Should Your Business Consider PINless Debit?

While the advantages of PINless debit aren’t as dramatic, or the savings as great, as they were expected to be, the technology is still good for many companies, and you should consider whether it might be a good idea for yours.

PINless transactions take place in real time, which means the money is withdrawn from the payer’s account at the time of the purchase, and is available to you the next business day.  It works much the same way as electronic check payments, but without the bank’s routing number, making the process that much simpler.

When the concept of PINless debit transactions was first proposed, they promised to save businesses a lot of money compared to ACH and debit cards, appealing to many business.  In the 2011 Durbin Amendment changed this.  The Act, in an attempt to control the strain of processor fees on merchants, capped interchange fees for debit card processing.

Mastercard and Visa had been charging 2-3.5% of each transaction on behalf of member banks for processing.  PINless debit networks were charging significantly less.  The Durbin Act set the maximum fee at 0.95%, meaning that PINless debit, while still saving businesses money, saved much less than previously.

For some businesses, a little savings adds up

There are three types of businesses for which even small savings go a long way: businesses with very small profit margins, businesses that handle a lot of small transactions, and businesses trying to compete in very tough markets.  For businesses like these, every little bit of savings add up to a potentially huge difference in the bottom line.  Though quite a few companies lost interest when it became apparent that PINless transactions would not offer the savings they hoped, but high-volume businesses can still save enough on their overall transactions to make PINless debit a smart move.

If you have a business that does a large number of transactions and you haven’t considered PINless debit, odds are you’re paying much more money to the bank than necessary.  If your business is more modest, adding PINless debit may not save you a whole lot, but is still worth considering.  If your business is very small, PINless debit may not be available to you, and may not save enough to be worthwhile if it is.

Saving on fees, however, isn’t the only benefits businesses see from offering PINless debit.


Credit card transactions can be disputed and the amount charged back to the business.  PINless debit does not allow disputes or chargebacks.  If your business is prone to chargebacks and you find yourself narrowly avoiding the Terminated Merchant File, PINless debit can help you lower your chargebacks and protect your business.

While you may or may not actually save a great deal on PINless debit transactions, using credit cards less often means fewer transactions are at risk of chargeback.  You need to be aware, however, that there are restrictions to PINless debit and if you are a smaller business or you operate in an industry that is not generally considered “safe”, you may not qualify.

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PINless debit transactions are immediately confirmed, giving them an added advantage of ACH and electronic checks that are not instantly confirmed.  ACH transactions also make the money from the transaction available the next day, but entering a debit card number is simpler than having to enter both a bank routing number and checking account number.

Whether or not you decide the cost savings are worth adding a PINless debit option to your payment processing, you should take into consideration whether other advantages might make the technology worthwhile.  Consult with an expert to find out if PINless debit is a good match for your business.

For more information on PINless debit and how your business could benefit, call to our experts.

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