As a small business you can save up to 97% on merchant fees when you utilize PIN based debit transaction. You will need a PIN pad to be able to do this. What happens when you run a PIN based debit transaction, you only end up paying a per transaction fee. You do not pay a discount rate which can be anywhere from 1.09% to 1.89%.
Debit card merchant account is best for business owners who want the most out of processing credit card but don’t want to pay the high discount rates. Debit credit card processing is cheap because it has the lowest risk associated with a transaction due to the fact that it is not processed via the Visa/MasterCard interchange network.
This type of payment method is cheap because it is virtually impossible to run a fraudulent transaction because the customer is in a card present environment where they have to slide or swipe their credit card to initiate the transaction. Up to this point, if the card was stolen, then the transaction can still be authorized. But when you ask the customer to input their 4 digit pin code or secret password into the terminal before the transaction is approved, then 99.9% of the time, that card actually belongs to that person. Basically here are the reasons why businesses are rewarded by utilizing PIN debit transaction: chargeback is virtually impossible, to run a stolen credit card is not possible unless the person who stole the card knows the person’s pin code, you are dealing with cash in the customer’s checking or savings account, and lastly the risk assessment is very low as they are first swiping and then keying in a pass code. There is no need for them to sign a receipt and will not be presented with that option.
When you use a PIN Pad the transaction cannot downgrade, the rate will always be a flat per transaction fee that you will pay. You don’t have to worry about qualified rates: mid or non mid. And besides, you can just hand the PIN pad device to your customers as this saves time at the countertop in a retail environment where lines can sometimes be long if you operate a busy store. Due to the payment type, the transaction should always be processed and not declined as this is like paying with cash in their bank account. If the transaction is declined, then they simply don’t have the cash on hand.
On average, people carry as many as 10 check card and debit card (bank cards). This is due in part to the fact that people would rather carry a piece of plastic than actual cash; the card is lightweight and fits into their pocket, if the card is stolen, all one has to do is contact the issuing bank to put a fraud alert on the card or simply cancel it completely (you cannot do this with cash if someone steals your wallet or purse). There is really no limit on the amount a person can charge on their debit and businesses benefit from this as the consumer ends up spending more money.
Recent data has indicated that debit card issuance has risen significantly. Something like 20% increase from 2008 while credit card transactions have decrease significantly in comparison.
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