It used to be cheaper to take pin debit cards via the debit networks instead of through the credit card interchange networks. A customer would enter his pin number onto a Pin-Pad instead of a signature for payment acceptance. The debit networks are Pulse, Maestro, Interline, Jeanie, NYCE, Star and others.  But with the Dodd Frank Act, it is cheaper to take debit cards just like a regular credit card, without the pin entry.

The Dodd Frank Act regulated the large banks so that they couldn’t charge more than .05% plus $.22 for a debit card.  Congress thought that the large banks were gouging people who wanted to use a Signature Debit Cards. Small local banks and credit unions won the right to be able to still charge merchants a higher rate for debit cards run through the Visa/MasterCard network.

There are good reasons why a merchant would still want to utilize the debit networks and accept pin entries.  Merchants who have a lot of chargebacks would want to encourage their customers to enter their pin with their debit card.  Transactions that go through the debit network are as good as cash.  They cannot be charged back.  So, liquor stores, for example, many times want to keep using the pin debit network. You would probably can save another .75% off the Interchange Rates. The debit networks charge, on average, 1% plus a transaction fee of $.15 compared to .05% and $.22 for a regulated debit card. Both are excellent and should be accepted, when possible, by all retail merchants! (Pin-Debit is NOT available for account where card is NOT PRESENT/KEYED!)

For consumers, however, there are more issues to consider when using a Pin-Debit Card to make payments. Since it is linked on one's bank account, if that information is ever compromised, the perpetrator could have access to the consumer's entire bank money! There is also the issue of overdraft. If the customer purchased a higher ticket item and there was not enough funds to cover the transaction, the bank will implement a Non Sufficient Funds Fee ($30-$50) per incident! Ouch! 

If you are NOT ACCEPTING Pin-Debit and want to know more about it, give us a call!