Credit Card Guide

What Is PIN Transaction Fee?

19 March 2013 by CreditCardsCo™

When you use your debit card, it is very common for businesses to charge a processing fee because they have to pay a PIN transaction fee. This is a fee that banks or debit card issuing companies charge to use a PIN pad that is attached to a POS terminal.

Credit card companies that issue debit cards or provide PIN access at the terminal often charge their retail customers a PIN transaction fee. This fee is often passed on to the end-user, or the customers of the business that is providing the PIN-based option at the point of sale register.

Of all the fees your credit card company could potentially charge you, the PIN transaction fee is probably the least substantial. At the same time, it is a fee that can quickly rack up extra charges if you don't pay attention.

When a business decides that they want to offer debit card transactions at their point of sale terminals, they must install a keypad where customers can enter their PIN, or Personal Identification Number. This is a convenient feature that allows you to access the money in your checking account through your debit card or use your credit card almost as though it were a cash advance. This feature is convenient to consumers, but it comes with processing fees that some merchants either would prefer to not pay or simply cannot afford to.

The Fee

Again, the PIN transaction fee is quite insignificant, usually ringing in under a dollar. However, card companies can choose the charge whatever amount they feel is reasonable. Basically, it is a small service charge that will be added onto every transaction performed through the keypad.

Where You Might Expect To Pay A Pin Transaction Fee

As you can imagine, the PIN transaction fee could appear almost anywhere. This includes:

  • Gas stations
  • Restaurants
  • Convenience stores

If you have ever tried to pay for your gas at the pump, for instance, you might have been asked to pay an additional $.45 for example. Similarly, many smaller restaurants and convenience stores will require a minimum purchase of $5.00, for example, for all debit transactions. This is partly due to the small PIN transaction fee, which could have been charged directly to you as the customer.

The Benefits Of The Pin Transaction Fee

As a consumer, you may not understand how a PIN transaction fee actually works, or why someone may have to charge one. The details lie in how much money a merchant has to pay for each credit, offline debit, or PIN transaction. Generally, a company that sells high-ticket items or averages larger sales benefits from a PIN-based transaction because they are charged less for it. Typically, this is a flat rate that is very simple. However, the same company could pay much more for the same transaction if it is processed as offline debit.

On the other hand, smaller companies, like family restaurants and convenience stores, benefit more from using offline debit, which requires a signature just like a credit card. Obviously, then, a small-ticket merchant would rather that you sign for your transaction or pay cash, which is why they either charge you for fee itself or require you to spend more money. When you spend a "minimum" amount of money, it offsets the amount of money the merchant will have to pay in fees.


Paying a PIN transaction fee is something that most people do not worry about because it is usually a very small amount of money. However, it is an unnecessary fee that you can avoid when you understand the intricate world of credit and debit transactions.

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