What is a Pinpad?
Pinpads are electronic devices used in a debit or credit transaction. Most people don't carry cash, so they are critical to a business’ POS system. Pinpads have hardware and software security features that ensure the security keys and PIN numbers are erased immediately in the event of someone tampering with the device. There are also standards required by the payment card industry that pinpads must meet to ensure adequate security. And, as you'll read below, pinpads are required to accept Apple Pay.
Can I accept debit cards without a pinpad?
There is a common misconception that, if a merchant doesn't have pinpads, some customers won't be able to pay them. There are very few debit cards that are issued without a Visa or a Mastercard logo. The Visa or Mastercard logo will allow the merchant to run the transaction as a credit card rather than a debit card.
So why do I need a pinpad?
Fees — or rather, a reduction of fees. Although there's no set rule because processing fees are always dependent on your merchant services provider, debit transactions are often less expensive than credit transactions. Debit transactions typically charge a flat fee while credit transaction fees are based on the total transaction amount. Because of this flat verse variable cost structure, a breakeven point exists. And for small transactions, debit can actually be more expensive than credit. A good rule of thumb is that a $20 transaction is around the breakeven point.
So should I get a pinpad?
It depends. Is the average transaction at your business greater or less than $20?
What type of pinpads exist?
The most basic pinpad does not include a credit card swipe and only allows for PIN entry.
Signature capture pinpads allow customers to swipe credit cards on the pinpad as well as sign their name electronically, like the pinpads at your local grocery store. Signed receipts can help prevent chargebacks. These pinpads can also project advertisements or videos on their digital screens when they are not being used.
What about EMV, NFC, and Apple Pay?
Regardless of the technology, most new and developing payment technologies require pinpads.
Can I use any pinpad with my POS system?
No, pinpads must be encrypted with the merchant's payment processor, and they are typically designed for specific software programs. That's why it's always helpful to speak with a POS specialist before purchasing your pinpad.