Debit card use has soared in recent years. Debit cards subtract money directly from a customer’s checking account for each transaction. Many consumers prefer debit cards as a budgeting tool, boosting debit card usage 12 percent annually.
PIN Debit or Online Debit involves payment processing in which the customer is required to swipe his debit card and also enter the PIN or Personal Identification number. This is possible through the usage of a credit card terminal or POS software system with an attached pinpad. PIN Debit is one of the fastest growing methods of payment available today. With Personal Identification Number (PIN) debit, customers simply enter their PIN, verify the transaction total and press enter. With no additional identity verification required, all that’s left is to hand them the receipt.
PIN debit is becoming the payment method of choice for many consumers, owing to the security it offers. Another reason et cash back at participating retailers by using your PIN. This allows you to save time and ATM fees. PIN debit transactions are cheaper than debit card transactions secured by signature, incur lower fraud losses, and generate slightly higher average tickets. Consumers also prefer PIN debit because it’s quick and convenient.
More advantages of PIN debit:
- You may not always have enough cash on hand. PIN debit allows you to carry little or no cash and still make the purchases you need to.
- Using PIN debit is faster than writing a check, and you don’t need to provide identification.
- With credit cards it can be too easy to overspend your budget or spend more than you actually have. With debit purchases the funds are taken directly from your account, so you can spend only what’s in your account.
- One of the drawbacks with PIN debit is that the majority of banks place daily debit limits for their customers, so if you have a high average ticket size, PIN debit may not be a good solution for you. Also, a business must have a pinpad encrypted specifically with the bank they process through for PIN debit to be possible. Pinpads can range from about a hundred dollars to over a thousand depending on the complexity of the pinpad.
- Signature Debit or offline Debit transaction involves payment processing using a debit card just the way a credit card is processed. The only difference is that you are accessing your deposit account rather than your credit account. The transaction may be carried out over the internet, or using a credit card terminal but instead of using a PIN, you sign a sales receipt to authorize the transaction. Signature debit is also referred to as offline debit, because the transaction occurs “offline” meaning the funds are not deducted from your account in real-time. Rather, the funds are deducted from your account once the merchant’s receipts are settled. As long as the debit cards have a Visa or MasterCard logo on them, businesses can easily process them for a signature debit transaction. Signature debit cards are increasingly popular, and they’ve been in the U.S. and around the world for many years already. If merchants don’t accept signature debit cards, they limit their sales opportunities.
With Signature debit, Cardholders enjoy the convenience of being able to use this enhanced ATM card at millions of merchant locations worldwide wherever MasterCard and Visa debit cards are accepted. Plus, they feel more secure since they don’t have to carry cash or write a check. Retailers enjoy the fact that payment is guaranteed, customers generally purchase more, and there are reduced cash and check handling costs.
Both signature and PIN debit are great ways that a business can save money on their credit card processing fees. PIN and Signature debit both have different interchange categories than credit cards and both will normally be cheaper than a credit card transaction if your merchant account provider offers reduced debit rates.
