This is what x.com (aka payPal) did in the earliest days. You could submit a credit transaction to a credit card without an initial charge.
It worked, but it was strictly against Visa/MC policy, and they had to stop. By that time they had some critical mass and got ACH going quickly.
I don't know if it's the same thing with debit cards, but I suspect it is -- the transaction goes through Visa/MC, but settles via ACH once it's known that it's a debit card.
But Square might be big enough to change the policy. Especially since Visa is an investor?
It worked, but it was strictly against Visa/MC policy, and they had to stop. By that time they had some critical mass and got ACH going quickly.
I don't know if it's the same thing with debit cards, but I suspect it is -- the transaction goes through Visa/MC, but settles via ACH once it's known that it's a debit card.
But Square might be big enough to change the policy. Especially since Visa is an investor?