Most business owners and even merchant
account holders are well aware that they
should be accepting debit cards. However,
many do not understand how to fully take
advantage of these financial tools, or,
how accepting them will greatly increase
their bottom line. Please review the information
below as it pertains to the basics of
debit card processing, a free service
with a merchant account from Cardstreet.com.
Merchant Account Holders can accept debit
cards in one of two ways:
1. Off-line
Debit Card Transaction
The most common way to accept debit cards
is an "off-line debit transaction." In
this format the merchant account owner accepts a debit
card the same way in which they would
accept a normal credit card. The debit
card is swiped through the credit card terminal and
the customer signs the receipt. As far
as the merchant account owner is concerned there is
no difference in the way a credit card
or an off-line debit card is processed.
The one thing merchant account owners must remember
is that the debit
card must have a VISA or MasterCard logo
on it. Debit Cards that do not bear
the Visa or MasterCard logo can not be
processed off-line and will not be approved.
2. Online Debit Card Transaction
A newer and cheaper method for accepting debit cards
at the point of sale is an "online debit transaction."
In this type of sale the debit card must be swiped through
the credit card terminal and a PIN Pad
must be installed on the terminal. Instead of signing
the receipt for the transaction the customer will be
prompted to enter his or her PIN number into the PIN
Pad. The terminal will pass the encrypted number to
the bank for verification. The merchant account owner will then be
paid for the transaction in the same manner and time
frame that they would be paid on a credit card sale.
What are several advantages of accepting debit
cards "online" with your merchant account using a PIN pad?
1. Merchant Account Owners are charged a flat
fee for each on-line debit card transaction instead
of a percentage rate plus transaction fee. This can
add up to a substantial savings over the course of a
month. Assuming a merchant account owner takes 100 debit cards over
the course of a month (about 3 per day) and averages
$85 per sale, here is a conservative cost analysis.
Below you can see that this merchant account owner would have saved
$903.00 over the course of a year.
Debit
Card
Credit
Card
Cost
Per Transaction
100 @ 65 Cents -->
$65.00
100 @ 25 Cents -->
$25.00
Discount
Rate
N/A
$8,500 @ 1.65%* -->
$140.25
Cost
Per Month
$65.00
$165.25
Cost
Per Year
$780.00
$1,983.00
Annual
Savings
$1,203.00
2. The rate used in the above
chart is a typical merchant account discount rate.
Although rates are different
for every merchant account holder, most would be within a few hundredths
of a percent of the above rate.
3. Transactions can not "downgrade." With debit cards, you will always pay the same flat
fee as long as the customer enters their PIN number.
You will not have to worry about paying expensive downgrade
fees on transactions that did not qualify for the best
rate. There's no risk in accepting debit card with your merchant account!
4. Faster check out time. Most merchant account owners don't realize how much time it takes
to hand a receipt and pen back and forth over the counter.
Consumers appreciate the speed of online debit transactions
and feel more comfortable making smaller purchases when
they don't have to worry about holding up the line. Another good reason to accept debit cards with your merchant account!
5. Increased customer loyalty. Every consumer has their own spending habits and preferences
in how they pay for products. More and more consumers
are getting used to entering their PIN at the point
of sale and prefer to spend their money at places that
accept debit cards. These customers expect to be able
to pay with their debit cards. Make sure you accept debit cards with your merchant account!
For more information on accepting debit cards with your merchant account contact Cardstreet.com at
info@cardstreet.com.
