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I have several Visa and Mastercard debit cards, each associated with a current account of a British bank. Even though my cards are debit cards, in several countries I have checked they are treated as credit cards. The countries I have checked this so far are Peru, Bolivia, Chile and Argentina. Why is this the case?

Edit: Many POS in these countries accepted only debit cards, which meant that they didn't accept my cards, because of the above. Even in the occasion that they did accept credit cards, the employee had to explicitly enter that my card was credit, if they were entering debit then the POS was giving a 'wrong menu' error. So I am wondering why that is the case.

  • What is the practical difference from the point-of-sale point of view? – Greg Hewgill Dec 12 '18 at 1:19
  • Edited my question to explain the practical difference. – PetrosP Dec 12 '18 at 1:47
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    If it's anything like Indonesia, the debit cards in those countries are not Visa/MasterCard but use some proprietary local protocol. So perhaps to use a Visa / MasterCard debit card they have to process a credit card instead – michel-slm Dec 12 '18 at 2:14
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    What debit card logos are printed on your cards? do the POSs hove the same logos? – Nean Der Thal Dec 12 '18 at 2:37
  • Note that this can be the case even in Germany. I have been unable to use my UK card in a German supermarket because they only accept the local EC-Karte debit cards and assume that my Visa Debit is a credit card. – Mark Perryman Dec 12 '18 at 9:43
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TL;DR

In many countries, "credit card" just means "use the international network" (and associated contracts and fees), while "debit card" means "use the local network"

Long version, with a bit of history

Historically, cards using the Visa and MasterCard networks (as well as Amex, Diners, JCB...) where more often credit cards, especially given the very asynchronous way things worked initially, where charges were made using paper rather than electronic terminals.

For those who don't remember / are too young to remember, this was how a credit card charge was made:

enter image description here

You put the credit card on the imprinter, a sales slip on top (which has several layers of carbonated paper), and you moved the handle to the right and back to the left so that the credit card number an other details got "printed" on the slip. You then filled in the amount manually, and the cardholder signed the slip. The paper slip was then sent to the bank for processing (actually there was something like one copy for the merchant, one for the cardholder, and one for the bank IIRC). You understand that given the time it took to process all this, it could definitely not work as a "debit card" which takes the money out of your bank account right away.

That's the reason cards had (and most still have) the numbers embossed rather than just printed.

There was also manual authorisation (the merchant would call their bank, who would use the card network to make an inquiry with the card issuer to check if the amount to be charged was within the limits allowed and take a hold on that amount). The authorisation code would then be written on the sales slip. But the actual charge would still only happen once the paper slip had been processed, a bit like a cheque. Still not good for debit.

Then point of sale terminals were introduced, which would make the authorisation electronically, and then report the charge electronically as well, which is the system you are now used to. Depending on the countries/markets, this has been the usual way for decades or has been made common a lot more recently.

But in all cases the merchant needs to have a contract that allows them to charge those cards, and they pay fees which can be quite substantial for each charge (and authorisation request).

In parallel, local networks were set up for debit cards, sometimes using very different protocols or technologies, and, most importantly for many retailers, with usually much lower fees.

Like for deployment of POS terminals, there have been lots of variations in how the local and international networks/contracts were marketed. In some countries like France, it has been standard since the 80s to have a single contract that would allow both local (CB) and international (Visa, MasterCard) charges. In many other countries, you would get the debit card contract and equipment directly from your bank very easily, while getting access to the international network would require you to contract separately. This can lead to having separate equipment for each type of card/network: it's not uncommon in some countries for them to have many different terminals at the cash desk:

enter image description here

While there are now Visa and MasterCard debit cards, this is a relatively recent development, and they use the same network and contracts as the credit cards (some contracts may introduce different fees for different types of cards, though, even if they are all processed through the Visa or MasterCard networks).

So in many countries, "credit card" just means "use the international network" (and associated contracts and fees), while "debit card" means "use the local network".

In a few countries, it's a bit more complex, because local cards can have both features, and you are asked to select which "mode" of the card you actually want to use (you can even have account selection in some cases: checking / savings / credit). Some readers will just not accept an international card if you select one of the first two options (which have to go through the local system). Other readers will ask the question, but revert automatically to "credit" (which here means "use international network") for non-local cards. Other readers still may be able to detect what the card can do first and not ask the question if not relevant.

In other countries this will be a lot more transparent: you just pay, and that's it, the system will just take the appropriate route based on the card type automatically.

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As I understand it.

Credit cards globally are dominated by a handful of networks, mostly Visa and Mastercard (and to a lesser extent AMEX and Diners). Debit card networks on the other hand tend to be more localised to a specific country or a handful of closely linked countries. Some parts of Europe including the UK seem to be a bit unusual in that the Debit cards are actually primerally operated by the credit card networks.

To give their cards broader reach debit card issuers often work with with credit card networks allowing their cards to be treated as a credit card. Similarly in places where the credit cards and Debit cards are run by the same network the networks usually allow their debit cards to be treated as credit cards abroad.

So when you take your UK debit card abroad the terminals have no clue about the UK debit card system, their "debit card" options will be for whatever debit card system they use locally, but they can process the card as a credit card.

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