Credit & Debit Card Processing

Credit/Debit Processing

Merchant Account Processing primary function is to give a business the ability to accept and process credit card payments. These payments are either accepted manually with a card reader, virtually via an electronic payment gateway, or over the telephone with an automated voice response. Typically your Merchant Services will also settle all the funds with different card associations (VISA®, MasterCard®, etc.) on your behalf. In addition to their primary use, Merchant Account Processing offers other services that better allow your business to handle electronic payments. These include the handling of purchase adjustments and charge backs, interacting with a fulfillment company, and giving you real-time reporting of your credit card sales.


Debit cards, which are linked to customers’ checking accounts at banks, come in two forms: signature-based and PIN-based. Both capabilities typically reside on the same card.

Signature-based debit transactions (also known as “offline debit”) tend to be routed through either MasterCard or Visa, much like a credit card transaction. These transactions are debited from a customer’s account about two days after the purchase – similar to credit transactions. The process uses two separate messages for authorization, clearing and settlement. Consumers typically do not pay a fee for signature-based transactions, and the logo for the association is on the front of the card.

A First Data White Paper Payments 101: Credit and Debit Card Payments PIN-based debit (also known as “online debit”) requires the consumer to enter a personal identification number – four to 12 digits long – at the point of sale (POS); the transaction is then routed through electronic-funds-transfer (EFT) networks such as STAR®, Pulse®, NYCE®, MAC®, and SHAZAM®. These all require users to enter a PIN for both ATM and POS transactions. PIN transactions also can be run through EFT networks at MasterCard (Maestro®) and Visa (Interlink®). The PIN-based format uses a single message for authorization, clearing and settlement. Unlike signature debit, the customer’s checking account is debited immediately, much like an ATM withdrawal. And also similar to an ATM withdrawal, the issuing bank may charge the customer a fee to make a POS purchase.

Yet for merchants, fees for accepting PIN-based debit transactions have historically been lower than those for the signature-based option – the need for a valid PIN combined with the immediate debiting of funds makes them less risky, thereby translating to a lower cost. Signature-based debit cards, on the other hand, come with higher fees to account for their greater risk, in part due to the chance that the user might be forging a signature

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