Differences Between Credit and Debit Card Processing

Some people use the terms “credit card” and “debit card” interchangeably. After all, they are both plastic cards that act like money; so how different can they be? In reality, credit and debit cards are quite different indeed, and they are processed differently.

Differences Between Credit & Debit

Credit and debit cards have some similarities. They both have 16-digit account numbers, both may have PINs, both have expiration dates and security codes, and both are issued by big banks.  The similarities basically end there, though.

Debit cards allow customers to access funds that are already within their bank accounts. A debit card is hooked up to an account that has money deposited in it. When a customer makes a purchase with a debit card, they are taking money they already have from their account and transferring it to the merchant.

Credit cards, in contrast, allow customers to borrow funds from a creditor with the promise to pay it back at a later date. Credit card holders not only have to pay the amount of the purchase but may also be charged interest and other various fees for using the credit card service. In other words, credit cards allow customers to borrow money to make purchases and pay it back later.

Credit Card vs. Debit Card Processing

When a customer swipes a debit card, a machine reads the information and sends it to a card processing system. After the data is checked, it is sent to the bank that issued the card, which confirms that the account has the requisite funds available. The transaction amount is taken out of your bank account. Debit cards have different protocols and regulations governing their payment, such as no minimum payment stipulations and generally lower processing fees on average.

Credit cards have a different payment processing structure. When a customer swipes a credit card, the information is read just like it would be with a debit card, and that information is then sent to the card processing service. The transaction is then relayed to the credit card issuer, which is often a bank. The bank then checks to verify that the customer can pay the amount without exceeding their credit limit, then authorizes the payment and sends the authorization back to the payment terminal.

Credit cards have some additional restrictions on their processing. First of all, merchants often have a minimum credit card purchase, as credit card processing normally incurs higher fees than debit card processing. They are also governed by different dispute mechanisms than debit cards. Consumers generally have longer to dispute credit card payments and typically have lower liability for fraudulent charges.


Credit and debit cards are sometimes talked about if they were the same, but they are different and have different payment processing requirements. In general, credit card processing is more flexible but has higher processing fees whereas debit processing is cheaper but less flexible in terms of making payments.

If you are interested in learning more about credit card processing services or debit card processing services, you can visit Charge.com or call (888) 924-2743.

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