What's the difference between debit and credit card processing?
From the cardholder/customer point of view, a DEBIT card is more like writing a check or paying cash than like using a credit card. The DEBIT card is linked to an existing pool of cash, usually a checking or savings account of some kind, and the funds necessary to cover the purchase being made on the debit card are deducted nearly instantaneously from that existing pool of money. A purchase made on a CREDIT card, on the other hand, is more like a small loan or cash advance that the card issuer grants to the cardholder when he/she uses the card to make a purchase, and which the customer pays back to the issuer (hopefully!) when the credit card bill arrives in the mail.
From the Merchant point of view, the DEBIT transaction may or may not cost considerably less to process than the CREDIT transaction, depending on many factors we'll discuss in a moment. Debit processing capability also may or may not require that the Merchant have a slightly different processing equipment configuration, again depending on several factors.
From the processor point of view, DEBIT processing is an entirely different animal from CREDIT card processing. Totally different processing, authorization, and settlement protocols and procedures are involved, totally different processing networks are involved, and the legalities and rules are different as well since legislation called Regulation Z/Truth in Lending Laws that apply to credit (i.e. loan) transactions don't necessarily apply to debit transactions.
