The use of debit cards has grown significantly over the past decade. Consumers may favor debit cards because the money comes directly out of their checking accounts, which can enable better financial management. Many payment processing companies offers both PIN-secured and signature-based debit card processing.
PIN-based Debit Cards
PIN-secured debit purchases use a secret personal identification number (PIN) to authorize purchases. The transactions are authorized in real time. The funds in the customers’ accounts are captured, and money is normally transferred into the merchant’s account in two to three business days.
PIN-based Debit Networks include Pulse®, STAR®, NYCE®, Maestro®, Interlink®, AFFN®, Shazam®, Accel®, MPact®, Instant Teller®, Tyme®, Alaska Option®, Credit Union 24® and Jeanie®.
Signature-based Debit Cards
Signature-based debit transactions are performed offline and do not require a PIN. They do, however, require the customer’s signature on the receipt. Because signature-based debit cards are processed through the same system as credit cards, they incur transaction fees and discount rates. Merchants who have existing credit card accounts can easily add signature-based debit to their list of payment options and broaden the number of payment options they provide to their customers.
Signature-based debit cards have a MasterCard®, Visa® or Discover Network® logo and typically have the word “Debit” somewhere on the card’s face.
Some cards are multi-network and can be used with a PIN or with a signature. They typically show the Signature-based Debit Network logo on the front of the card, and the PIN-based Debit Network logo on the back of the card. If the card can also be used in an ATM to get cash, it will also show the logo of the ATM network as well.
On most Point-of-Sale (POS) equipment & terminals, if the customer selects “debit” then the transaction will be processed via the PIN-based debit network, and if the customer selects “credit” it will be processed via the Signature-based debit network.