Pin Debit vs Signature Debit


Merchants often ask… “Should I accept Pin Based debit? Would it save me money?” With so many recent changes in the processing industry, including the Durbin Amendment, many merchants have been given conflicting information as to what is best for their business.  Unfortunately, there is no cookie cutter, “one size fits all” answer.  Average ticket, number of transactions, pricing, as well as pricing method, all must be taken into account.


Moreover, some merchants are under the misconception that the only thing they pay for with pin debit is the cost of authorization. This is simply not true.


To better understand what is best for one’s business, one must also understand the different components and how they work.



What is Pin Debit?


Pin Debit, or Online Debit, is an option in accepting credit cards where the merchant generally employs a Pin Pad to process check cards as an immediate electronic transaction; basically an enhanced ATM transaction. The customer inputs a pin number at the point of sale, and the debits are generally reflected in the cardholder’s account immediately.


Pin based debit was greatly affected by the Durbin Amendment, as all regulated debit cards pricing was capped. (Regulated Debit cards are any cards issued from a “regulated bank”, one whose annual assets are over 10 million)



Components of Pin Debit


Pin Debit pricing is comprised of the following fees:


  • Monthly Access fees from the pin debit networks
  • Monthly Access fees from the processor
  • Authorization costs
  • Pin debit network interchange rates
    • Percentage of volume
    • Per item fee


What is Signature Debit (Offline Debit)


Signature Debit, also referred to as Offline Debit, or Swiped Debit, is the process of running check card transactions in the same manner a business runs credit cards.


The card is (often) swiped and a signature is often required. The transaction appears as “pending” in the customer’s bank account, until the transaction clears and is posted.



Who Needs Pin Debit?


While some merchants may find they benefit financially from accepting pin debit, some merchants need pin debit even though it may cost them more overall.


  • Merchants that offer cash back
  • Merchants that offer EBT
  • Merchants whose customers demand it

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