PIN pads are normally used with payment terminals, automated teller machines or integrated point of sale devices in which an electronic cash register is responsible for taking the sale amount and initiating/handling the transaction.
In this case the PIN does not need to be sent to the bank or card scheme for verification.
Like some stand-alone point of sale devices, PIN pads are equipped with hardware and software security features to ensure that the encryption keys and the PIN are erased if someone tries to tamper with the device.
ISO 9564 is the international standard for PIN management and security, and specifies some required and recommended characteristics of PIN entry devices.
Not all PIN pads necessarily have the same letters for the same numbers.