Glossary
Online Debit
Online Debit, often referred to as PIN debit, involves a direct deduction of funds from a cardholder's bank account during a transaction at a Point-of-Sale (POS). The process starts when the debit card is either inserted into a chip reader or swiped through a magnetic stripe reader. To authenticate the transaction, the cardholder must enter a Personal Identification Number (PIN), which serves as a security measure to confirm the identity of the user.
The key characteristic of online debit transactions is their real-time processing through the ATM network associated with the cardholder's bank. This means the funds are immediately verified and withdrawn from the cardholder's bank account, providing both the merchant and the cardholder with instant feedback on the status of the transaction. This system is distinct from credit card transactions, which may not immediately impact the cardholder's bank account, and from offline debit transactions, which do not require real-time authorization.
Benefits of online debit transactions include:
However, the reliance on real-time network connectivity means that online debit transactions can be susceptible to disruptions if network issues arise. Additionally, the availability of online debit transactions may vary internationally, depending on the global reach and compatibility of the ATM network.
Overall, online debit is a secure and efficient method for conducting transactions directly from a bank account, popular for its immediacy and the control it offers over personal finances.