A business will eventually accept debit cards to expand their market. Failing to process these transactions do not allow you to take full advantage of your merchant account. the debit card is one of the most convenient methods of payment for customers, and is important in e-commerce and telephone sales.
Types of Debit Card Transactions
Essentially, these can be categorized into two types: online and offline.
In online processing, the normal process flow is as follows: the first step involves the authorization process that confirms the method of payment, then the entering of the PIN to determine if the funds in the account are enough. once approved, the customer can now shop at the desired business and the amount charged will be transferred from the customer to the business owner in seconds.
Offline processing is carried out similarly: the authorization process is online, which confirms the card and checks for the amount. If the account has enough funds, the customer then carries out the transaction and signs a receipt.
There is also a third way to process debit card payments, and this is called the Electronic Purse Card System. In this system, the value amount is stored on the card chip and not in a printed out recorded account, allowing machines to accept cards without network connectivity. though not widely used in the United States, they are used in Germany, Austria, the Netherlands, Belgium, Switzerland and France.
The main difference between online and offline processing lies in the former's requirement of a PIN number, where the latter requires a signature of the consumer for authorization. given this, offline processing involves signing a charge slip; and it costs more, charging around 2% of the total purchase and is sent to the issuing bank as an interchange fee. Online processing, on the other hand, only charges around ten cents for each transaction.
Advantages of Debit Cards
As transactions with these cards are becoming more prevalent, your business should expect to increase its sales once you start accepting debit cards payments. for one, you only pay a single fee for each transaction process, instead of this fee plus the percentage rate charged in credit cards. In addition, processing debit cards exempts you from being charged higher downgrade fees. Check out time can also be cut down. the transaction usually takes a few seconds to sign for offline processing, and to key in a PIN for online processing.
Another consumer benefit of a debit card over cash involves insurance. not everyone carries a large amount of cash on hand, as a robbery, theft, or accidental misplacement most likely means you have lost that many forever. a debit card is replaceable, can be canceled immediately, and needs a pin number to work. for customers, those with bad credit history will find it more difficult to obtain a credit card compared to a debit card. Consumers also get to have full financial control over their expenses, as they can only spend what they have.
Plastic cards are becoming the more favored way to pay, replacing cash and checks. for businesses to thrive online, they should accept debit cards. Payment with cards was America's most favored method of payment in 2009, according to the Federal Reserve. they benefit both the merchant and the consumer by providing low costs and efficiency and convenience, not to mention having better control of the business for the merchant and spending activity for the customer.
Debit Card Transactions: The Types and Benefits
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