Index Home About Blog
From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: banks in the US ?
Date: Thu, 18 Dec 2003 02:47:16 -0500
Message-ID: <>

On Wed, 17 Dec 2003 14:16:51 -0800, wrote:

>I have had that statement on my credit cards for years - however, if
>you wish to use it at the USPO, they require a signature, will not
>accept any other ID with a signature.   That is unless they changed in
>the last six months.

Interesting this would come up now.  I'm considering accepting plastic in my
restaurants again.  I've been reading the merchant agreement that I'll have to
sign at some point.  It addresses this issue directly.  It says that I shall
not accept a card without a signature and that if I do I'm liable for any
fraud.  That will indeed be the way we operate.

My suggestion is, sign the card and then put a note on there to ask for an ID.
Most clerks won't but some will.

My better suggestion is, forget about it.  All the fraud liability is on the
network, since most all issuers now waive the $50 deductible, so why worry
about it?  You're at vastly more risk from the clerk/waiter/whatever who
handles your card during a transaction than you are from some random theft.
There is absolutely nothing except honesty to keep the clerk from swiping your
card twice, particularly in restaurants where they carry it off for


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: banks in the US ?
Date: Thu, 18 Dec 2003 14:24:21 -0500
Message-ID: <>

On Thu, 18 Dec 2003 09:22:11 -0700, Alan Balmer <> wrote:

>On Thu, 18 Dec 2003 02:01:33 GMT, wrote:
>>Speaking as a retailer who actually tries to hire and retain cashiers, we are
>>often grateful that they actually SHOW UP for their shift.  If a credit card is
>>presented and then scanned and approval is given, the retailer has fulfilled
>>the responsibility.  The signature means nothing for the most part - we often
>>have a husband or wife come in and use a credit card belonging to the other.
>>Responsibility rests with the card holder to control his or her own card.
>Don't bet your business on it. If you accept a stolen card, the issuer
>will charge you back.

No they don't.  At least not if they follow Visa and MC's rules.  As long as I
follow their procedure and don't commit fraud on my end then when the
authorization code is returned that money is in my bank.  The CC companies
bend over backwards to make the process easy, convenient and reliable.  They
take the hit on most frauds - and pass the cost on in the form of high
interest rates and fees.

>>Besides, what does some 16 year old cashier know whether the signature is
>>authentic or not?.  Very often, signatures are not identical anyway so it's
>>just not workable to question every one that is slightly different, especially
>>when you process the number of transactions we do in a day.
>For credit cards, you can train your cashiers to ask for further ID.

Visa and MC discourage that routinely.  They want the transaction to be as
nearly like cash as possible.  Only if something raises my suspicions (like an
unsigned card!) am I supposed to ask for ID.

>This is common, and one of the reasons I don't use credit cards any
>more - I don't like them recording my driver's license number or
>whatever other personal information they choose to ask for. Most
>people don't seem to mind, though.

The validity of that concern went away with the Internet.  Your personal
information is now so cross-linked, folded, spindled, mutilated and
transmitted at high speed via the net that all they need is one identifying
number like your CC to get your profile.  That part of personal privacy is
long gone.

>For debit cards, get a pin pad. Verification is immediate, and you
>have no further liability, as I understand it. SInce Neon John is
>studying current practices, maybe he has some suggestions.

Transactions through the CC networks are not set up to take PINs.  There is no
PIN encoded in association with your CC number.  Many simple card readers
won't even read the mag track that contains the encoded PIN.  The CC networks
simply don't want that level of security as long as they can pass the cost of
fraud on to the users.


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Credit Card fraud
Date: Thu, 18 Dec 2003 15:19:22 -0500
Message-ID: <>

On 18 Dec 2003 13:52:42 GMT, in rec.outdoors.rv-travel you wrote:

>In article <>, Neon John
><> writes:
>>There is absolutely nothing except honesty to keep the clerk from swiping your
>card twice, particularly in restaurants where they carry it off for
>If I was a waitress and swiped a card twice.... what would I then do with the

For terminals with the tip package (most all restaurants), what the server
would do would be to swipe your card twice and on the second swipe, enter,
say, $20 for the meal and $200 for the tip.  You sign the first one and add in
the appropriate tip, then leave without any knowledge of the second one.
Procedures vary with different restaurants but in some manner or another the
server is paid the cash from the tip.

I use $200 as an extreme example.  More likely they'll just add a couple of
dollars so as not to draw attention to themselves.  $2 on 50 transactions a
day would add up.

Even if he only swipes it once, he still has to enter the tip you specified on
the receipt.  The transaction on the terminal remains open until the tip field
is filled in.  That's normally done at night after everyone has left.  He can
fill in any amount he wants to.  To make the signed receipt match the terminal
entry, the most common technique is to prepend a digit to the tip amount.
Turning $20 into $120, for instance.

You can help thwart this technique by putting a "$" or a horz line in front of
and touching the tip amount so that any editing will be obvious.  Another
technique is to use your own pen with a peculiar color ink.  I carry a Cross
Ion pen with purple ink.  In any event, NEVER use the server-supplied pen.
That would be exactly the same ink the server would use for the alternation.

If the owner/manager is involved in the scam then even this isn't foolproof
protection but it does throw up more obstacles than writing something on the
back of the card.

I should also note that there are probably many other scams that I haven't
heard about in my small restaurants.


From: John De Armond
Newsgroups: soc.culture.usa,misc.rural
Subject: Re: About credit cards
Date: Sun, 19 Feb 2006 16:34:45 -0500
Message-ID: <>

On Sat, 18 Feb 2006 22:58:17 -0500, Sheldon Harper
<> wrote:

>Jim Ledford <> wrote in
>> as for bank profits, it is the credit card industry ripping their
>> users a new one.  but then God speaks to us about usury.
>The credit card industry charges me nothing, in fact, they
>pay me a bonus for using several of the credit cards I have.
>The credit card costs are all bourne by the sellers who want
>my business.

Actually they are.  Why does the industry push cards so hard to even
those who don't pay interest such as yourself and debit card users?
Easy.  Their own studies show that people who pay with plastic spend
from 10 to 20% more than similar people who pay with cash.  There
isn't that separation anxiety of forking over the green when you lay
down plastic.  Plastic is painless.  The CC companies work hard to
keep it that way.

I KNOW that to be the case with me.  I've carefully studied my
spending habits and I'll typically spend >20% more when I use the
debit card than when I use cash.  With cash I catch myself running
through the mental calculation of how much cash I have and how much
I'll have left after I buy this trinket and what else I need the cash
for.  More often than not, I decide not to buy.

Why do you think they quashed that growing practice from a few years
ago of merchants demanding DLs?  They don't want the customer to have
to think about the transaction.  As a merchant, my instructions are
that unless there is something OBVIOUSLY suspicious, once that
approval code comes back, the transaction is to be completed without
further ado.  All the risk of CC fraud just transfered to the
processor.  In the last couple of years they've even backed off on
requesting we do signature verification.  Ironically, the big box
stores are increasing ID verifications but that's because their high
volume contracts have them accepting part of the risk.

>When I buy something using my credit card, I pay for it, on
>average, about 15 days later. The credit card company collects
>a premium of something between 2 and 5% from the seller, and
>depending on their deal, doesn't pay them for my purchase for
>a period of between 7 and 30 days. Typically is is 2% for
>30 day payout, 5% for 7 day payout.

Nope.  Only the high credit risk merchants get stuck with second tier
processors with terms like that.  I have the "restaurant package" from
my bank.  I pay something less than 1% plus a 25 cent transaction
charge.  There are a few other nicks such as a $5 "statement fee" but
my overall commission is <2.5%.  If I close out my machine before
midnight, the money is in my account the next morning.

>Sellers mark up their prices to make up for this. It simply
>becomes an element in the cost of doing business, so even if
>someone pays cash for an item the seller is charging the extra
>2% as though the buyer were using a credit card. The best deal
>for credit card companies is when I pay off the full balance as
>I do every month. The best deal for the sellers is if more
>customers pay in cash.

Yep.  It's not a cost of doing business.  It is a convenience cost
that all my customers pay.  I went almost 10 years without accepting
plastic but I heard enough complaints that I set up a merchant account
about 2 years ago.  I also raised all my prices to account for both
the commissions and the overhead of accounting.  I put up some little
signs in my restaurant telling customers about the price increase and
why.  The most common comment is "gee, I didn't realize it cost that
much".  The CC companies have been hugely successful with their
propaganda and in hiding the true cost of plastic.

>The credit card industry doesn't hurt me at all, they're not
>ripping me off. In fact the credit card industry helps me
>because by using them I achieve what amounts to a small
>discount on everything I buy.

Actually, for all the reasons above, they ARE hurting you.  Or at
least costing you money.  You don't think they're giving you those
"rebates" just cuz they love you, do you?  They're making MONEY off
you, both from your spending more than you would otherwise and from
the higher prices you pay because of the commissions merchants pay.

Now it's legitimate to regard the costs as convenience costs but only
after you've analyzed the situation and made a rational decision.  I
use my debit card for many business purchases but only for planned
ones.  The debit card transaction goes from the processor to my bank's
online banking system, then directly into Quickbooks.  I never have to
touch the transaction other than assigning an account to the charge.
It's worth the convenience in this situation.

Before you argue that everyone pays the overhead, do some research.
Particularly for independent businessmen, cash discounts are common.
Oh, I know the merchant account contract prohibits that but what they
don't know won't hurt 'em.  I freely offer cash discounts
approximately equal to the CC overhead to customers for catering and
other services.  Pretty much anything over $50.  I don't have any
signs up advertising this but anytime a significant amount is
involved, I mention the cash discount.

I ALWAYS ask for a cash discount.  Sometimes even brand name stores,
usually franchises, give them when asked.  Next time you buy a couple
hundred dollars worth of trinkets at your local Ace Hardware, give
asking for a discount a try.  To the manager/owner, of course.  You
might be surprised.

Meanwhile, it's mostly greenbacks for me.


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: OT-Harry rants on...
Date: Sat, 08 Apr 2006 00:05:26 -0400
Message-ID: <>

On Fri, 7 Apr 2006 18:40:14 -0700, "Bruce" <>

>"HD in NY" <> wrote in message

>> Good idea <g>. Might help when the economy tanks. Just how long do
>> you think the folks can keep maxing out credit cards and home equity
>> loans?

This is the kind of stupidity that one writes when he gets his
"knowledge" from the nightly news.

>Didn't I recently read that consumer debt is down now over what it was
>in the recent past?

I haven't read that anywhere and I'd not believe it if I did but I can
tell you what my experience with my restaurant has been.

I started taking plastic again last year.  Just out of curiosity I
decided to keep track of the number of credit card users vs debit card
users vs cash. I programmed keys on my POS system for cash, credit and
debit cards.

Over the last year, plastic amounted to just under 7% of my total
sales.  Of the plastic transactions, about 80% were debit cards.  I
almost never saw actual credit cards.  I didn't keep a count but my
perception is that most of the credit card use was corporate cards
where the meal(s) were business expenses.  Another large chunk of
credit card users were students from the local private college which
probably indicates a combination of using daddy's money and a lack of
financial maturity.

This is a seachange from when I stopped taking plastic about 5 years
ago.  Then, debit cards were a novelty.

One other indication of the lessening of personal debit is the number
of transaction declines.  Or more correctly, the dearth thereof.  I
can probably count on one hand with fingers left the number of
declines over the last year.  One was because the guy forgot to call
and activate his new card.  I recall that one because he made a small
scene when I told him of the decline.  Five years ago a decline or two
a day was the norm.

I don't know anything about second mortgage use so I can't comment
there.  From all the gaudy signs around town hawking the things, I
suspect that they've fallen in great decline.

I have no idea whether the local scene resembles the national one but
for this little niche of the universe, cash and the plastic version
thereof is back in style in a big way.


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: Gassing Up & Pump Limits
Date: Mon, 08 May 2006 05:51:49 -0400
Message-ID: <>

On Mon, 08 May 2006 05:02:12 GMT, "Rudy" <>

>each time the pump stopped at $75 or something
>> and said 'limit reached'.
>VISA has a $ 50.00 pay at the pump limit.  AMEX goes to $ 75
>Its set by the CC company, not by the station.
>Perhaps if you call your CC company, they can raise the limit for you.

The issuing bank has nothing to do with it.  It's the network doing
the transaction processing, the system that interfaces to the
MC/Visa/Amex, etc system, that sets the policy.

This reservation system has always been there and is widely used
elsewhere.  I can manually place a reservation against a customer's
account, say, for the deposit on a future catering job.  While not
nicking his account at the time of placing the reservation, I am
guaranteed that the actual charge will go through as long as it's
smaller than the reservation.

This is actually a customer feature.  The reservation doesn't go
against the average monthly balance, days late or any of that other
stuff.  It's much nicer for someone who, say, reserves a date a month
in advance for a catering and guarantees it with a credit card, not to
have that guarantee go against his balance and interest calculations.
The alternative would be for the merchant to do the charge up front
and then either credit or debit the difference.

The companies who operate the gas pump networks kinda piggybacked on
this reservation system to make it perform a little different than
intended. It was intended to allow reservations for purchases some
distance in the future - hotel, airline, catering, etc reservations.
The pump networks simply use it for a reservation to be converted to a
charge only minutes in the future.

I know this stuff because I worked for a short period as a contract
programmer to Gilbarco, one of the major e-pump makers.  And of
course, I've written tons of transaction processing software for POS
and similar applications.


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: Gassing Up & Pump Limits
Date: Mon, 08 May 2006 05:38:03 -0400
Message-ID: <>

On Sun, 7 May 2006 23:20:31 -0400, JerryC <> wrote:

>Well we jumped in the pool and bought our first RV. I got the deal of
>the century in Atlanta and drove it back. I stopped at a few fairly
>large gas stations but each time the pump stopped at $75 or something
>and said 'limit reached'. So how the heck do you gas up one of these 55
>gallon babys? Do you go in and tell the clerk to remove the limit? Or
>gas up at a truck stop where there isn't likely to be one?

Just let the receipt print, stick the card in again and keep pumping.
No big deal.

The reason it works that way is that when you swipe your card, the
system puts a reservation against your account.  You're not actually
charged yet but a fixed amount is deducted from your credit limit or
checking account.  When the transaction is finished the reservation is
released and the actual amount is charged.

For a number of reasons, mostly to your benefit, it is undesirable to
put too large a reservation against your account.  On occasion the
reservation doesn't clear and both the charge AND the reservation
remain in place.  While you haven't been charged, the reservation DOES
go against your credit limit, is figured into computing penalties for
exceeding your limit and overdraft charges for debit cards.

Therefore the companies that operate the networks try to strike a
balance between reserving enough for the average customer and not
causing any more inconvenience than necessary when the system

The reservation has been creeping upward.  It wasn't so long ago that
the limit was only 30 or 40 bux, depending on the network handling the
transaction.  I recently bumped a hundred bux at the car diesel pump
while filling up my MD truck and didn't hit the reservation limit.

Yes, you can go to the truck island but you might find that a
persistent reservation for $500 or more ends up on your account and
pushes you over your limit or into overdraft.  Getting a spurious
persistent reservation lifted is a royal pain in the butt!

I personally prefer to use the regular pump and simply swipe my card
twice.  Only a tiny bit less convenient with almost no downside


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: Gassing Up & Pump Limits
Date: Wed, 10 May 2006 23:43:14 -0400
Message-ID: <>

On Mon, 8 May 2006 22:59:12 -0700, "RVer Don"
<> wrote:

>I'm rarely asked for ID.  Apparently I'm more honest looking than you.  <g>
>I would welcome being asked though as it's for my protection.  I wonder why
>the VISA/Mastercard contract doesn't allow asking for ID?

My contract not only allows asking for ID, it encourages it when the
situation is questionable.  What it does NOT allow is the writing down
of ID information.  I can note on the slip "DL checked" but not the DL


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: Gassing Up & Pump Limits
Date: Thu, 11 May 2006 00:27:08 -0400
Message-ID: <>

On Mon, 08 May 2006 16:54:47 -0700, Mike Van Dyk
<> wrote:

>Brian Elfert wrote (in part):
>> On Visa's website, they have a 140 page docement for merchants about
>> accepting Visa cards.  On page 30 of the document, it says in bold that
>> merchants may not ask for ID when accepting a Visa card.

The problem with this is that many merchants do NOT sign Visa/MC
agreements.  They sign agreements with their banks or operating
divisions thereof.  My agreement was with First Horizon, the CC
operating corp of First Tennessee bank. My contract is certainly NOT
30 pages long and it most certainly does NOT prohibit asking for ID.

>"In most cases, merchants may not ask for an ID as part of their regular
>card acceptance procedures".
>> I think the no ID rule is also in the contract the merchant signed to
>> accept Visa/Mastercard.
>More rationale here:

Quite dangerous quoting third hand.  This is an article that quotes
from a Visa newsletter, at least 2 levels removed from any policy
document.  The headline and lead sentences are flat wrong.  On down in
the article they get it closer to right:

Rules for checking identification
The Visa USA Operating Regulations clearly state the conditions under
which merchants can check cardholder identification:
• If the Visa payment card is unsigned or the signature panel has been
damaged, merchants can require cardholders to produce photo
• If the Visa payment card is signed, merchants can ask to see
identification but cannot make this a condition of the sale. That is,
if a merchant requests cardholder identification which the cardholder
refuses to provide, and the transaction was approved, the merchant
must accept the payment card without the requested identification.

The second bullet must be read carefully.  It applies only to the
situation where the merchant decides to ask for ID after the auth code
has been issued, completing the transaction.  That would be a pretty
dumb way of doing it.

In the few instances where my spidy sense told me to ask for ID, I
asked for it BEFORE swiping the card.  Had the ID not satisfied my
suspicions, I'd have declined to take the card at all.

Please also note that the procedure that I'm to follow when presented
with an unsigned card (including that BS "ask for ID" non-signature")
is to have the presenter sign the card in my presence AFTER having
presented suitable ID.  A DL with a signature that matched was good
enough for me.  Two photo-IDs is now required by the Post Office.

As a practical matter, if I knew my customer and he could recite his
card number from memory then I'd accept it.

I have noticed some extra steps some major vendors are now including
in the process.  At Lowe's, the clerk has to manually enter the last 4
digits of the card and the security code printed on the signature
strip.  This proves that the clerk actually had the card in hand,
looked at it and verified that the mag strip data matched the embossed
data and that she looked at the reverse side of the card.  She may not
have bothered looking at the sig but at least she had to look at the
sig block long enough to record the security code.

It'll be interesting to see what they do when my card wears just a
little more and the security code is no longer visible.  It just about
isn't now.

I'd be pretty sure that Lowe's is large enough to have a risk-sharing
agreement with the major card companies so perhaps they're more
motivated to deter fraud than a micro-merchant like myself.

One other comment.  There are a variety of "prohibited practices"  in
the merchant agreement that we merchants merrily ignore, Visa/MC knows
that we ignore and tolerates it.

The prime example is the minimum transaction amount.  I won't accept a
card for any purchase less than $5.  That's against the rules but
that's also the way it is.  The "restaurant package" that enables me
to add tips also costs me a fixed transaction fee plus commission.  I
am NOT going to allow a small transaction's fixed fee to remove my
profit - out of principle if nothing else.

There is a practical reason too.  Before I put that rule into effect,
I'd kept track of small transactions.  Invariably from someone who was
NOT a repeat customer, usually just for a coke or something.  The
process clogged up my POS for regular customers and took the same
amount of time as a real purchase.  I made the business decision that
I didn't need those sales and that my regular paying customers should
not be inconvenienced by the wait.  Ergo, the policy.

If some disgruntled customer contacts Visa/MC about that, I'll get a
nastygram in the mail which I'll cheerfully ignore.  If they threaten
again, then I'll send 'em their little machine back and return to
cash/checks only.  Plastic sales just aren't important enough to put
up with that kind of crap.

In point of fact, there is secular equilibrium between us and them.
Most all retailing segments have their trade groups.  The National
Restaurant Association, in my case.  These outfits battle with the
government, MC/Visa and other plastic processors, insurance companies
and a whole host of other parasites.  If MC/Visa ever decided to
seriously dick with restauranteurs over this minimum charge policy
then the NRA would step up to the plate for us.  They have many times
in the past.


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Credit cards and fraud (was Re: Gassing Up & Pump Limits)
Date: Wed, 10 May 2006 23:40:46 -0400
Message-ID: <>

On Mon, 08 May 2006 12:47:15 -0000, Brian Elfert <>

>If a card is stolen, the gas station will not be paid for the gasoline.
>A $50 limit means potentially less loss for the station.  A thief might
>not want to do a second transaction.
>Many people don't realize that the merchant is generally liable for
>stolen cards and such, not the credit card issuer.  That is why some
>merchants require ID even though VISA/Mastercard don't allow it.

That is completely incorrect.  Per my merchant agreement, if I have no
reasonable suspicion the card is stolen and I get that authorization
number then I'm paid.  Period.

The only exposure I have is a) if I don't get a signature on the
receipt and either a card swipe or card impression, b) the signature
isn't a reasonable match for the one on the back of the card and c) if
there is some obvious flag - a guy using a card with a female's name
on it, a photo card that doesn't match the person tendering it, etc.
Even then the risk is absolutely minimal. If the dollar amount was out
of the ordinary for my operation and other circumstances as the result
of an investigation proved that I didn't follow the "reasonable man"
policy (street bum using a platinum Amex to buy 100 lbs of BBQ for all
his bumly friends, for instance), only then would I have any exposure.
Effectively, when I get that authorization number, the money is mine.

In passing, I'll note that I pay for things for my mom all the time
using her card and signing the slip myself.  I recall once having to
take the slip out to the car for her to sign.  I can't recall any
other.  The fast is, nobody at the retail transaction end gives a
flying .....

I AM allowed to ask for ID.  What I am NOT allowed to do is write down
any additional information such as DL numbers.

If I as a merchant had even the remotest exposure to loss from
accepting a stolen CC that looked legit on its surface then I'd toss
my machine and so would a lot of other vendors.  The CC companies know
that and that's the reason they make the process as risk and
hassle-free as possible for both the user and the merchant at the risk
to them of increased fraud losses.  They don't care because they know
that morons who carry balances will tote the freight!

Speaking of cards, I had to go to the post office yesterday and
noticed a large new sign tacked to each window.  the sign was a xerox
enlargement of a policy memo issued from "those on high" with regard
to unsigned credit cards.

The post office now checks the back of every single card for the
signature.  If the signature block contains "ask for ID" or other
non-signature verbiage then the card is deemed unsigned.

The PO will accept the card but ONLY after seeing two forms of photo
ID AND having the customer sign the card in the postal worker's
presence.  If there is no room on the card for a signature because of
that "ask for ID" crap then the card is rejected.

Just a word of warning to those who think they don't have to follow
the CC company's rules.  Most private merchants like me want your
money more than they care about enforcing the rules but big corps and
the government are different.  The big corps have risk sharing
agreements that reduce commissions so they're more motivated to check
for fraud.  The government doesn't care because it doesn't have to.


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: Bad news from CitiCard.............
Date: Sat, 26 Aug 2006 22:45:12 -0400
Message-ID: <>

On Sat, 26 Aug 2006 10:50:16 -0500, Bob Giddings <>

>>My own self doesn't use them because I see no advantage to them over
>>credit cards.

The major advantage to me is that the transaction is over and done
with when I sign on the dotted line.  No monthly bill to pay or
account for.

>The one advantage is that there are quite a few places that take
>debit but don't take credit cards.  Including gas stations,
>something I ran into out in California.

Expect to see more of that in the aftermath of the federal anti-trust
suit against MC and Visa.  This suit is forcing the unbundling of ACH
and credit card processing.  Since ACH transactions are cheaper for
all parties in the processing chain and since they don't fall under
the credit consumer protection laws, expect to see more and more
debit-only merchants.

In a recent bout of temporary insanity, I applied for a credit card
through my credit union, thinking that I might get stuck in BF Egypt
with a broken down truck and be forced to rent a car from Hertz or
Avis.  I was turned down - "insufficient credit experience".  I
consider that a badge of honor.  I think I'll frame the letter as a
reminder the next time I have a fit of financial insanity.  I now
resume my previous attitude that if it can't be done with a debit card
then it probably doesn't need to be done.


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: Another myth busted
Date: Sat, 09 Sep 2006 13:44:43 -0400
Message-ID: <>

On 7 Sep 2006 16:51:19 -0700, "Rick Onanian"
<> wrote:

>Eisboch wrote:
>> I have a Bank of America debit card. It also says it's a "check card".
>> Anyway, when I use it sometimes it just rings up as a debit and the cashier
>> hands me a receipt.  Sometimes though, it rings up as a credit ... and I
>> have to sign the receipt promising to pay the amount on the receipt.  So ...
>> is it a debit card or a credit card?
>The semantics haven't kept up with the technology and the business.
>The term "credit card", in this context, means a Visa/MC/AmEx/Discover.
>"Debit card" in this context means ATM card (requires you to type in
>your PIN). Both can exist on a single magnetic strip on a single
>plastic card.
>Anybody who accepts Visa/MC "credit cards" should accept _any_ card
>with a Visa or MC logo on it.
>It probably is entirely true that you cannot rent a car from anybody
>using a debit card. However, a Visa/MC should work regardless of what
>type of account it's actually paid from.

Wrong again, Rick.

A debit/ATM card is actually two instruments in one.  It is a MC/Visa
credit-type instrument (that means that the transaction travels over
the MC or Visa network) and an ACH instrument, AKA "debit card".  When
I choose "credit card" (or the POS terminal chooses for me), the
transaction is handled by MC or Visa, outwardly just as if it was a
credit card.  Only at the processing center does it split off.

If I choose "Debit card" then the transaction is handled over the ACH
network(s), the same networks that handle ATM and inter-bank
transactions.  This is the transaction that requires the PIN.

There are several potential problems with ACH transactions.  One is
that since the transaction is outside the MC/Visa network, none of the
usual fraud protections apply.  You're at the mercy of your issuing
bank.  It has been my experience that it is difficult to get policy
statements from the banks that I've dealt with.

The second potential problem is that there is no restriction on the
amount transferred other than whatever the end unit (merchant or ATM
machine) imposes.  The ACH protocol is both simple and well known.
Once a potential thief has your account number and PIN, he can clean
out your account and your only recourse is your bank's mercy.

Both MC and Visa, OTOH, put a daily transaction limit on the account,
set by the issuing bank.  Some banks don't tell you about that.  My
bank was nice enough to both tell me about it and let me set the
limit.  I set it high enough to not get in the way but low enough not
to cripple my account.  I can change it on a per-transaction basis by
calling the bank's service center.

Even when using the card as a "credit card", the status of the card is
coded in the number.  The first number is the card type (4 for Visa,
etc.) and the last number is a check-sum.  Other numbers designate the

When I rented the car at Hertz using my debit card as a credit card,
the clerk read a statement to me indicating that they'd run a credit
score on me and hold $100 as a deposit.  BFD.  Enterprise simply held
a $100 deposit.  Again, BFD.  The Hertz deposit was back in my account
by midnight the day of return.  I expect Enterprise to do the same.

Effectively, a debit card IS the same as a credit card WHEN USED AS A
CREDIT CARD.  My bank, like most, is encouraging debit/credit card use
by such means as waiving the $50 limit of liability for fraud,
reducing it to $0.

John who used to write banking software in another life.

From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: Another myth busted
Date: Sat, 09 Sep 2006 13:45:57 -0400
Message-ID: <>

On Fri, 08 Sep 2006 05:24:44 -0700, Ralph E Lindberg
<> wrote:

>In article <>,
> Neon John <> wrote:
>> I just picked up a rental car from Hertz to drive to pick up my new 18
>> wheeler.  I paid for it with my debit card.
>  Last week Enterprize -refused- to rent a car to a co-worker with
>(only) a Debit card

The guy probably had a bad credit record.  The DO check that with a
debit card.  I'm writing this sitting in a debit-card-rented
Enterprise car using wireless internet.


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: Another myth busted
Date: Sat, 09 Sep 2006 16:40:16 -0400
Message-ID: <>

On Sat, 09 Sep 2006 16:11:37 -0400, Hunter <> wrote:

>>  Last week Enterprize -refused- to rent a car to a co-worker with
>>(only) a Debit card>
>My debit card has only as much money, "credit line", as I have in the
>account it's linked to.
>So, for instance, if I have 200.00 in my account and the car rental
>company wants to throw a 250.00 credit line at my card... it won't
>work and I'll get refused to.

Better check again.  Put $10k in your account and try to spend $2k on
one transaction.  At least at my bank, the default limit if I hadn't
chosen to change it was $1,500.

Second, most banks do NOT decline an overdraft.  They honor it and
charge an overdraft fee.  Both my banks and my credit union do that.
I'd be shocked and amazed to find that your bank would issue a
DECLINE, considering how much profit overdraft fees generate.


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: Who can give me information somthing about that?
Date: Fri, 15 Jun 2007 03:50:59 -0400
Message-ID: <>

On Thu, 14 Jun 2007 21:18:24 -0500, "Steve Barker" <>

>I don't see how you figger "you pay more".  We use a discover card for 99.5%
>of everything we buy, and get a big kickback bonus each year.  If credit
>cards are used like they were originally meant to be used, then they are a
>very good money management tool.

Two reasons.  One, according to the industry itself, plastic users spend on average
about 10% more than otherwise similar people who pay with cash or check.

Two, The term some shrinks use is the "lack of severance pain".  IOW, you don't feel
the pain of forking over that dough.  You hand 'em a card, some FM happens and you
get your goodies.  There is a strong element of self-moderation built into the
process of counting out dollars.  Much less but still some in writing a check and
having to write out the dollar amount twice.  None with plastic.

"As they were originally meant to be used" >WAS< to get you to spend more than you
otherwise would.  To reduce your natural aversion to being in debt to someone.  To
get you obligated to pay THAT bill instead of going out and buying something else
with the cash you have available.

Credit cars were simply a more convenient embodiment of the old fashioned store
credit or store tab.  the merchant knew that if he offered to let customers run a tab
and his competition didn't, then he'd get the mid-week business when the customer had
spent all his paycheck but payday wasn't til Friday.

It's interesting to go back and read some of the trade literature from the turn of
the last century and a little after, basically up to the Depression.  The language
wasn't couched in mealy-mouthed BS like it is today.  The objective WAS to get the
customer locked in and they said so.  House credit, house credit cards, revolving
credit, all were and are tools to hook the customer.  The only difference today is
that people are enslaved to Citibank and Discover instead of Sears and Roebuck.

Have you ever gotten to the checkout at, say, Home Depot and decided that you really
didn't need certain items rather than fork out all the cash that you were having to?
I certainly have, either because I didn't have enough cash on me or because I
realized that I was spending money for things I didn't need.  Ever done that with
plastic?  Probably not.  I can't recall a time when I did.

Ever notice how many folks cover up the total when they're signing the slip?  A lot.
I like to study people in check-out lines and watch their attitudes toward money.  A
lot of folks just figuratively "duck their heads and run for it", intentionally
ignoring everything but the signature line.

That's what the banks want you to do and is where they make money even on folks like
you who never carry revolving debt.


From: John De Armond
Newsgroups: misc.consumers.frugal-living,misc.rural
Subject: Re: Walmart Prices: Urban vs Rural?
Date: Tue, 26 Aug 2008 21:39:40 -0400
Message-ID: <>

On Tue, 26 Aug 2008 21:08:38 -0400, George <george@nospam.invalid> wrote:

>I know a local rather large store and a gas station that were called on
>the carpet for giving cash discounts. I don't know if it has something
>to do with specific requirements for merchant agreements in my state. I
>used to like buying stuff at that store. You walked up to the register
>and said "cash" and the clerk hit that key and you were given a cash
>discount. Same with the gas station. You pushed the cash key and you got
>a discount. One of the card companies found out and the determination
>was that a merchant couldn't do anything to highlight the fees the bank
>was getting including offering a cash discount. I have never seen any
>other places in my state offering cash discounts.

I didn't accept credit cards for about 6 of the 11 years I operated my
restaurants.  I finally installed machines to make paying over the phone for
catering jobs easier.  I did not sign a merchant agreement.  I simply called
my bank, told 'em I'd like to accept credit cards and a few hours later, a
bank rep showed up with the machines already programmed.

I charged a fee and had a minimum purchase requirement for credit card use.
Occasionally someone would complain and I'd get a call from the bank telling
me that someone had complained.  My standard response was "That's the way I
run my business and if that's not OK with y'all then come get the machines.
I'll have all my banking moved to a competitor within 24 hours."  Nobody ever
came for the machines.

CCs were more of a pain in the *ss than anything, slowing up the register line
and making cash customers wait.  I came close to ripping out the machines on
my on volition several times.  If it weren't for the corporate catering
customers, I would have.

In business, as in war, the guy willing to risk the most usually wins.  The
bank valued my business much more than I valued their CC machines so we
reached an agreement in my favor.


From: John De Armond
Newsgroups: misc.consumers.frugal-living,misc.rural
Subject: Re: Walmart Prices: Urban vs Rural?
Date: Wed, 27 Aug 2008 12:18:18 -0400
Message-ID: <>

On Wed, 27 Aug 2008 11:08:30 -0400, George <george@nospam.invalid> wrote:

>> In business, as in war, the guy willing to risk the most usually wins.  The
>> bank valued my business much more than I valued their CC machines so we
>> reached an agreement in my favor.
>> John
>Not doubting you but according to everything I have ever been told it is
>unusual. The local store I described is a huge place which includes a
>tire center, hardware, furniture, pets, sporting goods etc. The family
>that owns it has a total of 3 such operations.

It depends on who your processor is.  The two major categories are banks
themselves and independent processors.  I did end up moving my banking because
of other issues and at neither bank was I asked to sign a merchant agreement.

Sales reps from independent processors called on me frequently.  Some had
slightly better rates than my bank but the deal-killer that they all had in
common was the mother of all contracts.  At least 10 pages of about 8 point
type that would have taken me hours to read if I'd been able to actually see
the text.  I'm sure that somewhere in that contract was a clause prohibiting
what I did.  That was fine.  I sold 'em some BBQ and sent 'em on their way :-)

I should note that I never did business with a banking conglomerate.  I always
banked with home-town independent banks.  I knew the president and could walk
in and chat any time.  When they sold out to a conglomerate and he founded a
new bank, I moved with him.  I'm sure that, say, a Citibank would offer a
merchant agreement large enough that I could use it for wall paper.

The major incentive to deal with a home town bank and forego other benefits
such as in-network ATMs all over the country >IS< the personal service.  I
expected them to stand between me and Visa/MC and they did.  I'm sure that
someone at the back told a V/MC rep that they'd scolded me and that all was

One other thing that I should note.  V/MC aren't all-powerful.  In addition to
having the anti-trust government types on their backs, they deal with
companies much larger than they.  They don't dictate terms in a pre-printed
contract in those cases.  They negotiate terms.

Quite obviously the major chain gas stations and truck stops have negotiated
agreements that let them give cash discounts.  Very substantial ones.  Most
Love's and other chain truck stops, er, travel centers, have interstate
billboards that alternately flash the cash and credit prices.  During my year
of OTR truck driving, I became quite familiar with those.  Sometimes the
discount was as much as 12 cents/gallon.

The company that I drove for gave me a fuel card that when used at the truck
pump, rendered yet another price, the one that they'd negotiated with the
chain.  We could use certain chains but not others.  "Others" apparently
hadn't reached a satisfactory pricing agreement with the trucking company.

Point of my posting is to demonstrate that people who think that something as
complex as the plastic banking industry can be reduced to a simpleton
platitude such as "no cash discounts and no surcharges allowed" are simply
bullsh*tting themselves.

I want to point out another thing.  We independent businessmen are ALWAYS
smarter, more flexible and more mobile than any bureaucratic machine such as V
or MC.  For example, consider a situation where I needed to process plastic
for my business but also wanted to offer discounts to cash customers.  Enter
my Frequent Porker customer loyalty card.  As it existed, after 9 meals were
marked off on the card, the 10 one was free.

All I had to do to achieve my purpose of charging a plastic user fee was to
offer a Frequent Porker discount to my loyal customers but make it only
effective for cash transactions.  Show me the FP card and cash and get a
discount.  It never came to that but I already had my homemade point-of-sale
system programmed, just in case.  Most of my customers were regulars so we'd
have worked something out.

Mine were low cost, high quality family restaurants.  Most of my clientele
were blue collar workers.  I had to compete with Micky-Dee.  My prices were a
little higher but the quality made up for it. Few of my customers used
plastic.  Had I been operating an upscale white tablecloth establishment, I'd
have gladly taken plastic or cash on an equal basis.  My prices would have
been such that the cost difference would have been buried down in the noise.

Consider this.  I could offer a 1 pound USDA aged Prime Ribeye with all the
fixings for about $22 and change and make a nice profit. Last time I checked,
that same steak would cost you about $80 at Ruth's Chris steak house.  Do you
think that they minded paying the 35 cents + 1.88% plastic fee? (assuming they
had the same rate as I did.)


From: John De Armond
Newsgroups: rec.outdoors.rv-travel
Subject: Re: Gas Company Rip-Off by "Holding Funds"
Date: Sun, 14 Sep 2008 20:39:01 -0400
Message-ID: <>

On Sun, 14 Sep 2008 17:45:55 -0400, Don Bradner <> wrote:

>On Sun, 14 Sep 2008 17:22:18 -0400, Steve Wolf <> wrote:
>>How many days is a typical hold?  Is that in statute somewhere?
>Depends on the bank. Debit holds are typically shorter than credit
>holds, but both can range from short to long.
>Very, very little about credit cards is statutory. One exception is
>the Federal law protecting against fraud; that is often talked about
>because it is so exceptional. CC issuers can do just about anything
>they want in terms of normal operating practices, and the only limits
>are those employed by competitive pressures.

Which is the way that it should be, of course.  Man, Steve's really hung up on
that government interference thing, isn't he?

Anyway, The company that supplied the terminals for my bank installed what
they call the "restaurant package".  This includes the ability to do
post-transaction tipping, place and release extended holds and a few other
features.  The standard restaurant package maximum hold was 30 days which was
fine with me.  It served my needs.  Given my relationship with my bank, I'm
sure that I could have had that period extended for good cause.

I got a LOT of catering business through the rafting companies on the Ocoee
River.  Corporate bookings to feed the troops after a day of bonding or
whatever on the river.  Almost always, the secretary doing the booking would
use a company credit card to secure it.  Fairly commonly, when it came time to
actually pay, they'd pay either in cash or with a company check.  When that
happened I obviously had to be able to release the funds hold on their card.
No problem.  Just hit the correct key, enter the transaction number, hit enter
and it's done.  When I booked the catering I always gave the customer the
transaction number for just in case I ever lost the slip on my end.

While I'm typing, does everyone realize that the Visa or MC-branded debit card
issued by banks is actually a dual function card?  It's a Visa or MC debit
card that works and is processed just like a credit card AND an ACH card.  ACH
(automatic Clearing House) is the transaction that occurs at ATM AND on
merchant machines when you select the "debit" option and then enter your PIN.

That transaction is completely OUTSIDE the Visa/MC networks AND is outside
their rule structure.  There are several ACH networks, the most common being
Sirrus.  An ACH transaction happens directly between the ATM or merchant
terminal and whatever clearing house that the bank uses.

Many merchants, particularly the big guys like Walmart, strongly encourage
customers to do ACH transactions.  Anyone with a dual purpose card has
probably noticed that when you swipe the card, the PIN entry screen comes up
immediately.  You have to CANCEL the ACH transaction and select CREDIT from
the menu.  At Walmart, the CREDIT selection flags the cashier to do an
identity check (they never do) which is why she has to hit a key before the
transaction processes.

Why do they do it that way?  Because an ACH transaction costs almost nothing.
It bypasses the fees that Visa/MC/Discover/Amex and all the others charge.  It
also takes the automatic almost-always-in-favor-of-the-customer charge-back
mechanism off the table.  To perform the equivalent of a charge-back, one must
work with his bank's customer service department.

Unless there is highly evident fraud involved, they normally do NOT
charge-back and then investigate. They investigate first. Been through that,
have the scars :-(  Do NOT confuse this with a Visa/MC debit transaction where
the normal CC rules apply. (not by law, Steve, but from competitive pressure -
the market at work.)

The ONLY time one should use the ACH (PIN) function of a dual purpose card is
with an ATM.  NEVER with a merchant.  I felt strongly enough about this that I
had the ACH functionality disabled on my terminals so that my cashiers
couldn't do ACH transactions even if they wanted to.

The only exception is Sam's Club where they won't take V/MC cards but will
accept ACH transactions.  Even there I do it with great trepidation and only
when I forget to bring along a check.


Index Home About Blog