Definition

A debit card also known as a bank card or check card is a plastic card that provides an alternative payment method to cash when making purchases. Functionally, it can be called an electronic check, as the funds are withdrawn directly from either the bank account or from the remaining balance on the card. In some cases the cards are designed exclusively for use on the Internet and so there is no physical card.

Processing
Now days the debit cards are gaining more popularity just because of the fact that it is getting extremely simple and easy to pay for the day to day expenditure by the use of debit cards. The only care which one needs to make is to check the balance of the balance through which the debit card is linked with. It also keeps a personal check on the expenditure of your day to day to life and which could help a person analyze his/her expenditure. Debit card processing includes two important steps which are, one is the PIN debit cards and other is signature debit cards. In the PIN debit card the user is given is personal identification number and then the person has to type the number on a PIN pad for the transaction to take place. The PIN must be kept very secret because it is identification which the card can understand. In signature mode of debit card processing the card must have a logo specifying whether it is master card or a visa. With the signature cards the person is enabled of using the card anywhere and in any ATM and just like the PIN debit card in this the money is not immediately deducted and the deduction takes place in few days when the merchant contacts the bank and then the bank deducts the money. It is very dangerous as due to some delay in time after the actual transaction has occurred, it can result in overdrawn account. There are many things which are required along with the PIN pad such as printers, software, terminals and many other things are required for the successful transaction of the money through this card. There is one more and much recent debit card processing type and it for the people who do not have much significantly high masses or volumes of transaction through their accounts. For the successful implementation of this process we require two very important tools, one is the telephone and other one is the printer. The account holder uses the telephone as a medium of transaction from the banking company. In other words, in this kind of debit card processing the account holder does the transaction through the telephone and the identification mark of the person is the telephonic PIN number which is secret and personal to each and every person. As we all know that the use of debit card is increasing day by day and also help the people to have a check on their expenditure, which could help people to have a check on the expenditure and reduce them in order to save some amount for the savings as the day to day requirements are getting more and more costly. Debit card processing is just a way through which a person can decide which card is suitable for tem. After the transaction the bank never

immediately deduct money and the wait for the merchant request of the money. One must keep the PIN of the debit card secret to themselves as it is the most integral part of the usage of the debit card. In many countries the use of debit cards has become so widespread that their volume of use has overtaken or entirely replaced the check and in some instances cash transactions. Like credit cards, debit cards are used widely for telephone and Internet purchases and unlike credit cards the funds are transferred immediately from the bearer's bank account instead of having the bearer pay back the money at a later date. Debit cards may also allow for instant withdrawal of cash acting as the ATM card for withdrawing cash and as a check guarantee card. Merchants may also offer cash back facilities to customers where a customer can withdraw cash along with their purchase. Debit card usage has been increasing faster than any other form of payment. The FDIC reported that rates of payment went up 20 percent a year from 1995 to 2006. The popularity of debit cards has created more risk exposure for banks that issue them. As a result, more sophisticated fraud prevention protocols have evolved to fight unethical debit card use.

Sources
Debit card fraud is on the rise. A paper written by the Federal Reserve and Bank of America found that the frequency of debit card fraud rose 11 percent from 2006 to 2010. The most common source of fraud is data loss. The majority of this data loss is outside of the bank's control and happens at different points in the debit card payment network. PIN skimming, counterfeit cards and online commerce are other sources of fraud.

Prevention
Banks take a multi-faceted approach toward debit card risk management. These include monitoring return rates for customers and separating responsibilities for different functions in their payment network. When a debit card purchase is made banks and payment brands such as Visa and MasterCard check to make sure different criteria are met before authorizing a purchase. These criteria are your daily spending limit, frequency of card use expiration date on the card a matching name and a valid PIN.

Types of debit card systems

There are currently three ways that debit card transactions are processed: online debit also known as PIN debit, offline debit also known as signature debit and the Electronic Purse Card System. It should be noted that one physical card can include the functions of an online debit card an offline debit card and an electronic purse card. Although many debit cards are of the Visa or MasterCard brand, there are many other types of debit card each accepted only within a particular country or region, for example Switch (now: Maestro) and Solo in the United Kingdom, Interac in Canada, Carte Bleue in France, Laser in Ireland, "EC electronic cash" (formerly Eurocheque) in Germany and EFTPOS cards in Australia and New Zealand. The need for cross-border compatibility and the advent of the euro recently led to many of these card networks (such as Switzerland's "EC direkt", Austria's "Bankomatkasse" and Switch in the United Kingdom) being re-branded with the internationally recognised Maestrologo which is part of the MasterCard brand. Some debit cards are dual branded with the logo of the national card as well as Maestro (e.g. EC cards in Germany, Laser cards in Ireland, Switch and Solo in the UK, Pinpas cards in the Netherlands, Bancontact cards in Belgium, etc.). The use of a debit card system allows operators to package their product more effectively while monitoring customer spending. An example of one of these systems is ECS by Embed International.

Online Debit System

Online debit cards require electronic authorization of every transaction and the debits are reflected in the users account immediately. The transaction may be additionally secured with the personal identification number (PIN) authentication system and some online cards require such authentication for every transaction, essentially becoming enhanced automatic teller machine (ATM) cards. One difficulty in using online debit cards is the necessity of an electronic authorization device at the point of sale (POS) and sometimes also a separate PIN pad to enter the PIN, although this is becoming commonplace for all card transactions in many countries. Overall, the online debit card is generally viewed as superior to the offline debit card because of its more secure authentication system and live status, which alleviates problems with processing lag on transactions that may only issue online debit cards. Some on-line debit systems are using the normal authentication processes of Internet banking to provide real-time on-line debit transactions. The most notable of these are Ideal and POLi. The most advantageous way to process debit cards is to do it online. You will still be able to accept debit cards at the point of sale, but you will need to install a PIN pad on your credit card terminal. An online debit card transaction works much like a credit card transaction, except that after your customer swipes his or her debit card, they will enter a PIN instead of signing the receipt.

At this point the encrypted debit card information is sent to the customers bank for authorization, and youll receive the funds just as you would for a credit card transaction. Your business has many advantages when you accept debit cards. For example, you pay a flat fee for each debit card transaction that you process, instead the flat fee plus percentage rate that you are charged when you accept credit cards. Over time, this can potentially save you a lot of money. Another advantage when you process debit cards is that you cant be charged higher downgrade fees. In a credit card transaction, you are usually charged the discount rate. However, some transactions are considered to be a higher risk or expense to the bank, and you are charged a higher rate as a result. But when you accept debit cards, you always pay the same flat rate, with no danger of the rate increasing. You can also cut down on checkout time when you accept debit cards. It takes an average of 30 seconds to hand over the pen, wait for the customer to sign the receipt, and then take the pen back. If you process 20 credit card transactions a day, youre losing 100 minutes a day just passing a pen back and forth! Thats almost two hours. When you accept debit cards, the customer simply enters his or her PIN in a few seconds. Lines will move faster, which leads to greater customer satisfaction. Finally, theres the convenience factor. Hopefully we dont have to tell you that consumers are very picky and want to do things their way. If you accept debit cards and one of your competitors does not, many customers will come to you for that reason alone. By accepting debit cards, you take full advantage of your merchant account, and you add another stream of revenue to your business.

Offline Debit System

An offline debit card transaction is still the way most merchants accept debit cards. This is essentially the same as processing credit cards. You swipe your customers debit card through a credit card terminal and have them sign the receipt. If you choose to accept debit cards offline, be sure that the debit card has a VISA or MasterCard logo. Otherwise, the debit card wont be approved and you wont be able to process the debit card offline Offline debit cards have the logos of major credit cards (e.g. Visa or MasterCard) or major debit cards (e.g. Maestro in the United Kingdom and other countries, but not the United States) and are used at the point of sale like a credit card (with payer's signature). This type of

debit card may be subject to a daily limit, and/or a maximum limit equal to the current/checking account balance from which it draws funds. Transactions conducted with offline debit cards require 23 days to be reflected on users account balances. In some countries and with some banks and merchant service organizations, a "credit" or offline debit transaction is without cost to the purchaser beyond the face value of the transaction, while a small fee may be charged for a "debit" or online debit transaction (although it is often absorbed by the retailer). Other differences are that online debit purchasers may opt to withdraw cash in addition to the amount of the debit purchase (if the merchant supports that functionality); also, from the merchant's standpoint, the merchant pays lower fees on online debit transaction as compared to "credit" (offline) debit transaction.

Electronic Purse Card System

Smart-card-based electronic purse systems (in which value is stored on the card chip, not in an externally recorded account, so that machines accepting the card need connectivity) are in use throughout Europe since the mid-1990s, most notably (Geldkarte), Austria (Quick), the Netherlands (Chipknip), Belgium (Proton), (CASH) and France (Mono, which is usually carried by a debit card). In Germany, all current bank cards now include electronic purses. no network in Germany Switzerland Austria and

Prepaid debit cards

Prepaid debit cards, also called reloadable debit cards or reloadable prepaid cards, are often used for recurring payments. The payer loads funds to the cardholder's card account. Prepaid debit cards use either the offline debit system or the online debit system to access these funds. Particularly for companies with a large number of payment recipients abroad, prepaid debit cards allow the delivery of international payments without the delays and fees associated with international checks and bank transfers. Providers include Caxton FX prepaid cards Escape prepaid cards, Travelex prepaid cards and Trans Cash prepaid Visa cards. Whereas, webbased services such as stock photography websites (i stock photo), outsourced services (o Desk), and affiliate networks (Media Whiz) have all started offering prepaid debit cards for their contributors/freelancers/vendors.

Debit Card Processing

What It Is and How It Works
Debit cards work with the same ease as credit cards and allow customers to deduct funds for purchases from their bank account (usually their checking account). True debit cards require a PIN number to be entered before a purchase can be complete. Many people refer to the Visa/MasterCard Check Cards as Debit cards since they do the same as true Debit cards, except for the fact these check cards do not require a PIN number to make purchases. You can easily identify check cards as they will have the familiar Visa or MasterCard logos on them. The process works just like accepting credit cards except when you enter in the customers debit card information the amount to cover the purchase is deducted from the customers' bank account. Make sure when you connect to accept debit cards that a verification service is included. The verification service will check a negative database of bad check writers. This will drastically reduce the number of bad checks you might receive.

Do you operate a retail establishment?

You can save bundles on processing costs by accepting debit cards with the addition of a PIN Pad. Unless the swipe terminal you're using includes an internal PIN pad, you will want to invest in an external one. Processing debit/check cards as a regular credit card transaction can mean paying twice the amount for processing. By using a PIN pad for debit transactions you only pay a per transaction fee (between $0.35 and $0.55), no discount rate of any kind. Also, it should be noted that in order to ONLY incur a per transaction fee the customer MUST input their 4digit PIN number into the PIN pad or your processing terminal (if the unit has an internal PIN pad). If the customer doesn't enter their PIN number, the typical per transaction and discount rate will be charged to those using debit cards with Visa or MasterCard logos on them (also called check cards). True debit cards like Star, MAC, Honer, NYCE, Pulse, Interlink, and Maestro will only incur a per transaction fee because the customer must input their PIN number in order to use the card -- it's optional for Check Card customers, but it will save you money so encourage them to enter their PIN number, if they know it. This is ONLY available for retail establishments. If you're an Internet merchant you will still incur the same charges for debit card processing as you do with credit card processing. There is currently no special Debit card acceptance system in place that only incurs a per transaction fee for Internet businesses. You can save money by using an electronic checks (e Checks) service for your website.

There are two types of debit card processing:

PIN (formerly known as online) debit transactions

It requires the debit card and cardholder to be present, and the cardholder to enter a PIN (Personal Identification Number) into a PIN Pad at the time of purchase. This method of payment can also offer optional cash back to the customer with a purchase. PIN debit transactions provide immediate access to the cardholder's checking account funds. PIN Pad technology encrypts the information and keeps the transaction secure.

Signature (formerly known as offline or non PIN) debit transactions

Behave very much like credit card transactions. The debit card must have the Visa, MasterCard or Discover Network logo which allows it to work in any card-present or card-not-present purchasing situation including mail order, telephone order, wireless, and Internet. Cash back is not available when processing a signature debit card transaction.

What do you need?

Along with your merchant account, the equipment you need to process debit card transactions may include:

Terminals Software Gateways PIN Pads Printers

Terminals
With wide range of the latest processing terminal technology, you can process credit cards, debit cards, gift cards and checks. And the Internet Protocol Network enabled credit card processing terminals offer an alternative to dialup and leased-lines. Additional industry specific options are also available. Credit card processing terminals are easy to use and maintain and their compact design means they occupy the minimal amount of counter space. Here is an example of a typical credit card processing terminal.

Software
With the latest in software technology on offer you can authorize and settle credit cards and debit cards quickly and easily. Whether you accept payments at your call centre location through the mail or through your website, we can support your business. Wells Fargo Merchant Services offers one of the most popular and comprehensive credit card software processing products available ICVERIFY. ICVERIFY processes all major credit cards, and is capable of handling purchasing card Level II and Level III data for corporate cards. In addition ICVERIFY supports both debit and ATM card processing. The primary strength of ICVERIFY software comes from its customer database, its instalment billing functions and its ability to support advanced configuration options. The above demo describes how to customize and use ICVERIFY for Windows and highlights its features and benefits. Whether you choose ICVERIFY or another option the credit card processing software is easy to install, use and maintain.

Online Payment Processing

The Internet has created tremendous growth opportunity by enabling businesses to increase revenue and reach new customers with online shopping. Wells Fargo's online payment processing services makes online revenues a reality by enabling the processing of credit cards directly through your Web site or through the gateway's back office virtual terminal service.

Accept Online Payments with an Internet Merchant Account

Small, medium or large, Wells Fargo's Internet Merchant Account makes online revenues a reality for all sizes of business. With an Internet Merchant Account, you can accept all major credit cards1, reduce fraud through Address Verification Service, Verified by Visa, MasterCard Secure Code, Discover Network Address Verification Service and maintain the flexibility of using your own payment gateway provider or purchasing a payment gateway directly from us.

How payment gateways work

A payment gateway is the technology that authorizes, settles, and manages credit card transactions online they take the place of a card-swipe terminal typically used in retail stores. When your customer enters his or her credit card number on your Web site, the payment gateway automatically captures that data and securely forwards it toWells Fargo for payment processing. Payment gateways also provide access to a "virtual terminal" where a Web site is not required. You can take orders via the phone, fax or mail and process the payment through the Internet via a secure payment page provided by a payment gateway.

Already have a payment gateway?

If you have already signed a contract with a payment gateway provider, just contact us to determine if the payment gateway is compatible with Wells Fargo's online merchant card processing. If the payment gateway is compatible, we'll give you a customized quote for your situation. Here's where you'll find the compatibility matrix of the shopping carts and gateways. If you don't yet have a payment gateway, Wells Fargo is an authorized reseller of the Authorize.net and Cyber Source payment gateways. Fees for these payment gateways are included with an Internet Merchant Account. You can also choose from our products and solutions designed especially for online merchants above.

PIN Pads
A Personal Identification Number (PIN) Pad is an economical way to add debit card capability to payment processing terminals. Requiring minimal counter space, PIN Pads fit easily in the palm of the hand. With some debit card PIN Pads, your customers can slide their cards through the magnetic stripe reader themselves. This debit card terminal feature of never having to relinquish the debit card can increase customer confidence about transaction security and encourages debit card use. Debit cards have seen a significant increase in popularity, as consumers wary of carrying cash or checks, use them for smaller purchases. PIN Pads are easy to use and maintain, and offer an economical solution to your debit expansion needs.

Features of PIN Pads

Compact Size Large keys Easy-to-read display Integrated appearance with your terminal Here is an example of a typical PIN pad.

Wells Fargo provides several state-of-the-art PIN Pads to merchants and we often add new models. Once you have determined you need a PIN Pad to add debit card payment processing to your terminal, we'll work with you to find the model that best fits your needs.

Printers
For high-volume point-of-sale environments where speed and reliability are critical considerations, you may decide you need to add a printer to your terminal.

Features of printers

Clear, legible, high-speed printing High-yield ribbons Superior print head and print mechanism Paper low and paper-out sensors Compact design Integrated appearance with your terminal Here is an example of a typical printer.

Wells Fargo provides several state-of-the-art printers to merchants and we often add new models. Once you have determined you need to add a printer to your terminal, we'll work with you to find the model that best fits your needs.

Benefits of accepting debit card transactions

Encourage incremental sales Attract new and repeat customers by providing them access to their checking account funds. Enhance security Safer than cash or checks, debit card processing reduces your risk of bounced checks and disputes.

Reduce risk of theft and pilfering Your cash on premises is limited. Provide superior customer service Keep the lines moving when customers don't have to write checks.

Solution Benefits

No charge backs Reduced employee theft Ability to offer a cash-back option to customers Increased revenues No discount rate, only a per transaction fee Reduced risk of bad check losses

Internal or External? - Choosing a PIN Pad

When it comes to choosing an internal or external PIN pad for your retail establishment you will want to weigh in the pros and cons.

Internal PIN Pads

If you're someone who wants an all-in-one unit then this may be the route you want to go. These processing terminals have a smaller footprint (since the PIN pad is internal) which doesn't take up much space.

External PIN Pads

If you don't mind having two pieces of processing equipment (terminal for credit cards and external, usually handheld unit for Debit transactions) then you may want to opt for an external PIN pad. IVI Checkmate, a manufacturer of payment processing equipment, completed a survey and found a few reasons why choosing an external PIN pad might be in your best interest.

Swiveling can take up more counter space Most merchants don't place their terminals in a customer-accessible location You may not want customers handling your processing terminal Strain on cables caused by swiveling can increase equipment failure rates

Who Needs This Solution?

Debit card processing is another good additional processing solution to credit cards. It is also the fastest growing way to pay for orders, topping credit cards. Any business no matter what industry they may be in can benefit from accepting debit cards. The convenience of not having to write out a check is something that can really draw people to use their debit card to make purchases. Retail merchants can certainly save themselves a lot of money each month

by investing in a low cost PIN pad to connect to their swipe terminal. Again, online merchants can save money by looking into an E Check acceptance service.

Advantages of debit cards

A consumer who is not credit worthy and may find it difficult or impossible to obtain a credit card can more easily obtain a debit card, allowing him/her to make plastic transactions. For example, legislation often prevents minors from taking out debt, which includes the use of a credit card, but not online debit card transactions. For most transactions, a check card can be used to avoid check writing altogether. Check cards debit funds from the user's account on the spot, thereby finalizing the transaction at the time of purchase, and bypassing the requirement to pay a credit card bill at a later date, or to write an insecure check containing the account holder's personal information. Like credit cards, debit cards are accepted by merchants with less identification and scrutiny than personal checks, thereby making transactions quicker and less intrusive. Unlike personal checks, merchants generally do not believe that a payment via a debit card may be later dishonoured.

Unlike a credit card, which charges higher fees and interest rates when a cash advance is obtained, a debit card may be used to obtain cash from an ATM or a PIN-based transaction at no extra charge, other than a foreign ATM fee.

Disadvantages of debit cards

Use of a debit card is not usually limited to the existing funds in the account to which it is linked, most banks allow a certain threshold over the available bank balance which can cause overdraft fees if the users transaction does not reflect available balance.

Many banks are now charging over-limit fees or non-sufficient funds fees based upon pre-authorizations, and even attempted but refused transactions by the merchant (some of which may be unknown until later discovery by account holder). Many merchants mistakenly believe that amounts owed can be "taken" from a customer's account after a debit card (or number) has been presented, without agreement as to date, payee name, amount and currency, thus causing penalty fees for overdrafts, over-thelimit, amounts not available causing further rejections or overdrafts, and rejected transactions by some banks.

In some countries debit cards offer lower levels of security protection than credit cards. Theft of the users PIN using skimming devices can be accomplished much easier with a PIN input than with a signature-based credit transaction. However, theft of users' PIN codes using skimming devices can be equally easily accomplished with a debit

transaction PIN input, as with a credit transaction PIN input, and theft using a signaturebased credit transaction is equally easy as theft using a signature-based debit transaction.

In many places, laws protect the consumer from fraud much less than with a credit card. While the holder of a credit card is legally responsible for only a minimal amount of a fraudulent transaction made with a credit card, which is often waived by the bank, the consumer may be held liable for hundreds of dollars, or even the entire value of fraudulent debit transactions. The consumer also has a shorter time (usually just two days) to report such fraud to the bank in order to be eligible for such a waiver with a debit card whereas with a credit card, this time may be up to 60 days. A thief who obtains or clones a debit card along with its PIN may be able to clean out the consumer's bank account, and the consumer will have no recourse.

HSBC
Credit and debit card payments and online processing
If your customers want to pay using credit or debit cards, HSBC Merchant Services 1 can help your business to accept card payments either in person, online, by phone, mail order or fax. The following card processing services are provided by HSBC Merchant Services, HSBC's preferred strategic partner1. Accept credit and debit card payments Enable your business to grow by offering your customers a full selection of services, including Accept all major credit and debit cards Fast settlement and improved cashflow Purchase with cashback Accept foreign card payments Gift Cards Compact terminals ready to plug in and use Process chip and PIN transactions HSBC Merchant Services1 fraud management helps protect you against card fraud Get help from our dedicated team whenever you need it. Eligibility for 'card present' card processing2 You need to have a Business Current Account.

Accept card payments online by phone, mail order or fax

Accept all major credit and debit cards from customers online, by phone, mail order or fax Fast, reliable and secure payments deposited directly into your business account Process card transactions without a terminal Expand your sales opportunity by reaching a wider audience. Eligibility for 'card not present' card processing2 To accept debit and credit cards over the internet, you will need to have been banked with HSBC Bank plc or have had a card processing relationship with HSBC Merchant Services for a minimum of 12 months.