PIN Pad Transactions - Pin-Based vs. Signature Based

A PIN pad is an electronic device used in a debit or smart card-based transaction to input and encrypt the cardholder's PIN. PIN pads are equipped with hardware and software security features to ensure that the injected security keys and the PIN are erased if someone tries to tamper with the device.

When a pinpad is added to your credit card machine for transactions, the customers will be able to use their ATM / debit card as payment for the products. Also the PinPad will be compatible with all credit card machines. In order to accept pin-based transactions, you must have your PIN pad encrypted by your processor.

Comparison Pin-Based vs. Signature Based

 Pin-Based (on-line) Debit Transaction :

The pin based debit transactions are called as online debit cards in the processing industry. Here the customers ATM, Magnetic stripe reader, Debit card or PIN number is used at the time of purchase to authorize the payment, and once the transaction is authorized, the money is debited from the cardholder’s bank account.

Advantages of Pin-Based Debit Transaction:

• Customer receives a convenient payment choice.
• Signature is not required.
• Low Rates & Fees. 
• Reduced Fraud.
• Ability to offer customers “Cash Back”.
• Virtually eliminates chargebacks.

Signature Based (off-line) Debit Transaction :

A signature-based debit card transaction is one that is processed offline. Customer's signature is required at the POS when purchase is made. The most common transaction type is to accept a debit card and is processed like a regular credit card by swiping it through the terminal machine. The amount is taken from the customer’s account just as it is with pin-based debit, so the card remains linked to the customer’s account, it doesn't matter how the merchant processes the card.

Advantages of Signature based Debit Transaction:

• Faster Transactions
• These transactions can be processed over the phone and on the Internet.
• No pin number is required.
• Convenient for people who don't have access to a credit card 
• Can also be used for debit cards that bear the VISA or MasterCard logo.

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