Debit card processing solution
Debit cards are gaining popularity as the preferred way to pay for many things. Even everyday items such as grocery and gas can be purchased by using debit cards. A debit card is like a personal check which can be used for expenses whenever you need it. All you need to worry about is the balance in your checking account which is where the money is deducted from when you use your debit card.
Debit card processing solution:
There are two ways in which debit cards are processed. These are
- PIN or Online debit card
- Signature or offline debit card
Online debit card processing
In this process, the debit card holder is given a personal identification number or PIN along with the card which he must use by typing it into a PIN pad each time he uses the debit card for a transaction. This PIN is card holder specific and cannot be shared with anyone else. Giving instant access to the debit card holders checking account, this kind of debit card processing solution is safe because of the encryption by the PIN pad. Also, the money from the checking account is deducted the moment the transaction takes place.
Offline debit card processing
The signature or offline debit card processing method requires the debit card to have a logo of either MasterCard or Visa on it. This allows the card holder to use the debit card at any ATM irrespective of its location. A merchant account is required and the money is not deducted from the customers checking account immediately. The money is withdrawn only a few days later when the merchants bank reconciles the transactions and hard posts the transaction to the debit card holders checking account. This kind of deferred posting of offline debit takes place with a time lag and can also result in errors leading to serious problems such as an overdrawn account. In addition to a PIN pad which may or may not be used, other instruments such as a printer, gateways, software and terminals are required for this kind of debit card processing solution.
Dial Pay debit card processing:
This is another kind of debit card processing solution. This is often used by debit card holders who do not have significant or high volume of card transactions. For this process, a telephone and a printer are required. The debit card holder uses the telephone to deposit his transactions with the banking company. In other words, he issues instructions to his bank to release funds from his checking account by merely calling up his bank and notifying them. Identification of the caller is made on the basis of a telephone PIN that is again specific to each card holder.
Overview
A debit card holder must have funds in his checking account to enable transactions using the debit card. For a debit card holder, money goes out of his account as soon as he makes an online debit purchase or uses his debit card online. However, banks wait for an authorization request from the merchant before deducting any funds from the debit card holders checking account.
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