Debit Card Processing Fees For Businesses

Debit Card Processing Fees For Businesses – If your company processes millions of dollars in debit card transactions each year, these fees can add up quickly. That’s why it’s important to understand how much you’ll be charged for accepting debit cards.

Not every debit transaction is the same. You can save thousands of dollars in debit card processing fees if you decide to accept these cards.

Debit Card Processing Fees For Businesses

Many traders don’t realize this, but one of these methods is more expensive than the other. I can give you a general answer that is most effective for your organization, but it varies from business to business.

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Note: Get a free audit and analysis to see how much you can save on credit card processing fees.

As the name suggests, a PIN debit transaction is processed when a customer provides their personal identification number (PIN) to complete a sale. After swiping or swiping the card, the customer enters their secret digits into the PIN.

This is how customers verify their identity. After entering the PIN, the customer does not need to sign the sales receipt.

PIN debit transaction information is sent from the merchant to the customer’s bank via the PIN debit network. These transactions are subject to fees charged by PIN Debit Networks. This means that debit network charges may vary depending on the debit network charges. I know the credit card processing industry doesn’t always make things easy for merchants to understand.

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PIN debit transactions are commonly known as online debit transactions. This is because the debit network processes the routing data for the transaction, unlike Visa or MasterCard.

Customers verify their identity to sign debit transactions by, you guessed it, providing a signature. After dipping or swiping the card, the customer will sign the sales receipt. Signatures are used in the same way as for credit card transactions.

Signature debit transactions are routed to the bank through the Visa or MasterCard network, as opposed to the PIN debit network.

Since the PIN network has no role in processing these transactions, signature debit sales are often referred to as offline debit transactions.

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The applicable network will determine its own charges. Interchange fees charged by credit card associations do not apply here.

In most cases, merchants have no idea which PIN network the transaction is through. However, fees between different PIN networks are generally the same.

Because of this pricing structure, small-ticket transactions are typically more expensive to process. But big-ticket PIN debit transactions are usually more cost-effective for merchants, although you don’t always know what PIN debit network fees are assessed before the transaction.

If customers sign debit receipts as opposed to providing a PIN, the sale is processed in the same way as a credit card transaction.

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Additionally, credit card associations have different interchange fees that apply to debit card transactions. These fees are usually lower than the interchange fees associated with traditional credit card transactions.

As you can see, interchange fees are based on the card type as well as the merchant’s fee plan.

But that’s not all. If you read our complete guide to interchange fees and rates, you’ll see that the fees shown in the chart above are significantly lower than comparable credit card transactions.

For example, the lowest credit card interchange rates for a Visa Supermarket merchant are 1.15% + $0.05 per transaction. They are up to 2.10% + $0.10 per transaction.

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Compare those rates in the table above. In percentage terms, credit card interchange fees can be 40+ times higher than debit fees.

This is due to the risk associated with large volume transactions. Issuing bank does not provide credit to the customer for the debit transaction. Instead, funds are withdrawn directly from the customer’s bank account.

As I said earlier, prices vary by dealer. But these are the main factors you need to consider when calculating these costs.

Most of this guide focuses on the difference between PIN debit and signature debit card transactions. This factor carries the most weight when determining your debit card processing costs.

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PIN transactions have low interest charges and high fixed fees. Signature Debit transactions are subject to card network interchange fees.

PIN transactions are processed through debit networks. There are at least a dozen debit card networks operating in the US. Each has a different fee.

If a debit card is processed as a signature transaction, signature debit fees are subject to Visa or MasterCard rates.

This new law limits the amount banks can charge for debit card transactions. However, the cap only applies to financial institutions with more than $10 billion in assets.

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Large national banks like Wells Fargo or Bank of America may charge as little as 0.05% + $0.21 per transaction. Small local banks do not have these restrictions.

In addition to fees charged by card networks and banks, you are subject to processor notes, just as with credit card transactions.

These rates will vary depending on the type of processing plan you have. In some cases, you will pay an equivalent transaction fee. At other times, merchant fees will vary. But for debit payments, the average interchange fee will be lower compared to credit transactions.

It’s also worth noting that the size of the debit card issuing bank can affect how debit card fees work. If a bank or credit union has more than $10 billion in assets, the maximum fee is $0.21 + 0.05 percent.

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Outside of Durbin’s change, things are a bit trickier for exempt trades. This is because there is no rate cap and fees vary by credit card network. Payment processors may charge higher fees here as well.

Fortunately, many debit cards are issued by major banks. So you usually don’t have to worry about this, as you can expect customers to pay with regulated debit cards.

Every business should accept debit cards. But the way you process those debit card transactions has a significant impact on your credit card processing fees.

Organizations with high average ticket sales can usually benefit from PIN debit transactions. This is because the fees as a percentage of the transaction are very low.

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Again, the optimal method varies from business to business. Many other factors are also at play. To find out how much you can save on debit card transactions, please consult our team at Merchant Cost Consulting here. We can help you save money without changing your credit card processor.

Having worked in the financial world for over 7 years and quickly learning the world of payments, Matt has been exposing the industry for what it really is for the past 5 years. Matt oversees MCC’s sales team, developing new employees and educating clients on how they can cut costs in the payments world. Matt holds a BA in Business Administration from Bryant University and currently lives in South Boston, Massachusetts.

Merchant Cost Consulting is a cost reduction company that helps businesses reduce credit card processing fees for merchant services without disrupting their day-to-day operations. Whatever you sell and wherever you sell it, credit and debit cards are likely to be a significant part. from your payments. That’s why we’ve put together this explanatory article to walk you through all the components that make up card processing fees, as well as what you can do to ensure you’re getting the best rates for your business.

The first two are pretty straightforward because that’s how card schemes and payment service providers make their money. However, these fees may vary based on geographic location, business model (high/low risk), card used, and recipient (if you use a multi-recipient setup). But what is an exchange? And what are the exchange fees? This is a question that does not have a short answer.

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Interchange fees apply when a merchant accepts payment by debit or credit card. This fee is supposed to cover “fraud or bad credit” that occurs when payments are approved (the money banks lose when payments don’t go according to plan). These fees are agreed upon and collected by the card network and then passed on to the issuing bank (the bank that issues the credit card to the cardholder). Not only are they the biggest expense, they’re also a logistical puzzle. Structures and fees vary by market and card type (consumer debit, commercial, prepaid, you get the idea). They also have a habit of changing.

There are many things that can affect how much you pay. Below is the formula that affects credit card fees.

In the past, there was a lack of transparency in how fees were calculated, and since cards are such an important part of the online shopping ecosystem, merchants were at the mercy of banks. However, things have improved

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