What Is an Online Transaction?

Also known as a PIN-debit transaction, online transactions are password-protected payment methods that authorize a transfer of funds over an electronic funds transfer (EFT)

Types of Online Transactions

When you pay for goods or services with your debit card, you have an option for the payment to be processed in two different ways:

  • an offline transaction via a credit card processing network
  • an online transaction via an EFT system, which requires a personal identification number (PIN) to complete the process.

What Is Required for Online Transactions?

There are three steps to completing an online transaction:

1. Registering

In order to make a purchase, consumers save their personal details (e.g. email, name, address) to create a password-protected profile.

2. Ordering

After placing products (or services) in a shopping cart, consumers determine the number of items they want and move to the payment option.

3. Paying

Most purchasers will be provided multiple payment options (e.g. Paypal, credit card, digital cash). To ensure that your personal details are safe, these payment pages are required to be secured with high-level encryptions.

Note: For online transactions, an EFT network (e.g. Star, Pulse, Interlink) is based on whichever one your bank’s associated with. Transaction costs typically amount to an interchange fee of 1% of the total purchase price, which is charged to the vendor/merchant.

Laws About Online Transactions

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed by Congress, and included in the Act was an amendment to address interchange fee reform (the Durbin Amendment). The Federal Reserve is now authorized to review and reform debit card transaction fees.