A Signature-Based Debit transaction is a type of payment where customers authorize the transaction by providing their signature rather than entering their Personal Identification Number (PIN).
The transaction is processed through the credit card network, and funds are typically deducted from the customer’s account within two to three days.
Unlike PIN-based debit transactions, which are processed through the ATM network and usually result in an immediate transfer of funds, signature-based debit transactions are processed similarly to credit card transactions.
This means that the merchant may incur higher processing fees, as the credit card networks usually charge higher interchange fees for signature-based transactions compared to PIN-based transactions.
However, some merchants prefer to accept signature-based debit transactions because they may offer a more seamless customer experience, as customers do not need to remember and enter their PIN.