The security of credit card transactions is subject to stricter legal safety requirements and higher liability protection than debit cards. However, the security policies implemented by card networks and issuers differs leading to variance in the level and functionality of the fraud claims process among both credit and debit cards. Even though credit card transactions are thought to be safer than debit cards, other factors also influence and test this belief. These factors include the card’s unique security features, safety practices of the card carrier and the technology used to process and monitor transactions.
Credit cards and debit cards operate differently, and this affects their security in some ways. Sally Herigstad, a certified public accounting reporting via CreditCard.com suggests credit cards offer more financial protection in terms of actual cash-flow because with credit cards a disputed charge is not immediately drawn from an account as is the case with debit cards. Additionally, the Bank of America states credit cards are more secure for shopping via the internet because consumer fraud protection is stricter than debit cards for these kind of purchases.
The brand and issuer of both debit and credit cards also affects the quality of their security. For example, a Visa credit card issued by Bank of America has different security features and services than a MasterCard credit card issued by the Navy Federal Credit Union. Moreover, according to Visa, both its credit and debit cards are protected by perpetual fraud monitoring via its no liability policy. MasterCard also has its own trade marked security features such as a holographic magnetic strip called “Holomag” on the back of its card.
Demographic factors can also influence if credit cards are safer than debit cards and by how much. For example, according to CreditCard.com, women are more likely than men to be victims of identity theft. Thus, if a woman is carrying a credit card and a man carries a debit card, the probability is higher that a woman will be victimized regardless of what card is carried by the man. In other words, in this example, gender plays an increased role in security than the type of card.
The Federal Reserve Bank of San Francisco states the Credit Card Fraud Act protects both credit and debit cards. However, also per the San Francisco Federal Reserve Bank, debit cards are regulated by the Electronic Funds Transfer Act whereas credit cards are protected by the Fair Credit Billing Act and the Truth in Lending Law. Since these laws are not the same, and more laws exist for the regulation of credit cards, the security afforded to debit cards is less expansive than that protecting credit cards.