Money & Finance › Payments & money movement › Credit and debit card payments: how a swipe or tap gets paid
Debit cards and PIN networks (Star, NYCE, Pulse)
· Asset or instrument
Fact, law or dataA rule, statute, definition or measured number.
Cards that pay straight from a checking account, routed over Visa or Mastercard or over PIN networks like Star, NYCE and Pulse.
See it on the Money & Finance map →How it works
A debit purchase takes money from the account at once, authorized by PIN or signature, and settles in a day or two. 'Signature' debit runs over Visa or Mastercard; PIN debit can also run over networks that began as ATM systems: Star (Fiserv), NYCE (FIS) and Pulse (Discover, now Capital One). The Durbin Amendment caps fees at big banks and requires two unaffiliated networks on every card. Regulation E limits liability for a stolen card to $50 if reported within two business days.
Why it matters
Debit is the most-used US card by count, and network competition here sets merchants' costs; the Justice Department sued Visa in 2024, saying it handles over 60% of debit.
Facts, rules and data
The Fed's Regulation II and Payments Study data, network filings, the Electronic Fund Transfer Act (1978) and Regulation E, and United States v. Visa (S.D.N.Y., filed 2024).
Debates and risks
Whether Visa's large debit share reflects better service or exclusionary deals with merchants and banks, the heart of the DOJ case, is unresolved.
Connections (3)
▸P2P apps: Zelle, Venmo, PayPal and Cash App are often funded by Debit cards and PIN networks (Star, NYCE, Pulse)Fact, law or data
The connection
Venmo and Cash App let users fund payments or cash out instantly through a debit card, which moves money over card networks in seconds; bank transfers by ACH are free but slower. Cash App also offers its own Visa debit card, so app balances can be spent in stores.
When and why
US users of Venmo, Cash App and PayPal; instant cash-out uses push-to-card services such as Visa Direct and Mastercard Send.
How we know
App fee schedules (about 1.75% for instant transfers) and card-network product disclosures.
Debates and risks
Whether app balances, insured only if passed through to partner banks, are safe enough as quasi-bank accounts was questioned after the 2024 Synapse collapse.
▸Durbin Amendment (2010): caps on debit card swipe fees requires two unaffiliated networks on Debit cards and PIN networks (Star, NYCE, Pulse)Fact, law or data
The connection
Every debit card, from a bank of any size, must work on at least two unaffiliated networks, such as Visa plus a PIN network like Star, NYCE, Pulse or Accel. The merchant, not the bank or Visa, chooses the route. A 2022 Fed rule, effective July 2023, made clear this applies to online purchases too.
When and why
Effective April 1, 2012 for most issuers; the online clarification took effect July 1, 2023.
How we know
Regulation II section 235.7, the Fed's 2022 final rule, and the Justice Department's September 2024 antitrust suit alleging Visa blocked routing competition.
Debates and risks
Whether Visa illegally kept most debit traffic, as the Justice Department alleges, is still being litigated.
▸Debit cards and PIN networks (Star, NYCE, Pulse) get Reg E, not Reg Z, protection in Chargebacks and dispute rights (Reg Z and Reg E)Fact, law or data
The connection
A debit card pulls money from a checking account, so it falls under the Electronic Fund Transfer Act and Regulation E, not Regulation Z's credit rules. Theft liability depends on reporting speed: $50 within two business days, up to $500 later, though network zero-liability policies usually waive it. Reg E covers no product-quality disputes; network chargeback rules often do.
When and why
Electronic Fund Transfer Act of 1978; Regulation E, written by the Fed and now by the CFPB.
How we know
Regulation E sections 1005.6 and 1005.11, and CFPB guidance comparing Reg E and Reg Z rights.
Debates and risks
Whether payments a scammer tricked the customer into authorizing deserve Reg E protection, a CFPB and court debate since peer-to-peer scams surged.