What is PIN Debit?

09|2021

PIN (personal identification number) debit is a debit transaction that’s routed through the debit network instead of the credit network. Debit transactions typically offer higher security and lower costs for merchants, but what is the difference between PIN and signature, and why does it matter?

Signature Debit

Signature debit is a debit transaction that’s being run as credit. Instead of verifying by PIN, the customer instead will sign for the purchase or simply run as credit. These debit transactions are then processed on the credit network at the debit interchange rate, otherwise known as an “offline” debit transaction. This rate is capped at 0.05% and $0.22 for all regulated banks, and often significantly lower, which makes signature debit a better choice for businesses with smaller average transactions.

Cost

By entering a PIN number, the debit transaction is routed through the debit network. The debit network is a single transaction-based markup as opposed to the credit network, which subjects transactions to interchange plus pricing. In other words, PIN debit transactions are only assessed a single flat-rate fee by the processor instead of a flat-rate fee plus a percentage-based fee. This means that PIN debit is especially advantageous for businesses with larger average transactions as opposed to signature debit, which is better for businesses with smaller averages.

Security

PIN Debit transactions add an additional layer of security by requiring customers to input their personal PIN numbers before completing a transaction, which reduces the risk of fraud and chargebacks because it confirms the card isn’t stolen and is a card-present transaction. This is by far the biggest advantage to accepting PIN debit! Cardholder funds are confirmed at the time of the transaction and the cardholder’s account is debited immediately, which protects merchants from payments bouncing.

Contact us to discuss debit options for your business and check out more blog posts.