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“Whilst usability is key for payments, security is a necessary condition for people to use them.” – Peng Ning

According to the surveys carried out by the Federal Reserve, consumers consider security to be the top feature of payment methods. However, other payment characteristics like record keeping, cost, and convenience aren’t regarded as less important characteristics.

The Difference Between PIN And Signature

PIN debit transactions are based on EFT or electronic funds transfer networks such as Pulse, Star, Interlink, NYCE, and more. When the POS asks “Debit or Credit?”, and the customer chooses “debit”, entering the PIN, EFT takes place. Because of electronic authorization, PIN transactions are also called “online transactions.”

Signature-based debit transactions are based on Visa or MasterCard networks used for credit card transaction processing. As such processing isn’t based on a PIN debit network, signature debit transactions are also called “offline transactions.”

Fraud Associated With PIN And Signature

PIN debit transactions are regarded as more secure. The reason is that the cardholder authenticates the card with a PIN, and the transaction can’t be made unless the PIN number is stolen.
Signature-based debit transactions don’t have easy authentication. All eCommerce, mail and phone debit transactions use signature-based debit processing, where fraud is widespread.

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Security Associated With PIN And Signature

According to 63.8% of consumers, PIN debit transactions are secure or very secure, as compared with 51.4% for signature debit. More than 41% of consumers think PIN/no-signature debit transactions are very risky.

Online debit transactions requiring neither a PIN nor a signature are considered as more secure than the no-PIN/no-signature in-person transactions, with only 20% of consumers stating they are very risky.

Consumers regarding PIN debit transactions as secure or very secure are twice as likely to use PIN debit processing as those considering PIN as risky or very risky. Those thinking signature debit transactions are very secure are less likely to use signature debit processing than those consumers considering signature debit transactions as secure or neither of them is secure.
PIN Vs. Signature Payments

According to Stavins from the Boston Fed, those preferring PIN debit transactions use PIN debit more than twice as often as signature debit transactions. Those preferring signature debit transactions use it over 3 times as often as PIN. Those considering debit as secure or very secure use it more often than those regarding debit as more risky.
Importantly, consumers may not know that no-PIN debit and signature debit transactions are processed the same way. So consumers aren’t well aware of the differences between these 2 types of debit transactions. However, they take PIN debit as more secure than signature one.