At face value, both PIN debit and signature debit transactions look the same. They are both conducted on a debit card, so what’s the difference?
The truth is there are some big differences when it comes to cost. How you process debit cards can have a large impact on your bottom line. Most businesses aren’t aware of this and end up throwing money out the window. Here’s what you must know.
What is a PIN Debit Transaction?
A PIN debit transaction occurs when the customer enters their PIN into the credit card machine. Only they know the PIN and if they enter it incorrectly, the transaction won’t go through. The transaction doesn’t go through a credit network like a credit card does. Instead, it goes through a debit network.
With a PIN debit transaction, the debit network ensures there are enough fees for the transaction to go through. If there are not enough fees, the transaction is denied.
What are the Processing Fees?
Unlike credit card transactions (free credit card processing), PIN debit transactions don’t have interchange fees because they go through a different network. One downside, however, is you can’t choose the debit network the transaction goes through, so you’re at the mercy of the fees charged by the appropriate network.
PIN debit transactions have a PIN debit network fee plus a processor markup. The fee is a percentage of the sale (which is usually lower than the credit card interchange fee) plus a fixed markup for the processor.
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