Understanding Pos Debit And Point Of Sale Charges

Whenever you accept debit cards as a form of payment, that transaction will appear on the customer’s credit card statement, often with “POS” or “POS debit” in the description. You may be wondering why. Every sale that goes through the point-of-sale system is technically a POS transaction. So why are debit card purchases singled out as POS debit?

The merchant descriptors applied to your customers’ bank account statements help them understand what that type of transaction was. If the terms are vague, that could lead them to flag the transaction as a fraud.

By understanding how this process works, you can be proactive in making your customers feel more secure. Here’s all you need to know about POS, POS debit, and how the process works for customers and merchants.


  • The term “POS debit” is used to describe a transaction made with a debit card at the point of sale, such as the merchant’s POS machine or in an online ordering environment.
  • Adding a merchant descriptor for purchases can help reduce confusion from customers to avoid costly chargebacks and streamline how you process payments.
  • Debit and credit card transactions will reflect differently on the customer’s statement and are also transacted at different rates which are determined by the card issuer and your payment processor.

POS vs. POS debit

“POS” and “POS debit” are the two most common terms that will appear on customer statements when they use their debit card at the checkout online or cash register in person.

POS, as we know, is the point of sale terminal that allows transactions to be made with a tap, swipe, chip, or key. Examples of common POS systems include Clover, NCR, Revel, and Toast. Theoretically, all purchases made at that POS device or through a POS system, including gift cards, should be marked as POS on a credit card statement. But that’s not always the case.

POS debit, comparatively, refers to card payments that come specifically from a debit card, sometimes called an ATM card. This debit card use, plus the POS system, equals POS debit. But there are a few ways this can work:

  • Through a POS terminal in-store using a personal identification number (PIN)
  • Through an ATM transaction (a cash withdrawal at a cashpoint)
  • Through an online payment via an online POS system.

In most cases, both POS and POS debit transactions are PIN-authenticated through the automated teller machine or point-of-sale transactions in person. In online transactions where the consumer manually enters card information, this is not the case.

In the case of in-person POS or online POS systems, signature-authenticated transactions or PIN-not-required transactions also fall under the POS debit umbrella.

It’s a minefield for customers to comprehend.

Alternative debit-related bank statement descriptions

In addition to “POS” and “POS debit,” there is also “DBT Purchase” to make up the array of terms relating to debit transactions.

While POS and POS debit usually refer to PIN-authenticated transactions (usually, but not always), a DBT purchase is a way to explain that the transaction was made without a PIN. This is used in cases where a PIN is not required. It could be a contactless payment (EMV), an e-commerce transaction, or other payment methods that don’t require a PIN. Whatever the reason, DBT purchase is a nice clear description to use when a debit card is used, but no PIN number was needed.

POS Debit card vs. credit card transactions

When customers use a debit card—spending the money in their checking account—it is classified differently from a credit card transaction. Debit cards are connected to funds that the customer has in their checking account. In contrast, credit cards use money from the credit card network, which the customer will need to pay back.

Because these two payment types bring with them different levels of risk and card processing, they are listed differently and attract different fees. Although card issuers (banks and credit card networks) love credit cards for their earning potential, they charge higher fees because there is always the risk that the consumer might not pay.

Debit card transactions, comparatively, are straightforward for banks and card networks. The money is deducted from the consumer’s bank account. It’s already there. There are no more checks and balances required from that transaction.

Both payment cards can be issued by a card issuer, such as Mastercard and Visa. The difference is in where this money comes from—i.e., the cardholder’s bank account or the card network’s credit.

From a merchant perspective, debit card transactions are the best. Thanks to the ease of processing, debit card transaction fees are lower and safer. Plus, the Durbin Amendment of 2010 ensures that these rates cannot change over time.

Debit card transaction rates are capped at interchange rates of 0.05% + 22 cents. Merchants will still have payment processing vendor fees, but the base fees remain fixed. By contrast, credit cards have no similar fee protections and are subject to rising over time.

Where you can encourage debit card transactions, it’s worthwhile to do so. The only downside for customers is that it comes out of their main account, and there could be overdraft fees if they don’t have adequate funds.

POS withdrawals

A POS withdrawal is a different kind of POS debit transaction. This is a feature some merchants choose to enable for customers who wish to withdraw funds at checkout, similar to using an ATM. Commonly referred to as getting cash back, this allows customers to use their debit card and PIN to make a purchase and withdraw additional funds that are distributed by the cashier. This is most common in environments such as grocery or convenience stores.

No card debit cards

For all our talk of debit cards, it’s worth highlighting that there are also card-not-present debit cards.

Customers may use online banking to make payments from their debit account. They could also have their debit card attached to a digital wallet where they bring up the app and flash their phone to perform mobile payments.

While online banking will have its own bank statement description, mobile payments through their digital wallet fall under the same descriptors as card-present debit card transactions.

The mechanics of a merchant descriptor

The bank statement description that customers review is called a merchant descriptor. These terms can be used interchangeably. “Bank statement description” is more commonly used amongst customers, and “merchant descriptor” is more common with merchants. But they both refer to the same thing: the line of copy which serves as a way to identify the transaction.

Savvy customers will review the monthly statement from their bank to assess the transactions, making sure there is nothing out of the ordinary. Poor descriptors can lead to alarmed customers who think that something is awry. As a result, poor descriptions heighten the risk of fraud reports.

In most cases, these fraud reports—known as “friendly fraud”—come from consumers who inadvertently failed to recognize one of their transactions, thus issuing a chargeback. Chargebacks, including those caused by friendly fraud, are a costly issue for retailers and are estimated to cost businesses $100 billion in 2023.

One of the easiest ways to minimize friendly fraud is to create clear merchant descriptors. (Yes, you can make up your own.) This step is typically taken when you first sign up with your payment processor and is a helpful functionality for your customers and your business. As you go through the enrollment process, you’ll need to enter information about your business that will be used as your merchant descriptor.

If you already have a merchant descriptor in place, contact your payment processor or consult their help center for information on updating it. Clover, for example, has detailed instructions on how to set a merchant description in its developer resource site.

Learn More

Types of merchant descriptors

There are three types of descriptors that every merchant should be aware of:

Static descriptor

Static descriptors are also referred to as default descriptors or hard descriptors. These are essentially set-and-forget kinds of descriptors. For example, whether your customer pays with a credit card, debit card, or mobile wallet, they’re going to see the same descriptor.

Dynamic descriptor

Dynamic descriptors are descriptors that change depending on the purchase. These are the ones that would specify POS, POS debit, DBT, or any number of others outside of the debit realm. They could also be dynamic to change according to the item purchased, like the name of a book being bought or other specific product details.

Dynamic descriptors are not always available. It will depend on your payment service provider and what support they offer for dynamic descriptors. This descriptor is then passed onto the customer’s issuing bank through an API.

Soft descriptor

Soft descriptors refer to pending transaction descriptors. This would come up in the customer’s bank account when they are looking at transactions that have been authorized but not settled. What appears here is very often the same as the static descriptor, but there are a few odd approaches.

Some issuing banks display the payment service provider’s name in the pre-settled stage, such as Stripe, instead of the merchant’s name. While this is annoying for merchants, it will depend on the issuing bank as to what goes in the soft descriptor.

Keys to a clear merchant descriptor

Merchants that didn’t realize they could do this will likely have some auto-generated descriptors. Merchants who have uncovered this handy customization may have already mastered this art. However, it’s very common that merchants make descriptors with their own internal convenience in mind rather than what is helpful to the customer. You will need a balance of both. It’s critical that you use accurate merchant descriptors.

Merchant descriptor best practice

When crafting your merchant descriptor, it’s best to ask yourself: what do customers need to know? Through a bank statement or online banking, your customer can see whether the transaction information relates to their credit or debit account. That information is often automatically added by the bank, anyway. What they need to confirm is that the transaction is one they remember or one that makes sense. This can be done easily with the standard descriptor type, the static.

The most important information is your company name and your contact information. With both your company name and contact details, it immediately puts customers at ease. They can call you before calling in a chargeback if they can’t remember what their purchase was.

The format could be one of the following:

  • Business name + URL + state + zip code
  • Business name + phone number + state + zip code
  • Business name + URL + phone number + state + zip code.

Be mindful that different online banking portals will show this information differently. Some may not have the space to list your name, URL, phone number, and location details. Some will not even have the space to list your name and URL. It’s good to play around with these in different online portals to check how customers view them so that you can design them with the most efficacy.

As for dynamic descriptors, if you charge for a subscription, one dynamic descriptor structure could be the invoice number and then the company name. LinkedIn is an example of this formula, using XXXXXX_LINKEDIN for their descriptors.

For lesser-known businesses, it can be more important to have the company name and contact information. The invoice number or line-item number won’t help your customer to remember the transaction.

As with the static, it’s worth playing around with how this shows up on different online portals. You want to make sure that the item number doesn’t compromise the information they will need to identify you and their transaction easily.

Avoiding confusion around payment transactions

Seeing terms like “POS debit” in a bank statement can cause confusion among consumers and frustration among merchants. Thankfully, accurately naming your merchant descriptors is one simple way to minimize these issues.

To ensure that all transactions go smoothly in your business, it’s best to partner with a reliable payment processor like Stax by Fattmerchant.

Our all-in-one platform radically simplifies your payment infrastructure. Best of all, you only pay an affordable subscription fee based on your needs. Get in touch with Stax today and see how we can help you save on payment processing costs.

What Does a Good POS System Need?

For any business owner—whether you’re a small business or a large enterprise, you need a good POS solution. But what are the key features of a good POS system? There are a few elements to look for to ensure you have what you need.

First, a good POS solution is much more than a card reader and payment terminal. Beyond having an easy-to-use interface for your business and your customers, look for POS solutions with sales tracking capabilities and financial analytics. These integrations will help you better understand your business’s financial health.

When looking at third-party integrations, it’s important to consider what applications are most useful to your business. If you use common software tools such as Quickbooks, Xero, Hubspot, and Mailchimp, chances are a reliable POS solution will integrate with it. If not, you may want to reconsider. 

Reliable hardware that also works for your business and industry is a must. Many solutions have POS terminals that are specialized by industry, such as mobile POS devices for the restaurant industry or hardware with a built-in barcode scanner for retail environments.

To learn more about our services at Stax, reach out to us today. We will be happy to answer your questions and help you benefit from our modern payment solutions.

Request a Quote

FAQs about POS Debit

Q: What does “POS debit” mean on a bank statement?

“POS debit” on a bank statement describes a transaction made with a debit card at the point of sale, either on a merchant’s POS machine or in an online environment. This term is used to help customers understand the type of transaction.

Q: How are POS and POS debit transactions differentiated?

“POS,” or Point of Sale, refers to any transaction made through a POS system. However, “POS debit” specifically refers to transactions involving debit cards, including those made via a physical POS terminal, an ATM transaction, or an online payment processed via an online POS system.

Q: What’s a DBT Purchase?

A DBT Purchase or Debit Purchase, is a type of debit transaction made without a Personal Identification Number (PIN). This term is typically used for contactless payments, e-commerce transactions, and any other payment method that doesn’t require a PIN.

Q: What’s the difference between debit card and credit card transactions?

Debit card transactions use funds directly from the customer’s checking account, while credit card transactions use money from the credit card network, which the consumer will have to pay back later. Due to these differing levels of risk, they attract different transaction fees.

Q: What is a POS withdrawal?

A POS withdrawal is a type of POS debit transaction where customers can withdraw funds at the checkout, similar to an ATM withdrawal. This feature, commonly known as “cash back,” allows customers to use their debit card and PIN to both make a purchase and withdraw additional funds.

Q: How can businesses minimize the risk of fraud reports due to unclear transactions?

To minimize the risk of fraud reports, businesses can create clear merchant descriptors. A merchant descriptor is the description that appears on the customer’s bank statement. It should be easily recognizable to the customer to help them identify the transaction.

Q: What are the key features to look for in a good POS system?

A good POS system should be more than just a card reader and payment terminal. It should include sales tracking capabilities and financial analytics. Additionally, it should be able to integrate with relevant software tools such as Quickbooks, Xero, Hubspot, and Mailchimp. The hardware should also be reliable and suited to your business and industry.

Q: What is the impact of the Durbin Amendment of 2010 on debit card transactions?

The Durbin Amendment of 2010 caps debit card transaction rates at interchange rates of 0.05% + 22 cents, ensuring that these rates cannot change over time. This makes debit card transactions a preferred option for merchants due to their ease of processing and lower, fixed costs.

Q: How does a dynamic descriptor help customers?

Dynamic descriptors change depending on the purchase. This can be helpful in providing additional context to the customer about their purchase on their bank statement, such as specifying the type of transaction (e.g., POS, POS debit, DBT) or the specific product details of the item purchased.

Q: What strategies can businesses adapt to avoid confusion around payment transactions?

To avoid confusion around payment transactions, businesses can accurately name their merchant descriptors. This could mean including the business name, contact details, or other pertinent information about the transaction. It’s also beneficial to ensure that all transactions go smoothly by partnering with a reliable payment processor.