No, using the PIN results in a transaction showing as ACH. Not a MasterCard/Visa purchase.
NO. These are not processed throug ACH.
It may count as something different, but it's not "ACH" (which stands for Automated Clearing House - the entity that transfers money between financial institutions, as directed by the Federal Reserve Bank).
Thank you - it is NOT ACH.
Okay - this is complicated but I know exactly how these transactions are processed. I'll try to summarize what I could easily do 2 day lecture on into something simpler.
Kind of a summary - transaction with a PIN is efficient and should cost merchant less but issuing bank gets more money.
Don't read further unless you really like to get into details:
PIN transaction - also known internally as a single message transaction. The customer swipes the card and enters PIN.
A message with all the information needed to process the transaction is sent to the issuing bank.
Upon approval at the end of the day (with no further action required of merchant bank) the funds are transferred.
The cost to the merchant is usually a fixed amount (can vary a lot) per transaction NOT a percentage of the total.
This can be cheaper for the merchant to process, but less to issuing bank
This is really more efficient than a traditional credit (MC/Visa) transaction but merchants and issuing banks have billions of dollars invested in the traditional processing. More costly to have a terminal with pins, etc.
Debit cards (which originally did NOT have MC or Visa on them) were processed this way when they started up in the 80s.
MC/Visa transaction - also known as dual message transactions
This is how traditional credit cards are processed. When it was invented in the early years they were emulating how a check was processed. (online authorization followed by batch settlement).
Card is swiped or info entered manually.
An online transaction with limited information, just enough to authorize is sent to issuing bank for approval.
At end of day a batch set of these transactions (2nd message) is sent to initiate funds transfer.
The merchant pays a fee as a percentage of the amount of the transaction. Initially the merchant paid the same amount if it was a debit or credit card unti
Walmart sued and forced them to charge a smaller fee for debit.
The problem arises as people confuse what to call how these are processed. It really comes down to a PIN vs. non-PIN transaction.
No question than the single message PIN transaction is more efficient to process, but it does require the customer to know and use a PIN. Not really feasible for a traditional MC/Visa transaction. Plus to change to this model would probably be cost billions or trillions to convert all the software. Not happening.
How do I know this. I was hired by Visa to introduce debit products. I was the debit product manager in the 80s. Spent years with Visa from when they were tiny until I retired. Before than I managed a group that provided software to run multiple regional debit networks - most are gone now but you had things like Pulse in Texas, Mac on east cost, etc. In the early 80s the debit products were usually not nation-wide. They were regional.
My credit experience really goes back to the 60s when I worked for the credit bureau as a high school student and read credit reports from index cards. No computers back then.
I know this industry backwards and forwards. History, detailed info in these transactions, etc. I even know the bit maps of each transaction, how disputes are managed, etc. I am not totally up to date on all the fees today. But the basic processing has not changed.
First she sends me to the branch and then she changes her mind and tells me it no longer exists?
This was really a horrible customer service experience. Certainly not worth 1% if the program were still available. I'm closing my account.
It was fun while it lasted though!
I have a disney chase checking account only because I'm primarily using it for the 10% discount at the giftshops and disneystore vs. earning the rewards. I have a credit card that earns better rewards. It was fine for me to open a checking account to get the discount, but no way will I open another credit card just to get a discount. I just don't get the reasoning behind this move. Now, not only will I close the Chase account, but I'll also do less shopping on Disneystore.com (as the 10% usually covered shipping) but I'll also shop less at the parks. I now it wasn't a lot, but it covered tax in the gift shops.
