Online Debit Card Processing Advice

Merchant Warehouse |

December 7, 2010

There are two different kinds of debit card transactions available to merchants and consumers alike, and there is a great difference between the two methods used. For those merchants who use a PIN pad along with a credit card terminal, online debit card processing can offer a great savings.

The difference between “online” – or Personal Identification Number – debit card transactions and “offline” debit card transactions is that online debit card transactions require a customer to input their 4-digit PIN number and have their debit card swiped through a sales terminal. On the other hand, offline debit card transactions function exactly the same as any credit card transaction that requires a sales receipt signature and ID verification.

Online PIN debit card processing represents a great deal of potential savings in one of the most important areas, fraud. Using this type of processing can reduce fraudulent sale transactions. Consider the how the bank sees things. When customers present their debit cards for payment of their purchases, and then enter a PIN number manually, the chances of fraud are greatly reduced. As a result of this of this, the costs for PIN-based transactions or online debit card processing can be much lower.

Since debit card transactions require the debit card and cardholder to be present and the cardholder to enter a personal identification number into a PIN pad at the time of purchase, this method of payment can also offer optional cash back to the customer with a purchase. This is because the same set of operational steps ensues when customers uses their debit card at an ATM. PIN debit transactions provide immediate access to the checking account funds of a debit cardholder. PIN pad technology at checkout registers and ATMs encrypts the information to keep the transaction secure.

When conducting PIN-based transactions, merchants are charged a transaction fee, plus a flat fee for each order placed instead of a percentage rate (or discount rate). Assuming a merchant takes 100 debit cards over the course of a month (about three per day) and averages $85 per sale, a conservative cost analysis shows that a merchant could save over $100 a month, or $1,200 a year, in processing costs.

There are a great number of fantastic benefits when merchants accept debit card transactions at their places of business. One major benefit of this kind of processing is the encouragement of incremental sales, by attracting new and repeat customers by providing them access to their checking account funds, something with which they feel more secure. This enhances overall security, which makes the transaction safer than cash or checks. Debit card processing similarly reduces your risk of bounced checks and customer disputes. It also reduces risk of theft and staff pilfering, which greatly reduces the quantity of available cash you have to keep on the premises.

Additionally, acceptance of debit cards provides superior customer service, as it keeps your store checkout lines moving rapidly when customers do not have to take the time to write checks for their purchases.