Comparing PIN Debit and Signature Debit for Businesses

While credit card processing areas tend to get plenty of attention from merchants, it’s important not to forget about related debit payments. Debit cards may not get as much press as credit cards and ACH rates, but they are priced separately by processors and should absolutely be considered.

At Merchant Card Advisors, we’re proud to offer numerous such services, from small business credit card processing solutions to a variety of other payment processing programs. Those considering their debit payment processing areas will generally have a choice between debit formats using PIN numbers and those using signatures – here’s a comparison of these two types and some of the factors to consider when deciding on one, the other or both.

Comparing and Contrasting

Some assume PIN and signature debit are the same thing, but this can be a costly mistake. These formats actually run entirely differently and come with different processing rates.

PIN transactions, for starters, require the cardholder to enter their four-digit PIN number. When going this way, the transaction will be routed through a debit network rather than a credit card network – the specific network it’s routed through will determine the transaction charge.

Signature debit, on the other hand, involves the cardholder signing for the purchase instead. In these cases, transactions are processed through traditional credit card networks like Visa, MasterCard or Discover. These transactions are often called “offline” debit transactions since they don’t go through a debit network.

Ticket Size and Fraud Considerations

From a cost standpoint, which of these options you choose may depend on your standard ticket sizes. Signature debit tends to do better for smaller tickets, but those businesses who tend to have larger tickets usually opt for PIN transactions, which are cheaper over larger amounts.

There are also major differences between these two when it comes to fraud prevention and handling. Generally, PIN debit is the more secure option here – unless the PIN number itself is stolen, even a stolen card is not enough to complete a transaction. In comparison, signature format makes it easier to complete a transaction with a stolen card.

Making Your Choice

As we noted, PIN is generally the safer option – both for fraud prevention and because it will easily decline the transaction if the wrong PIN number is entered. Most businesses simply do not have the time and resources to check signatures against cards or driver’s licenses, meaning this format is less secure. However, for smaller businesses where legitimate fraud is not a big concern, signature debit may serve as the better financial choice.

For more on signature debit versus PIN debit and which is the right choice for your business, or to learn about any of our credit card processing services, speak to the staff at Merchant Card Advisors today.

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