What is a debit transaction?

Point of Sale (POS) Glossary

A debit transaction is a point of sale purchase that is processed using a bank card linked to a checking account. Unlike a credit transaction, a debit transaction usually requires that the customer have the money available in their bank account to cover the transaction.

Debit transactions are similar to checks in that they work against a checking account balance instead of credit. A debit card transaction may allow a customer to simultaneously make a cash withdrawal from their account and then receive the money from the merchant.

A POS terminal may prompt the customer for a secret personal identification number (PIN) for debit transactions or withdrawals. The use of a PIN depends on the conditions of the card and merchant preferences. Debit cards can also usually be used at an automatic teller machine (ATM) to access a customer’s bank account.

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