What I’m curious about is, how does credit card fraud get handled in the EU?
At least in the US that kind of fraud is the bank’s problem, which is why I prefer using credit over debit.
At least in the US that kind of fraud is the bank’s problem, which is why I prefer using credit over debit.
I suspect fraud is less of an issue because accepting signatures for card purchases hasn't been common for at least a decade (you need the PIN for all spending above the contactless limit - about 30 euros in most countries) and PSD2 (mandatory for transactions since 2020) requires 2FA authentication for most online transactions too. See https://en.wikipedia.org/wiki/Strong_customer_authentication.
That means copying or stealing a debit card, or capturing entered online card details by themselves won't get you very far in the EU, which removes a lot of classic fraud. In the remaining cases though, I have no idea!
In the U.S. the system favors the consumer, so the merchant has to actively prove that it was not fraud (by default, this is definitely not blindly applied).
The signature part is one part of this, but the U.S. actually has laws in place to push this, and that largely has driven the non-PIN policy in the U.S. (since most of the anti-fraud pressure is on other parts of the system).
(2) Putting the risk on credit card companies highly incentives them to fight fraud. This is ideal because they make the money and they are best positioned to fight it.
(3) Your premise is false to begin with. Higher fraud, like taxes, is payed for by some combination of the customers, the employees, and the owners (though actually it's more complicated than that due to contractual agreements: I believe merchants bear the penalty so we get recursive).
Even when the customer pays exclusively, there's a propagation delay that hits somebody else's wallet in the interim. (E.g., merchants don't raise prices immediately everytime fraud/taxes/wages increase.) It's a mistake to think of this as a mere transitory effect rather than a structural advantage that favors the consumer.
However, using security factors like secrets or updating the withdrawal limit is possibly inconvenient, that's why some people rather not use them and companies are incentivised to just recover the relatively minor losses to fraud in fees.
I guess it comes down to the fact that in some countries people are used to having about five different cards, and in others it's close to one.
((1) is both disingenuous (ignoring sensible withdrawal limits) and mathematically wrong (unlimited fraud spread evenly over all accounts is still unlimited fraud against every account). I guess people would pay more to avoid surprises, but they'd like it even more if there was less fraud.)
(3) The point was more that someone will have to pay for the fraud that is happening. Deriving a structural advantage from not using secrets is far fetched.
[1] https://en.wikipedia.org/wiki/Strong_customer_authentication
This makes fraud much harder, while still allowing online payments with credit cards.
It is probably also helping smaller shops, as even Amazon customers now need to do something when they buy there.
> This makes fraud much harder, while still allowing online payments with credit cards.
As an European I can confirm,
> It is probably also helping smaller shops, as even Amazon customers now need to do something when they buy there.
Nope, sadly. Amazon apparently can magically skip the 2FA most/all times.
My guess is that amazon has deals with banks to streamline the process, but I don't really know
In Europe the last time I saw a cheque was in the early 90's, and they are still used in Canada for things like rent.
I also remember traveling to the states in 2016 with my tap-enabled credit card, blowing people's minds in shops. All their equipment was ready for tap, but no US cards had it yet.
It also surprised me that things like Venmo have a reason to exist! I don't think many Americans know how bad they have it terms of banking tech.
How bad we have it. Comeon, just stop it.
So five years ago, you still had to enter a pin / swipe, you couldn't just tap. We've got it so bad. So bad! It's the dark ages here, circa five years ago.
> my tap-enabled credit card, blowing people's minds in shops
Yeah right. The iPhone had been around for nearly a decade, but oh wow tapping credit cards to blow minds.
> It also surprised me that things like Venmo have a reason to exist!
Crazy stuff! But like you said, we've got it so bad. An easy to use software service exists to transfer funds, incredible. The suffering. I feel dread just writing this comment and thinking about it.
The reason that Venmo is seen as an unusual, and somewhat superfluous concept, is that the functionality is just expected to exist as part of every financial app, either legacy/mainstream bank or trendy new fintech upstart - it's really not anything special enough to require a separate system.
I just listed some examples, but the frustration was real. Individually all minor inconveniences, but when you are used to a better system it's frustrating.
Top 3 real frustrations are the difficulty of international wires, the frequency I have to visit a branch and how weirdly hard it was in SF to split bills (the last may have changed since 2018).
But sure, first world problems!
And yet you don't know that, as nraynaud and bayart said, the French use checks (about as often as Americans). Checks are definitely a thing in the UK, too. Are France and the UK no longer part of Europe? (If you make a Brexit joke here, as opposed to actually trying to respond to my point, you automatically lose.)
>Top 3 real frustrations are the difficulty of international wires
I will give you this. When I had to send $2000 to a Canadian earlier this year, the cheapest method we found was to do so through Coinbase using Bitcoin; I think the fee was about 1% (for me to purchase the additional Bitcoins I needed; no fee charged by Coinbase for the transfer itself because it was internal).
>the frequency I have to visit a branch
I've been a customer of USAA Bank for years. As it was created to serve the military (although its remit has expanded), USAA has always been designed to work without a local branch. There are many such branchless banks in the US. That said, I have accounts with other, "traditional" banks and they have been about as online as USAA is for years.
>and how weirdly hard it was in SF to split bills (the last may have changed since 2018).
This is one of the things people use Venmo for.
It's still a thing in France, mostly because you can control the moment it's cashed in, it can be used as collateral for rent and so on, and because there's a tradition of paper documentation cheques play into.
But people of my generation rarely bother to get a cheque book at all, bank transfers are just fine.
IMHO credit cards and the systems around them are a remnant of the past. The US just hasn't caught up with the rest of the world yet.
weird. i'm european, live in europe, only use credit cards. either visa or amex. they offer better protection when buying something, protection against scammers, plus added benefits (from travel to cashback etc). it also contributes to my credit score.
if anything i think europe is actually craving a lot more credit, see klarna as a good example.
But using a credit card like MasterCard or VISA in Denmark usually incurs a fee with most merchants.
As for protection, I think you still have months to report fraud. Although you should always report it as soon as discovered.
2008 changes a few things and somehow Debit Card in US caught on. Credit Card in EUR increased as well. I think Debit Card now represent something like 40%+ of transaction in US. Credit Card in EUR is still comparatively small, but much larger than pre 2010s mostly due to company spending.
Losing a card isn't very stressful here.
There's no difference in fraud protection between debit and credit cards in Europe, at least on my bank. Fraud is refunded following the same rules.
Most banks will refund fraud in most cases even on a debit card here (UK)
For credit cards the credit card issuer also shares legal liability with the vendor for purchases over £100.
https://www.ukfinance.org.uk/area-of-expertise/cards/chargeb...