A debit card is a form of payment card that takes money directly from a cardholder’s account for each transaction.
Debit cards, like credit cards, are plastic cards that customers use to make payments. The primary difference is that with debit cards, funds are removed directly from the customer’s account each time they use the card.
Sometimes called check cards, debit cards allow users to withdraw money from ATMs. They can also be used for purchases in stores and via the internet.
There are two types of debit card transactions: online and offline. An online debit card transaction takes place when a customer enters their PIN and accesses a debit network.
Some debit networks include Maestro, Pulse, NYCE, and STAR. You might have noticed their logos on your debit card or on an ATM.
An offline debit transaction occurs when a customer doesn’t enter their PIN. This kind of transaction is also referred to as signature debit because the customer provides their signature instead of a PIN.
Offline debit transactions are similar to credit card transactions. They use the Visa or Mastercard networks rather than dedicated debit networks.
Any time you use your debit card for a purchase over the internet, it’s an offline debit transaction. That might sound confusing, but again, it just means that you aren’t entering your PIN.
For offline debit transactions, fees and chargeback protections work the same as they do with credit cards.
If you own a business and want to accept PIN debit transactions, make sure you’re set up to do so. Your merchant account provider can help you get the right software and equipment.
There are benefits for merchants who accept debit cards. First, many customers prefer to pay with debit, and accepting their cards is good for business. In fact, 68% of consumers in a 2020 survey said they used a debit card every month. This is in comparison to 63% who said they used a credit card.
Secondly, PIN debit transactions are less likely to be fraudulent than credit card transactions. And, interchange fees are low for certain debit transactions due to the Durbin Amendment.
Whether you’re a cardholder or a business owner, you probably have experience with debit cards.
If you’ve ever taken money from an ATM, you’ve likely used a debit card. While there are ATM-only cards, they work the same way as debit cards. The only difference is that debit cards can also be used at stores, and they can be used offline for signature debit transactions.
If you run a business and take credit cards, you have probably processed signature debit transactions as well. These transactions work the same way at the point of sale. This is true whether you do business face-to-face or online.
To accept PIN debit transactions, you need compatible processing equipment. If you don’t currently accept PIN debit, but you’d like to, contact your processor.
Today, almost all debit cards in the U.S. have EMV chips. This means that PIN transactions are run as Chip and PIN. The customer inserts their card so a merchant’s terminal can read the chip, and then they enter their PIN.« Back to Glossary Index
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