Features

• Although for both credit and debits transactions, the money is eventually drawn from the same account, debit transactions on ATM card, known in the banking industry as "online debit transactions," are processed differently from credit transactions, also known as "offline debit transactions." Online debit transactions are routed directly to the card holder's bank, while offline transactions must go through a credit card company.
  
  

Significance

• As when withdrawing money from an ATM, a user who pays for a purchase with an online debit transaction is taking money directly out of his checking account, with the transaction immediately appearing on his account statement. Credit transactions, however, are first processed and approved by credit card companies, which can often take several days.
  
  

Expert Insight

• According to the Federal Reserve Bank of Kansas City, while merchants are paid immediately when a customer performs an online debit transaction, with an offline debit transaction, the merchants run a risk that the customer will not have enough money in his bank account to cover the cost of the purchase.