Glossary
Offline Debit Transaction
An Offline Debit Transaction, commonly referred to as a signature-debit transaction, is a payment method where funds are transferred from a cardholder’s bank account to a merchant using a debit card through a credit card network. This type of transaction is processed in a similar manner to a credit card transaction, distinguishing it from online or PIN-based debit transactions where authentication is done through the entry of a personal identification number (PIN).
In an offline debit transaction, the cardholder authorizes the payment by signing a receipt, rather than entering a PIN. This signature serves as verification of the cardholder's identity and approval of the transaction. Because the transaction is processed through credit card networks, it may not immediately reflect in the cardholder’s bank account balance; the actual debiting of funds can take a few days to process, similar to credit transactions.
One of the notable aspects of offline debit transactions is the fee structure. An interchange fee is incurred during these transactions, which is typically borne by the merchant rather than the card-issuing bank. This fee compensates the issuing bank for part of the transaction's risk and processing costs.
Offline debit transactions offer consumers a level of convenience similar to credit cards, allowing for easier dispute resolution and the potential for deferred payment effects, while still drawing on actual bank funds. This method is widely accepted at merchants that may not have the capability to process PIN-based debit transactions, providing a versatile payment alternative for consumers.