When you enter a PIN to pay with your debit card, you help the store save money. In many cases, you also help yourself in the long run.
We recently changed how we pay for everyday purchases. Whether we buy groceries or hardware supplies, we choose debit and enter our PIN. We avoid the credit option whenever possible.
Debit vs Credit: What’s the Difference?
When you choose “credit” and sign a receipt, banks charge higher fees to the store. Sometimes, the store does not even ask for a signature. Still, the higher fee applies.
In contrast, PIN-based debit transactions usually cost stores much less. That small choice can make a real difference over time.
How Higher Fees Started
Debit cards once cost merchants nothing to accept. That changed in the 1990s. Visa began processing debit payments through its credit network. This created the “credit” option for debit cards.
Visa charged higher fees for these transactions. As a result, more banks joined Visa’s system. By 1999, Visa charged about $1.35 on a $100 purchase. At the same time, PIN networks charged only a few cents.
Visa’s Growing Control
Today, Visa dominates the debit market. It controls most signature debit transactions. It also holds a large share of PIN-based payments.
Because debit cards now outsell credit cards, banks see even more profit potential. That is why fees remain a hot topic.
How Fees Affect Consumers
Every card transaction includes a processing fee. It also includes an interchange fee. This fee usually ranges from 1% to 3% of the purchase price.
Last year alone, banks earned $45 billion from these fees. Merchants strongly oppose them. They argue debit payments carry less risk than credit cards.
Why Prices Go Up for Everyone
Merchants often pass these fees on to customers. That means higher prices for everyone. Even cash buyers pay more.
According to the National Retail Federation, these fees cost households about $427 in one year. That adds up quickly.
PIN Payments Still Cost Less
PIN transactions still cost stores less than signature payments. Large retailers pay about 75 cents per $100 for signature debit. PIN transactions cost less than half that amount.
However, this gap may shrink in the future as banks push for higher profits.
Does Using a PIN Really Matter?
One person entering a PIN will not change the system overnight. Still, collective habits matter. More money stays with local businesses instead of large banks.
For us, that choice feels right. Supporting local stores and avoiding unnecessary fees makes a difference.
