Six of the Worst Payment Pain Points

Adam Rust

Let's imagine the following scenario: You are about to pay your taxi cab driver.  You are in a rush to get to your meeting. Your driver is in a rush to stop obstructing traffic. You came with some colleagues, and they are waiting outside, looking at their watches and wondering if they will have time to make it through security and then arrive at the meeting on time.

Almost everything involved with paying a taxi cab driver is suboptimal.

Do you need to get a receipt? I'm not too fond of the receipts used by taxi cab drivers. The driver pulls out a weird-looking payment terminal, punches in the price, and then returns the card with a tiny piece of paper. You’ll be filing an expense report, but the receipt is the size of two postage stamps. Do you feel safe giving your card to the driver? You can't see what he is doing with your card. You wonder...

Let's consider some other problematic moments:

You are using a debit card to buy gas at the pump. Because the gas station cannot know precisely how much gas you are about to purchase, they have to place a hold on your account for the highest possible spend. With prepaid debit cards, stations often hold as much as $100 on the outside chance that the driver is about to fill up a Lincoln Navigator (33.5 gallons). /

You are making a card-not-present transaction. Card-not-present, in case you are not familiar with the term, describes the time when you must give your card numbers over the phone. You hope they are honest, but if they were not, there's really nothing you can do to prevent the person on the line from stealing your numbers. Your best bet is to cross your fingers; at the worst, you will have to file a claim for fraudulent activity. Note: you're betting off if you are making a claim for charges made to a credit card versus to a debit card.

You left your card somewhere. Imagine if you left your suit in your hotel room. You call up the front desk. As luck would have it, the housekeeper found it and left it with the front desk. The clerk says he will be happy to ship it by UPS. You don’t have a UPS account. You have to give your digits to a stranger to pay for a service that is off the books.

You are paying the construction crew. You have hired a local landscaping crew to work to do some work on your yard. The job takes a few days. You paid for a portion of the work up front, but the crew now wants the other half before they head home for the weekend. The crew boss won’t take a check. He says the bank has closed for the day. He won’t state that he is worried that your paper check will bounce, but of course, you have no way of addressing that concern. It doesn’t help that you owe him $1,200, and even though you know you have the funds, you can’t do anything to clear up his doubts. Net result: you have to pay in cash. However, you can’t pull $1,200 out of an ATM. The crew needs money right now because they don’t have any money for the weekend.

You are using an irrevocable payment service operated by a non-bank financial institution to buy something on Craigslist. Consumers can always challenge a fraudulent transaction made through a branded card (VISA, MC, Discover) network. Rules have been laid out to give consumers the right to challenge an unauthorized debit. However, the rules are not as established over the governance of digital wallets.

May We Suggest You Try One of these Bank Accounts?
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Paying Taxi Cab Driver

"Users are finding The problematic use case is where a person buys a good through Craigslist, takes delivery of the item, and then cancels the payment before the recipient draws it down from a bank account.

One victim said that when he complained to Zelle, the company’s response was merely to say that its service should only be used for transfers among family and friends. In other words, you would be better off using cash.

To make it worse, some scammers close their bank account immediately after they pull back on the payment. I know it sounds like too much work just to buy an antique dining table, but it appears to be happening a lot.

The digital payment service providers defend their position on the grounds that consumers give authorization for each transaction.

Do you feel the pain?

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Adam Rust has worked to defend consumers against harmful financial practices since 2005. He has written extensively about overdraft fees, payday lending, credit insurance, student loans, prepaid debit cards, high-cost installment loans, and subprime mortgage lending. The New York Times interviewed him when it reported on the CFPB's rulemaking on prepaid debit cards; subsequently, his research paper framed the debate on consumer protections.

He serves on the Board of the US Faster Payments Council. He is Director of Research at Reinvestment Partners in Durham, North Carolina. He is the author of BankTalk. He is the author of "This is My Home: Challenges and Opportunities of Manufactured Housing" and has testified to Congress on how to redress some of the problems with manufactured housing. See more on his LinkedIn profile.