Merchant Glossary: Debit Card

Debit Cards behave and act just like a credit card, accept that the funds are immediately withdrawn from the cardholders bank account. A credit card on the other hand is billed to you each month, and may contain interest charges. Credit cards you do not have to pay off each month, while debit cards there is no balance to pay off, as the money comes directly out of your bank account There are two types of debit transactions, one is called offline debit (Signature), and the other is called online debit (PIN). With offline debit, the customer signs a receipt and does not enter a PIN. The transaction travels through the Visa/MasterCard Network. With online PIN debit, the customer must enter their PIN number and the transaction is authorized over a debit network directly. Online debit requires additional equipment (i.e., a pinpad), and can only be used in a card present environment where the card is swiped. Offline debit however can be used in both swiped and card not present situations (i.e., Internet ecommerce websites) since no PIN is entered. All standard merchant accounts allow offline debit transactions to run through th account as if it was a standard credit card.

Other terms explained in the Merchant Glossary: