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The Payment Advisor

Ross Federgreen Comments

“The Payment Advisor” is a monthly Q&A column to which readers can submit questions about card transaction systems, electronic funds transfer, check acceptance and processing, wireless transactions, international funds transfer, and other payment issues. To participate, e-mail questions to . Also watch for quarterly articles on related topics.

Q. Is there a difference between debit cards that are swiped and those that use a PIN (personal identification number)?


Yes. All debit cards are linked to a checking or savings account. Debit cards that are swiped without use of a PIN are called “off-line” or “signature-based” cards. They work in the merchant environment the same as a credit card and are not required to be connected in real time to the cardholder’s account balance. “Online” or “PIN-based” debit cards require a PIN and the ability to connect to the live balance of the account holder.

Q. What does the term “split-dial authorization” mean?


“Split-dial authorization” refers to a process that allows an authorization terminal, such as the one in a self-storage office, to dial directly to the various card processors for approval. It is commonly used with check-guarantee/check-verification services as well as most gift-card programs.

Q. Does a card approval guarantee I will receive payment?


No. An approval response code from the card-issuing bank only allows a sale to be charged to the cardholder’s account. It does not guarantee payment, nor does it prevent a customer from challenging a charge or creating a “charge back,” in which the charge is reversed.

Ross Federgreen is a co-founder of CSRSI, which provides an integrated approach to the analysis, design, implementation, deployment and management of electronic transaction services and systems. Since 1999, the company has helped more than 350 public and private institutions reduce the cost of acquiring money and minimize the liability exposure related to payment transactions and customer data. For more information, call 866.462.7774, ext. 1; e-mail; visit

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