Primary Types of Debit Card Payments

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  • PIN Debit: Used in a retail environment, consumers select debit at the point of sale and enter their PIN (Personal Identification Number).
  • Signature Debit: Can take place at a retail location or an online Web site. Transactions are routed through the credit card networks (e.g., Visa® and MasterCard®) but are paid using a consumer’s funds on deposit in their checking or savings account.
    No entry of a PIN is required for a signature debit transaction. As a result, there may be a heightened risk of fraud, and typically a higher interchange rate is charged to the merchant.

  • Online Bill Payment (also known as PINless Debit): A debit payment type used by certain Web-based merchants that have established some type of contractual relationship with the consumer and, therefore, know their identity. 
    Wireless providers are the largest merchant category using online bill payment. Consumers may pay cell phone bills online using a PIN debit card, but without being required to enter a PIN. Since consumer identity is already known, interchange rates are generally lower than card-not-present signature debit.
  • Online Debit: The most recent introduction of debit payment types is that of online debit. There are currently two methods of online debit supported by the PIN debit networks. The first method requires a consumer to use a PIN debit card and enter their PIN online in a secure manner.
    The second method, also using a PIN debit card, requires the consumer to log into their financial institution’s online banking site to obtain authentication. This transaction type is in its infancy and currently the interchange expense to the merchant is less than that of card-not-present signature debit.

Source: Chase PaymentTech
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