Information on Merchant Accounts,
Ecommerce and Credit Card Processing

August 8th, 2005 by Jamie Estep

Save Money by Processing Debit Cards

Filed in: Ecommerce, Merchant Accounts |

If you’re not setup with a reduced rate signature debit, and / or a pin debit system, you should be.

Already 50% of plastic transactions are debit card transactions rather than credit card transactions. Getting a reduced processing rate on debit cards is one of the best ways for any businesses to save money on processing fees.

There are two different types of debit card transactions, Signature and Pin debit. Signature debit is where the debit card is processed exactly the same as a credit card. Pin debit is where a pin number accompanies the debit card transaction, similar to an ATM machine.

Signature Debit
Any business that is setup to accept credit cards can accept debit cards using the signature debit method. This method is simply running a customers debit card the same as you would a credit card. The debit card must have a Visa or MasterCard symbol on the card for it to be processed as a credit card. When running a signature debit transaction, a processing percentage fee and a per transaction fee will be charged, just like a credit transaction. For about 6 months now, most merchant service providers can setup a business with a special signature debit rate for signature debit transactions. This reduced fee can vary from a few hundredths of a percent to a full percent less than the credit card processing fee. When spread over hundreds or thousands of transactions, a merchant can save a large amount of money without actually having to do anything different.

Credit Card Pinpad
Pin Debit
Pin debit is a system when a customer enters their pin number to complete the debit card transaction. A merchant must have an additional pinpad to accept debit cards using the pin debit method. Pin debit transactions normally use a flat per-transaction fee and no percentage at all. What this means to a businesses is that no matter the amount of the transaction, the fee will always be the same. Pin debit transactions have the additional advantage of eliminating a customer’s ability to request a chargeback for a stolen credit card and most any other chargeback reason. To get setup with Pin debit, a businesses would need to purchase an additional pinpad. The cost of pinpads varies, but one will cost at least $80. Most terminals are compatible with a pinpad so if you already have a terminal, the additional cost is fairly low. If you are planning on purchasing a terminal, you might look at a terminal with a built in pinpad.

All businesses should inquire into getting setup with a reduced fee signature debit program. If you find that many customers are using debit cards, a pin debit system can be a great idea as well. For large ticket businesses, the cost of a pinpad can be paid for by the savings from a single transaction. Once your business is setup with a debit program, you start saving without any further action. There’s really no reason not to get setup.

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