What is pin-debit?

Pin debit refers to a credit card transaction in which the buyer enters their 4 digit personal identification number (PIN) into a merchant terminal in lieu of a signature, when using a debit card.

Debit cards are usually associated with a checking account, but may also be a savings account. Regardless of the account, the card will ALWAYS have the DEBIT symbol on the front of the card. Newer cards usually have a holographic Debit symbol.

With PIN DEBIT the merchant pays a fee to the debit network instead of Visa & MasterCard interchange. This fee is under $1.00 per transaction, usually around $0.50 and the fees vary by debit network.

With SIGNATURE DEBIT, Visa & MasterCard have different interchange rates for debit card usage. With very few exceptions, such as processing greater than $420 million annually in debit or for supermarkets, the lowest rate for debit card interchange, which all payment processors pass on to merchants, is 1.03% plus $0.15 per transaction. More details are available by checking the latest interchange rates.

Pin-based debit transaction merchant fees include:
1. Per transaction charge from your Credit Card Processing services company.
2. Debit network charge (Debit Network Acquirer Fee). This fee varies depending upon your region of the country and the network that the cardmember’s issuing bank belongs to. The region determines which debit network the individual transaction will clear through.

Debit network acquirer fee examples:
Interlink Retail $0.175 + .75% (max of $0.525)
NYCE Retail Std $0.1375 + .65% (max of $0.6875)
Pulse (Includes Tyme) 0.16 + .65% (max of $0.71)
STAR (Includes MAC, Cash Station & Honor) $0.1625 + .65% (max of $0.6425)

Pin debit is best used if your average transaction is over $25. That’s generally a good break even point as to whether it’s cheaper to process via pin debit or signature debit.

2 thoughts on “What is pin-debit?

  1. Big question. I’ll try and write a short version reply here.
    Card issuing bank is the entity that issues a card to a consumer or business. Usually this means extending a line of credit.

    Debit card network gives companies a way to deliver instant funds electronically. It’s an infrastructure that enables users to enter a PIN number and have money instantly withdrawn/transferred.

    Card Associations- Visa and MasterCard have associations. The banks pay membership fees to the associations and can then issue Visa and MasterCard branded cards. The associations process the transactions, and earn a fee to do so. Risk against credit card fraud is spread among associations, which provide payments technology around the world connecting businesses, consumers, banks etc. The associations do not issue credit, therefore have no risk assoiciated with consumer debt.

    Discover and American Express issue their own cards, and assume related risk.

    A merchant processor handles the indiviual transaction processing.
    The merchant, well, you know what you do!

    The merchant must use a processor. The processor is the merchants connection to accepting all types of card payments. A processor can also be a card issuing bank, though this does not necessarily equate to cost savings. A merchant with pinpad in which consumer enters pin number bypasses the card association (and their fees) by instead routing the transaction through the alternative debit network. The debit network has a different set of fees.

    If consumer signs the receipt instead of entering pin number, using their debit card, the transaction is a signature debit, which goes through normal channels.

    Think of processing as a highway with toll booths. You must stop here, decide where you’re going, and pay a fee to be routed in that direction. You have tolls with the processor, the card associations, card issuing bank (MOST MONEY HERE), and sometimes the debit network. Everybody pays the tolls rgeardless of where you set up your merchant account. That’s because they are different types of tolls, so even if you get a merchant account at a bank, you still pay each fee in the system.

    What’s the cheapest way to get through the system? It changes all the time. Solutions like CenPOS for larger operations automatically find the least cost way for any given transaction, and can be adjusted based on merchant decisionable risk requirements.

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