In Credit Card Processing, EMV Credit Card Processing, PIN Debit

PIN Debit is Cheaper | Fact or Myth?

Contrary to common misconception, both PIN Debit and Check Cards now process at the exact same rate regardless of processing method.

Credit card machines that have the PIN Debit functionality turned on now prompt the user to select one of two different networks to process the transaction.  This means when you choose Debit, you are then asked to select either Visa/Mastercard Debit or US Debit.

So, What’s The Difference Between Visa, Mastercard and US Debit?

Choosing Visa or Mastercard Debit will route the transaction over Visa or Mastercard’s network and the user will not be prompted to enter their PIN number.  The machine will print a merchant receipt that the customer must sign.  This is also called Signature Debit.  Alternatively, choosing US Debit will route the transaction via the debit network supported by the user’s card and the user will be prompted to enter their PIN number.  There are many debit networks in the US, such as Pulse, Star, Interlink, NYCE, Shazam, etc.  The specific network that the PIN Debit transaction is routed is dictated by the bank who issued the card and which network they support.

The True Cost of Processing Signature Debit and PIN Debit

The cost to the merchant to process a card as Signature debit vs. PIN debit is exactly the same.  This is a common misbelief that using a PIN reduces the cost.  Pre-2012 this was the case, but the Durbin Amendment fixed the cost to process every check card and debit card at 0.05% plus $0.22.  The only exception to this is if the bank who issued the debit or check card has less than $1 billion in assets, aka a small bank or credit union, then the Durbin amendment allows them to charge 0.80% and $0.22 for the same transaction.

Again, the processing method has absolutely no impact on the cost, as it’s been fixed by the Federal government and the Durbin amendment as of October 2012.  The only cost difference between choosing Visa/Mastercard Debit and US Debit is that the PIN debit networks are now charging annual fees for the use of their network.  See details of these fees on a related post.

Which Option is Best for Me?

Assuming that you are a Leap Payments client with interchange pass-through pricing, there’s no cost difference to you regardless of how you process a debit card or check card.  The only difference is the surprise annual fees that can be imposed by each network even if you only process one transaction via that network in a year. Because of this, our recommendation is not to use the US Debit option and not to support PIN debit at all, because no one likes surprise, annual fees.  You still get paid if you process the debit card as a credit card sale, and your costs can be lower with no annual debit network fees, so get rid of your PIN pad and run every check card transaction as credit to enjoy the lowest possible costs.

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