Signature Debit or PIN Debit – Does it make a difference to the merchant?

Recent reports in the news focused only on the consumer perspective of using debit cards with a pin number or with signature on the receipt. How a customer uses their debit card does make a difference to the merchant in two areas – cost and exposure to fraud.

 

A quick evaluation of your merchant account fees will reveal how much can be saved by just asking customers to enter their pin number. Your best customers will be helpful in reducing your cost and limiting fraud exposure for both you and your customer. See below for how use of a debit card does make a difference for a merchant. Maybe you should be asking "Debit or credit?"

 

Use signature debit – Swipe debit card and do NOT enter pin #

Consumer

More time to file dispute of charge

Lower amount at risk due to fraud

Higher risk of NSF fees

 

Merchant

Higher risk of loss – chargeback fees plus loss of sale and goods

Less time to respond to dispute

Less protection from customers using stolen card

 

Use PIN debit – Swipe debit card and enter pin #

Consumer

By law, less time to file dispute – actual bank policy typically same as for signature debit

Lower risk of fraudulent charges from stolen card

Lower risk of NSF fees

 

Merchant

Lower cost per transaction – save 1% or more

Lower risk of loss due to fraud – only the card holder should know the PIN

Higher investment in pin pad (approximately $100)