What is a Debit Card?

A plastic card linked to a checking or savings account. Offline or signature-based debit cards work in the merchant environment the same as a credit card transaction and are not required to be “online” to access the account balance. Offline signature-based functionally work like credit cards; an initial transaction is used to hold funds and a second to settle or remove the funds from the card balance. Online debit cards or PIN-based debit cards ride over the ATM network; they require a PIN and the ability to authorize against the actual balance of the card in a single step transaction. Prepaid cards fall into the debit category.1

PIN/Online Debit Card Processing
This refers to a Card Present authorization where the cardholder enters their PIN into a terminal instead of using a signature or verbal authorization. These transactions use the ATM networks (NYCE, STAR, Interlink and PULSE) and the settlement happens in real-time instead of the two step process for credit cards (authorization/settlement). That is why cardholders can usually get cash back during this type of transaction, and processing fees are typically less expensive than Signature/Offline Debit transactions, due to a few factors including lower risk.

Signature/Offline Debit Card Processing (aka PIN-Less Debit)
This type of transaction has a verbal authorization or signature authorization (typically in a Card Not Present/MOTO transaction). In this type of transaction, the card must have a MasterCard or Visa logo, since the card networks will be used for authorization and settlement. The debit card processing fees for these transactions are typically higher than PIN/Online Debits due to a few factors including increased risk.