Even though debit and credit cards look similar and they are often used in the same way for purchases, some important differences need to be noted. Too often, customers and business owners consider these cards to be the same thing. But, when it comes to payment processing, they are two separate types of transactions.
The Difference in Payment Processing Fees
The main difference lies in the payment processing fees that you will pay for the different types of transactions. A debit card can be processed as a credit card instead of using the debit card network. In this situation, there is a transaction cost that comes from the interchange instead of the fees charged by the debit network.
In most situations, debit fees are calculated on a flat rate basis, based on the rate that was agreed for the debit transactions. But, credit network fees can change since they are based on the interchange rates. The processor has a going rate every time a transaction is processed, and this cost can fluctuate.
Which is Cheaper: Debit vs. Credit Transactions
It’s hard to say which payment processing option will be cheaper for your company. Generally, a debit card transaction is a cheaper compared to a credit card transaction. But, fees can be added on at times for markup, PIN debit network fees, and more. Also, the card type and the size of the transaction can affect the amount that is paid.
For example, there are times when the flat debit card rates might be higher compared to the interchange rates for a small transaction. On the other hand, large transactions will be more expensive if the processing fee is calculated based on a percentage instead of a flat cost.
Providing Options for Your Customers
It is important that you have a payment processing system that supports both debit and credit card transactions. Customers have differing preferences, and you need to provide options for everyone who walks through the door. Accepting both types of payments will increase overall sales, which outweighs the fees that will be paid.
If you have questions about the right payment processing solutions, then we are here to help. Call to learn more about the services that are available.
