definitely not the only ones. Lots of financial institutions block these kind of things.
The EU has less democratic accountability than I would like, but it is there. National governments have been brought down over their poor choices at the EU level. Even if you think Visa/MC made the right decisions in these cases, the fact that they're being made by private companies accountable to no-one should worry you.
That seems like a rather big statement to make without anything to back it up.
Wero is good? The company which is only reachable by snail mail, whose services are only accessible through devices running operating systems from the American megacorporations Alphabet and Apple (both known for being fined repeatedly by the EU for breaking various laws)? If that's what passes for good, I'd hate to see what you would call mediocre, let alone bad.
Also, some banks don't let you use the Wero app, you need to use it through your bank app. Which is a big no for me.
This has been de facto true for a while, not that it improves the situation. Various EU countries have legal limits for the size of cash transactions, requiring you to do it via a bank.
The idea that people have private property does seem to be something governments are incredibly keen to erode.
i hope the thing they roll out is a straight copy of pix from brazil. its fast, reliable, cheaper than debit cards and private (not anonymous but only the central bank can see your info). no corporations involved outside of support contracts and no stupid limits to make banks happy like this new proposal.
and there should be a right to use all payment methods in the constitution or whatever the eu equivalent is. all stores must accept digital euro and physical stores also accept cash. crypto shouldnt be a part of the system but protected from being made illegal in any member state, privacy coins especially.
This seems different than a credit card account though? I buy everything with my credit cards because I don't want to swipe my bank card at random merchants.
This tells me you are likely from North America?
Credit Card usage is really different between those regions. While I lived in EU, I rarely used credit cards (even paying online works with debit cards). But in Canada/US, I almost exclusively pay with credit cards now when shopping. Although in fairness it took me a few years to get in the habit of using credit cards and 'collecting points'.
A vast majority of card transactions in the EU are done via debit card. Credit card accounts for only around 25% vs debit. And the only place I've swiped my card was once, in the US, about 15 years ago.
> Credit card accounts for only around 25%
If this is true then what will this new "digital Euro" change about the reliance on US credit cards? It seems that the 25% of people that are swiping US credit cards are doing it for the convenience and benefits of using a credit card. Will this digital euro change that?
The headline is probably written for an American audience, or for brevity.
It should say "Digital euro clears key hurdle as EU seeks to break free from U.S. debit and credit card processors". Most debit cards in the EU are either Visa or Mastercard, although there used to be more local/national systems.
Not so much even processors. The problem is the _card networks_ (visa and Mastercard).
European banks offer the credit, but the payments infrastructure currently goes through US companies. The first step is to get those payment processors out of the picture.
In Brazil, which is further along in the transition to digital cash, PIX already supersedes debit cards. Some banks already offer deferred PIX payments, wherein the merchant receives the money right away and the buyer pays their bank later, with interest. The central bank is also developing a "pix with guarantee", which will compete with credit cards: payment would be agreed to be settled at a later date, with the bank guaranteeing that the merchant will receive the money.
Debit cards usually also use the Mastercard or Visa payment networks.
Even though I and the supermarket I go to are both part of SEPA and I can issue a bank transfer that will clear ~instantly, today cashless payments still involve EMV for various reasons.
Most debit card usage is via Visa or Mastercard, is the problem.
Debit cards are also mostly visa/mastercard.
Debit cards also use Visa and Mastercard
They mean reliance on US bank cards.
How does that make any sense? You're saying that 75% of Europeans use American bank accounts?
A bank card is a type of card. Credit cards and debit cards are both bank cards. Prepaid cards are another type.
With any type of bank card, there's a bank that guarantees to a merchant that they will later receive a payment. With a debit card, the guarantee is backed by money you have on deposit. With a credit card, it's backed by the bank's money, which is higher risk for the bank.
Two US companies, VISA and Mastercard, have big networks for processing transactions with bank cards. These networks act as intermediaries to connect merchants (who want to accept payments) and banks (who issue cards) together. It's much simpler for a merchant to send a request to (say) VISA than to figure out which bank issued each customer's card. The payment networks also define, publish, and enforce standards and rules for the payment process.
These networks aren't banks. But they are, in a sense, bank card companies because they are part of the bank card system.
So in other words, European consumers have an account at a European bank that issues them a card they can use for purchases at European businesses, but US networks connect it all together.
Visa and Mastercard are both US companies and they issue both debit and credit cards. If you have a UK or EU bank account with a Visa or Mastercard, regardless of currency or whether it's debit or credit, you are still ultimately reliant on US companies to clear transactions every time you use it. That's what the EU want to reduce.
US “bank cards” as in US payment processors such as Visa, not “US bank” cards.
My UK Halifax bank card says "Visa Debit" on it, because Visa/Mastercard control most of the payments infrastructure.
it's about the payment processors, not the card type, though the article makes it confusing by mentioning credit cards as it's really not about that at all
https://www.ecb.europa.eu/euro/digital_euro/faqs/html/ecb.fa...
Read the FAQ, it's about no longer relying on US payment processors for handling transactions in a different country that may not support your country's payment system
This is not an issue in Europe (and really in most if not all countries other than the US at this point), since both credit and debit cards require a PIN for all non-trivial payment amounts.
Are you in the EU or the US? The US has very different laws than the EU; specifically, in the US, credit card rewards and fraud protection strongly encourage credit card usage.
On an article like this, I encourage anyone giving an opinion based on their own experience to say what country it's from. (Or have this in their profile.)
It's the Internet. Just assume they are American unless otherwise specified.
And then the European chimes in and says something suggesting the Europe is a homogenous state :)
I am hoping this could be utilized by those living in the US who also don't want to use the dollar. The surveillance has grown too large and I don't trust my own money. The IRS requires all transactions sent to them if they total $600 or more on a payment app. Why would I want my money in US dollar when the Euro has vastly more robust protections and less corruption?
> The IRS requires all transactions sent to them if they total $600 or more on a payment app
I regret to inform you that your tax obligations don't disappear just because they're in a different currency. Worse, because you're a US national, they don't disappear even if you're physically in a different country.
I don't understand why you need a "digital Euro" since debit card transactions are already "digital", and widespread in Europe (Girocard, Carte Bleu, etc.)?
This sounds more like a cross-EU unified payment system/mechanism rather than a "digital currency" (which already exists).
AFAIK the ECB wants to have both things. Digital Euro being a CBDC could open up a lot of possibilities, but they want an unified payment system, too, and that would be a nice first job for digital Euro.
I must be missing something because I still don't understand what differentiates a "Digital Euro" from "Euro stored in digital form". They're essentially the same. The reason why crypto currencies are different is the mechanisms by which they are exchanged (i.e., blockchain) or how they are issued (i.e., mining). The ECB already has control over how the Euro is exchanged and issued. The only thing a digital euro does is eliminate the cash aspect but these days that's a small amount, and they could also achieve by gradually retiring cash and shrinking the available amount (like Sweden has done).
The difference is more a financial or legal thing, than a technical one.
From an users' perspective paying with digital Euro would work more-or-less the same as you pay today with card, bank transfer or something based on QR codes. But it will have very different guarantees and trusts behind the scene.
Today you don't really think about keeping your money in a bank and paying with card as a different thing than having physical cash, because banks and payment services have very strict regulations and insurance schemes. Banks rarely goes bankrupt and even if they do, most of the people are not affected, because they get back their money from deposit insurance.
Banks can create money from thin air (without the approval of the central bank) and lend it to you (and destroy when you pay your loan back), they can not do that with Digital Euro.
Everybody would be able to convert all their Digital Euro to banknotes at the same time, but that would bankrupt any commercial bank.
Banks can deny your request to open an account or provide payment services to you (e.g. what happened with the ICC judge), you can own Digital Euro without having a bank account.
Banks pay interest for using your money (and the risk you take), this could even be negative that means some people even willing to loose money if they can have Euro instead of their original currency. Banks wouldn't be able to use your Digital Euro, you wouldn't get any interest on it.
Digital Euro (the same way as physical cash), is a legal tender, money in bank and card payments are not.
The value of Digital Euro doesn't depend on your bank, the numbers on your bank account could worth nothing if your bank goes bankrupt, central banks can not go bankrupt.
Digital Euro (for a limited amount) could be exchanged directly between two peers like physical cash (offline, without connection to internet or any bank).
thanks, that makes sense.
seems to mostly be a question of giving the ECB more control at the expense of the banks?
Some people argue that it is just for more government surveillance and control, but the government already could access your bank and card transactions and freeze or confiscate your money.
I reckon it will be KYCed as hard as imaginable - and then some.
Aren't credit cards KYCed anyway?
Yes, offline, in person, in the bank. But regulators will want more. So I fully expect a deeper KYC for the digital euro.
> (Refiles to remove extraneous words before first bullet point)
Why does the article start with that line? Looks like they forgot to remove part of their AI prompt...
Related:
European Parliament committee backs digital euro - https://news.ycombinator.com/item?id=48645468 - June 2026
Will the digital Euro run on U.S. hardware and software?
Maybe requiring contracts that some would not sign.
(A number of services today are already "Configure with the App, get it on Google".)
I hope that they don't fall into the same trap that a lot of EU projects fall in to: only solving one problem.
My VISA card is not only a convenient payment method, it also forces ATM operators to give me cash without any extra fees. In Germany the EC card used to be THE way of paying with a card but you had to go to the ATMs of your bank, otherwise there would be sometimes pretty ridiculous fees. The kicker was that the fees were set by your home bank.
Add to that the ease of use online as well as in shops and it's easy to see that this is not going to be easy. I do root for them though, to do better than Wero.
> My VISA card is not only a convenient payment method, it also forces ATM operators to give me cash without any extra fees.
And that has absolutely nothing to do with Visa, but everything to do with your local banks.
What does your visa card do to force them to not charge fees?
I still see atm fees over here in the us, so it can't just be being visa. I would guess some regulation but you could get that applied to the digital euro too probably?
I don't know how but AFAIK VISA has a contract clause that prohibits the issuing bank from charging their customers fees for using other ATMs.
I've seen VISA cards with several banks in France where there is commission after 1 to 3 monthly ATM so I'd be doubtful about VISA having such as requirement.
That doesn't help you if the ATM provider charges you, though?
True but that doesn't seem to be a thing here.
I'm in Germany and haven't paid ATM fees since years. I also pretty much never use ATM since Covid
As far as i know, your Visa provider pays for the bank ATM fee and they do this with the motivation that you pay with your Credit Card which then basically makes the merchents pay it through the credit card transaction fee which at the end you pay anyway.
I do use my credit card everywere and i'm sure ingdiba is also saving money due to not having offices/ATMs everywhere, but i wouldn't mind if something in the background changes and we can replace Visa/Mastercard with something from the EU.
It is indeed ridiculous. In the UK all bank cash machines are free no matter which bank you're from. My Girocard charges me 7€ for out of house withdrawals.
Bank-owned and supermarket cash machines don't generally charge for withdrawals in the UK but there are still many third-party machines that do.
That's why i said "bank cash maahines", for want of a better word.
I'd rather they didn't waste time worrying about ATM's. I have used one once in the last 5 years. Almost everywhere I visit regularly doesn't even take cash now. The problem being every requirement you add to something like this is probably years of development time given it's the government(s) involved.
Germany is different. I don't need cash often but sometimes it's needed.
I think ATM fees are unrelated to the card type.
My Danish bank imposed a fee on using an ATM from another bank, until my income was high enough to make me a "premium" customer, then these fees were removed. The card didn't change.
I don't know why but my bank offers a VISA debit card and an EC card. I can use the VISA card on every ATM without fees and it doesn't cost me extra. The EC card has extra fees for when I want to get cash with it. I have seen other banks do the same. I think I heard that this is a VISA thing but maybe I'm wrong or misheard.
Similar situation in the US. It's common for banks to abuse their least wealthy customers.
Try buying something with your card that VISA or the US government doesn’t like.
Better yet, try selling something (or offering services) that Visa doesn't like.
I'm rooting for the EU.
Using a credit card generally forces you to pay fees and higher interest.
VISA has debit cards as well. I have that.
This sounds like "government issue Revolut". Which would be... low-key nice? Not a nefarious scheme, not a revolutionary future of money, just something to replace a certain part of your financial life without tying it to a commercial entity. Which might be appealing to the anti-capitalism segment of Europeans.
I theory it should be more. The ECB claims you will be able to hold and spend a (limited amount of) digital euro offline (without internet connection).
> The approval of draft rules by the economic committee of the European Parliament comes after three years of wrangling between the ECB and banks, which have been concerned about deposit outflows and lost revenues and sought to limit the scope of the project.
This kind of thing is why I'm optimistic both about Bitcoin and fiat currencies in third world countries like Brazil and India.
Still faster than increasing the block size limit in bitcoin
So who else thinks of some crypto scam when they see "digital euro" ?
Pros: break the duopoly of Visa and Mastercard. Convenient. Low fees.
Cons: in a couple of years, a well-meaning but idiotic EU official will try to restrict what you can buy with Digital Euros and demand that the police keep tabs on your purchases. You know, to “protect the children.”
Isn't the Euro digital already? I don't understand...
Is the buzzword just flying over my head?
Not really. Euro cash today is paper / plastic banknotes and metal coins. Your account in the bank is not really cash you own, it is more like the banks liability towards you.
If your bank fail, you loose the money you held in the bank (except the insured amount). If you have some cash, that's independent from any private company, and it must be accepted everywhere. Digital Euro should have the advantages of cash and the comfort of electronic payments, too.
Decision makers celebrate making a small decision.
Clearly the US should be shaking in it's boots.
might be time the europeans get a little democracy
What do you mean? Do not have us guess.
1984.
This is interesting and poignant less because of the digital currency aspect and more because of the geopolitics. In a world where technology touches everything, tech itself becomes political.
The boulder that is de-Americanization has rolled too far downhill now and gained too much momentum; it can no longer be stopped.
The two thirds of Americans who either voted for Trump or couldn't be bothered to vote against him because they aReN't PoLiTiCaL are going to have to come to terms with their new place in the world one way or another. The US is no longer seen as a stable military partner[0], nor a stable economic partner as evidenced by TFA. It's easy to blame Trump but he is merely a symptom of the root cause, which is the attitudes shared by a huge number of Americans.
America will cease to be (and in some cases already has ceased to be) the world's epicenter of geopolitical soft power, scientific innovation, and financial clout. Treaties to which the US is a signatory are not worth the paper they're printed on. The foundations have already been laid, and the de-Americanization trend can't be stopped. For a people so accustomed to feeling like a privileged special class of world citizens, I honestly wonder if the American psyche can handle it. Probably we'll see a wave of people who "never supported Trump in the first place", just like tons of Germans were "never Nazis in the first place" once it became socially unpalatable.
So, congrats, I guess. At least you guys got some people with brown skin deported.
[0] https://www.readtheline.ca/p/matt-gurney-we-will-never-fucki...
Don't underestimate how much in bed are many of the european politicians/oligarchs with US neocon class. Trump is also problem for them. If Trump gets replaced by some moderate neocon on wave of “good old times” every one of these lobbied politicians will jump back hail comming of the golden age, buy everything american again and delete all this sovereignity out of the sky.
Trump moved overton window so much we will be fed story about how we shall be glad for the corrupted but not vulgar politicians that do barely minimum.
>If Trump gets replaced by some moderate neocon on wave of “good old times” every one of these lobbied politicians will jump back hail comming of the golden age, buy everything american again and delete all this sovereignity out of the sky.
I don't think so. In fact I think you, like the American delegation in the article I linked to, are dramatically underestimating the degree to which a lot of US allies feel betrayed.
Yeah. This is also a threshold thing. There was a reluctance to accept that the US isn't as big a deal as it once was. The numbers weren't good during Obama's presidency†, but there wasn't much reason to ask "Is this still OK?" a decade ago and plenty of reasons to avoid stirring. Trump provided an impetus to ask the question in a circumstance where the numbers continue to look worse and there's political will to re-assess.
† The US has far too much debt, far too much poverty (despite all those billionaires) and it doesn't look great by comparison to peer nations on lots of fronts such as health access and educational attainment.
Wasn't CPAC literally being funded by the Hungarian government (and thence ultimately Russia)?
Oligarchy is definitely a global problem. Every billionaire is an unexploded political liability.
Good. Now replace USD for trades.
I'm not gonna use CBDC because they'll get hooked up to digital id, no matter what they're "promising" right now. This is just another shitcoin no one asked for.
That's a clear case of perfect being the enemy of good. Are CBDC privacy friendly? No, but it's better than 100% of the credit cards currently being used in Europe being part of the network of two big US companies.
> perfect [as] the enemy of good
In real critical systems, that seldom happens. Satisficing is the recipe for disaster. The current disastrous "world" is built on imperfect systems, "what could possibly go wrong" style.
It takes full work to create an acceptable instrument.
You are mentioning an improvement over credit cards - we would like to have a payment system acceptable by - say, the more "attentive", "discriminative" members of this community.
Can you say that a bit more clearly? What's your practical suggestion?
Contextually, clearly, "widely accepted electronic money with privacy" - as since a few years I cannot make transactions online as all the decent ways are gone.
You cannot call "perfect being the enemy of good" something like "the former solution punched you in the face, this punches in the guts" - it's still "punches".
The contextual solution from the eu only affects those who accepted those credit cards - and already that is a special (while overwhelming) chunk of the population, since today they are mostly those who accepted NFC on financial cards (we don't).
In general, "perfect" is required - because today "acceptable" is not granted and it is crucial part of the details.
There is no bank account that isn't linked to your id already.
Aren't your transactions with your bank already hooked up to your identity?
>> This is just another shitcoin no one asked for.
Giving Europe independence from US payments processors is a huge deal and very necessary.
> Giving Europe independence from US payments processors is a huge deal and very necessary
You do realize that US payement processor like Visa & MasterCard rely on chip technology from French company (Gemalto, now part of Thales), so these companies aren't independent from EU to start with.
Getting independence from the networks themselves, you only need to create a local competitor ...
And those has been existing for multi-decades in each country. E.g. Carte Bleue(France) Bancomat (Italy), Bizum (Spain), SIBS (Portugal) etc.
Just merge those into a bigger more ambitious network
"EuroPA" is exactly that effort. A digital euro is completely orthogonal to that effort.
Crazy people don't see how dystopian and dangerous the concept of a centralized digital currency is...
[flagged]
CDBC doesn't necessarily imply blockchain. It can be just another payments system.
You don't have to use it. you can continue to use your bank account (which is linked to your id, obviously)
As long as we can still use cash - on the condition that it is not linked to any ID.
> giving Union citizens the freedom to opt to pay with central bank money
Because nothing speaks freedom more than a crazily centralized digital currency
/s
It's centralized right now, digital or not, around the two major US payment processors (Visa and MasterCard).
> crazily centralized digital currency
Boy, will you be pissed when you learn about non-digital currency!
[flagged]
Apart from the times in which it is worse than nuclear annihilation, it does good.
Can we have cars back please? Reliable, decent and good. Not three-cylinders complicated and fragile smartphones-with-wheels etc.
And a landscape with decent non-offending lights, etc.
Oh, and can we have internal documents please? Made by people with well formed brains for people with well formed minds. No NFC.
Since we are here - could I have some usable, decent, for Men, electronic money? No tracking.
They must pay for the damages.
what's bad about an interoperable standard for charging?
What’s bad on replaceable or long living batteries?
EU is very good, most of the time.
Besides this GDPR Website thing, usb-c is great, energy standards are great, etc.
You forgot free mobile phone roaming
GDPR could have been great, if it was actually enforced in the way it was intended. Cookie banners and dark patterns are not actually allowed, but without enforcement, it's basically meaningless.
IMO the biggest issue is that the member states are individually required to set up agencies to police this. This makes perfect sense for local companies, but is meaningless against large entities that operate across the entire EU.
Large entities (companies right?) take that very serious. Its the other way around, small companies might not be aware of.
Nonetheless, i have seen in a very small company that we changed the behaviour of a camera which then only turned on when the action expected it and not before.
And in a very big company you alway have to fullfill it as a product standard.
It is being enforced: https://www.enforcementtracker.com
You can report issues to your local watchdog. That takes quite some time, given the large amount of companies that do not follow the law, but it is enforced
GDPR fixes at least some actors. There is no solution for all actors especially bad ones. But many big actors will take steps to be in compliance. Which is lot more actors than without such regulation. Perfect being enemy of better.
And at least now developers can have reasonable reason to ask do we actually need to store this or do we want to store it. Before that would have been stonewalled.
Credit cards in Europe are a form of very short term credit: you spend and pay the entire balance on the next month. The is very different from the model in the US, which is designed to keep you in debt forever.
And how do I exit this walled garden and pay in GBP to UK, or USD to USA, or dare I say Yuan to China.
What about RSD to Serbia? CHF to Switzerland?
You put the money in your bank account and use that to pay, or you buy the other currency. The same way you would with physical coins and notes.
Or, if the UK/USA/China set up their own pseudo-cryptocurrency, you can probably exchange digital euros for digital dollars or digital yuans.
you do standard FX... what are you trying to say?
Horrible idea. It's a step towards single-tier banking like in the Soviet Union, where the central bank takes the role of commercial banks. There's no other reason for this than surveillance and control.
There already exists multiple EU-wide payment systems handled by commercial banks. They just need to step up their game a little bit to get rid of Visa and Mastercard, which provide all the debit and credit cards.
[dead]
??? Doesn't Europe already have Wero (iDEAL in Netherlands)? That's a system for making online payments. Money gets directly debited from your bank account.
I've always found credit cards stupid. You just want to pay for something, and then suddenly you have a debt. You shouldn't be in debt when you can clearly pay with money you have. Credit card companies advertise with "super easy payments" and "buy now pay later" but at the same time the government warns all the time that "lending money costs money". Also, if your credit card number and CVC get leaked, then anybody can steal any amount of money, and your only recourse is to regularly check your statements and warn the bank within a month. Whereas with Wero/iDEAL you must authorize the exact transaction at that exact amount.
Supposedly, Americans have these "credit card rewards" loyalty program things. Doesn't exist in Europe. You can only pay, you don't get any bonuses. Which makes the only reason to have a credit card is to be able to pay in web shops that don't accept Wero/iDEAL.
I assume you never really interacted with the credit card world? E.g. most banks in Germany will give you a credit card that automatically deducts the outstanding debt at the end of the month, you can't really collect debt over time.
In addition I can deposit money on my credit card, so effectively I never have to be in debt if I don't want to. I just have to charge it up which is done in like 3 seconds in the banking app. It can even be automated.
Lastly credit cards with bonus programs definitely exist in Europe. Cashback variations are the most common ones, but all kinds of programs exist. E.g. Eurowings has one https://www.eurowings.com/de/ihre-vorteile/kreditkarten/uebe...
Credit cards serve the same purpose as loans: they allow you to make a purchase in advance of expected income. There’s a reasonable civic argument that this kind of loan should be tightly regulated to stop people from ruining themselves, but the basic economics work fine for millions of Americans who pay their credit cards on time (or otherwise consider a balance acceptable given their purchasing plans).
(I don’t think the fraud distinction you’re making is as stark in practice: in the US, you’re less exposed to fraud with credit since it’s the creditor’s money, not yours. Reversing a debit transaction in the US is somewhat more involved, albeit for not-good reasons concerning the US’s aging financial infrastructure.)
At least in France, most of what people call "credit cards" are actually debit cards.
Yeah most EU citizens never had a credit card but they call them credit cards anyway.
As wrong as all the other blanket statements.
The way I understand it the Digital Euro doesn't compete with Wero. It's a way for the European Central Bank to emit money in digital form. In theory that doesn't require bank accounts, and can support offline transactions. It's a pretty different concept, more like a new form of money.
Wero, SEPA, and the digital euro are complementing each others
How is "money in digital form" different from money on your bank account, which is also digital?
Europeans being so scared of debt is so funny. Just pay off your card every month.
The liability model is completely different in the US from Europe w.r.t. merchant vs bank.
The interchange fees are much much higher in the US, which is what pays for the rewards. Europe has an artificial cap.
Almost all EU credit cards are automatic debit at the end of the month, i.e. carrying over balance is not even possible. You will simply be over-drafted on the linked debit account and charged a fee + steep interest if you spend more then you have. Typically until the overdraft is resolved, no further debit card payments can be made.
The only reasons to use a CC in EU are:
- online payments where CC is the only accepted form of payment
- delay payments until after receiving wage
- hotels, car rentals, and other places that lock an amount on your card
- extra insurance provided by some more premium cards (VISA Gold etc)
Ever since 3-D Secure (2FA for CC transactions, beyond the CCV code), you have been liable for any transaction that was validated by it. Your bank may still do a chargeback as a courtesy, but that's not guaranteed.
Things like 3D Secure only work if the merchant supports it. I still regularly encounter shops that don't trigger the 3D Secure prompt at all.
All European merchants are required to support it. When you don't see the prompt, it's due to this: https://3dsecure2.com/frictionless-flow/
I don't think it's primarily about being scared of debt, it's just a weird, unnecessary step in-between. I have a credit-card and even I don't understand why I should prefer it over my debit card
Setting weird rewards/cash back things aside, which is the main incentive for folks to use it over debit card in most places:
It's not fully unnecessary step in-between when fraud is involved.
If someone hacks you/deceives you and somehow they got $5000 from your debit card, then your bank account is $5000 smaller. That can impact your ability to pay rent, or whatever you needed those $5000 for.
If it's via credit card, you have a decent amount of time to contest and resolve the issue.
the disputed amount should effectively be removed from your balance or offset by a temporary provisional credit until the investigation is completed
> If someone hacks you
Transactions are protected by 2FA, they have to steal your phone and know your bank password. Whereas with credit cards, you have a single shared secret (number + CVC) with all merchants. Just one merchant needs to leak it.
> If someone hacks you/deceives you and somehow they got $5000 from your debit card, then your bank account is $5000 smaller.
That's a myth. I had my debit card cloned and some money stolen. The bank gave my money back. Debit cards are protected too.
That's not a myth and your story doesn't invalidate what I said. Never said Debit card aren't protected
Between the time [some money stolen] and [bank gave my money back] your checking account balance was lowered by the amount stolen.
With a credit card, your checking account isn't directly affected.
Both are protected, the difference is your effective checking account balance in the time window between the time the money is stolen and the money is recovered.
> The interchange fees are much much higher in the US, which is what pays for the rewards.
You're just raising the price for everyone for the sake of Visa & Mastercard's profit. Europe's cap makes a ton of sense.
> Europeans being so scared of debt is so funny.
I've never understood this mentality. It's like walking through a dangerous neighborhood knowing that you have excellent health insurance. If you get stabbed, you'll probably recover very well, but why take the risk?
I can understand going into debt to buy a house, but I can't understand going into debt to buy a can of tuna. Why take an unnecessary risk?
Data shows they aren't that scared of debt, in fact some European countries have higher household debt than US, notably: Switzerland, Sweden and UK. It's pretty telling that Klarna is a Swedish company.
https://en.wikipedia.org/wiki/List_of_countries_by_household...
Your liability comment would mean though that the EU should use it and USA shouldn't.
EU has low fees for transfer, USA has high fees for transfer but apparently its easier for an US Citizen to dispute something.
At least as far as i'm aware, if i send money to someone else, its gone.
Whats that artifical cap?
10ct vs % of the value. The consumer is paying for that.
But I guess it’s the same logic as the tipping point/ salary culture in the US.
Or the fact that sales tax is not always included in the price.
Paying with credit card gives you at least some leverage when a merchant doesn't hold their end of the deal. Good luck getting your money back with iDEAL (it's not possible right now).