Having spent 2 weeks researching this I now have more questions about the debit landscape in US than when I started.
A few weeks ago I bypassed PIN at a Target store while using a VISA debit card for a sub-$50 purchase. Checking receipt I found that the AID in use was
US DEBIT. Since I was under an impression that not providing PIN would require the terminal to route transaction to VISA DEBIT (
A0000000031010), I dug deeper. Why did I need to bypass PIN? Well, the the bank stated that Visa Zero Liability only applies when a transaction is processed through VISA network, which requires a signature CVM ("Payment Insecurity" by RPGC [PDF] was an interesting read on why we even have Pin-and-Signature).
It turns out that Target along with other merchants started using PINless debit (per Oregon State CU) and route the transactions to local US debit networks. At the moment the limit for such transaction is $50 (but STAR & ACCEL networks increased it to $100 – fiserv).
It looks like some online services are also using the debit networks for card-not-present transactions – First Data, and that's why statements now show "POS" sales for some online transactions.
So now we have those channels that avoid Visa and "Visa Zero Liability" which states:
If you use your PIN for your Visa Debit card transactions without signing, you may not receive the same security protections for transactions not processed by Visa. – Visa USA
Per Regulation E § 1005.11(b), the consumer has 60 days after the statement to report an error/fraud on their account and limits the liability to $50 (with increased liability after that time period). Not zero, but still a recourse against fraudulent charges when card is not processed over the global Visa network.
So three questions:
- Has anybody had experience with Debit card fraud that Visa Zero Liability covered? How was it different from the Reg E handling?
- Do other perks (Purchase Security, Price Protection, Warranty Manager Service) that some Visa debit cards come with require the transaction to be routed through Visa?
- Does it even matter to a regular consumer which network their transaction goes through?
P.S. I anticipate answers containing "just use a credit card/never ever use debit", and while I acknowledge that this is the only way to route transaction through Visa network, that's outside of the scope of this post. Thank you!