Debit Cards: Pin based transactions are cheaper

According to the report "The dark secrets of debit" which examines "Why do banks push debit cards for every purchase you make? Because they stand to make millions—largely at your expense" a debit card user is much better off conducting pin based transactions than signature based debit card transactions.


The interchange fees that banks get from merchants for processing signature payments is much higher than for PIN-based transactions. On a $100 purchase, for example, the bank that issued the card typically collects only about 20 cents in interchange fees when payment is made using a PIN. But it gets at least seven times more than that if the customer signs to authorize the purchase.


Obviously the merchants will transfer these higher interchange fees to consumers in the form of higher prices.