PIN Debit Transactions

When you read the cardholder terms and conditions for different prepaid debit card products (you do read them, don’t you?), you’ll see that there are two kinds of point of sale transactions you can use a prepaid debit card for: “signature debit” transactions, and “PIN debit” transactions.

Here’s what a “PIN debit” transaction is:

When you buy something at a merchant (usually a brick and mortar merchant location), you may have the choice between either signing for a receipt (a “signature debit” transaction) or using the PIN pad and entering your PIN number. When you enter your PIN number, you are doing a “PIN debit transaction”.

In some situations, you want to use PIN debit vs. signature debit.

Here are two reasons why it is very important for you to understand the difference between signature debit and PIN debit transactions:

  1. Your card issuer may charge you DIFFERENT fees depending on whether you do “signature debit” vs. “PIN debit” purchases.  Read your cardholder agreement… and then use whichever option is CHEAPER!
  2. If your prepaid debit card is either a MasterCard or Visa prepaid debit card, you enjoy better protection if you use “signature debit” for your purchases.  For example, MasterCard provides a “Zero Liability” policy which ensures that you don’t have to pay for any unauthorized transactions (if you register your card and follow other rules).  Visa offers a similar “Zero Liability” policy.
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