Merchant Services: PIN Debit vs. Swipe Debit, Part 2

January 9, 2013

Making the Case for Swipe Debit

Much previous analysis of the Durbin Amendment suggested that Swipe Debit was not going to react well to the cap. One article was bold enough to proclaim that Signature Debit was dead.

But since the legislation took affect on October 1, there’s strong evidence to suggest that the doom and gloom outlook isn’t the case. The cap on fees really lets Swipe Debit be a competitive transaction choice. Combine the competitive fee structure that the cap forces on the transactions with the power of Visa –– the card issuer that is and has been the leader in Signature Debit –– and you’ll notice Swipe Debit has the characteristics in place and the high profile backing to continue to be a competitive choice for transactions.

This gives support to the overall convenience of Swipe Debit over PIN Debit. There’s fewer steps involved, no PIN Pad to have on your counter facing customers, and transactions run smoother.

Statistics from the Signature Debit article linked above also cite that Swipe Debit is currently more popular than PIN Debit overall: “Signature-based transactions currently have a lead on PIN Debit. In 2009, Fed reports signature as having 23.4 billion purchase transactions, and $837 billion of transaction value while PIN-based debit transactions totaled 14.5billion transactions, and $555 billion of transaction value.”

The article then points out that PIN Debit had been experiencing higher growth in recent years. But now with the cap on Debit transaction fees, Swipe Debit has a competitive boost.

Convenience is Key

There are quite a few articles that suggest PIN Debit will push Swipe Debit out of the market. But what many of these articles continue to overlook is the cornerstone of shopping: convenience. Shoppers want the purchasing process to be as smooth and easy as possible. Since both transaction options are now equal in pricing due to the Durbin legislation, convenience begins to be a more important factor in the decision making process. It’s been one of the key variables for the rise of e-commerce and online shopping. People can shop reliably online and get their purchases resolved in a matter of clicks. The same consumer behavior holds true while shopping at brick and mortar stores and using plastic. The consumer wants to check out as quickly as possible. One swipe has a powerful allure when you consider the customer doesn’t need to remember a PIN number or waste time retyping it if they make an error.


The Durbin Amendment continues to bring massive changes to the way people shop and the way businesses process payments. And right now, to Host Merchant Services, it looks like Swipe Debit is not doomed. Durbin legislation gives it a competitive edge that could help it compete as a Debit Card transaction choice.

PIN Debit vs. Swipe Debit, Part 1

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