Signature Debit Transaction Cost With Interchange Plus Pricing
There are two types of Visa, MasterCard, and Discover Debit card transactions: Signature Debit and PIN-Secured Debit. PIN-Secured Debit transactions are processed with the cardholder's PIN number entered into an encrypted PIN Pad or Terminal. Signature Debit transactions are processed by swiping or key-entering the card into a payment terminal without entering the PIN. PIN Debit transactions pay different Interchange Rates determined by the Debit Network for each particular card.
Although they are processed exactly like a credit card transaction (without the PIN), Visa, MasterCard, and Discover Signature Debit Interchange Rates are significantly lower than the corresponding credit card Interchange Rates.
One of the advantages of Interchange Plus Pricing is that it allows the merchant to access these lower debit interchange rates. Most Tiered pricing programs will charge the same rate for Credit and Signature Debit. For example, if a merchant's Qualified Rate for Credit and Debit is 1.99%, the Interchange cost for the processor is Visa Credit: 1.54% and Visa Debit: 0.95%. The same transactions at Interchange Plus 0.10% would cost the merchant Visa Credit: 1.64% and Visa Debit: 1.05% (plus Assessments).
The mark-up on Signature Debit Interchange is the main profit center for many Tiered Pricing Programs, and Third Party Processors, such as PayPal and Square. For example, PayPal charges 2.90% + $0.30 for both Credit and Debit. PayPal's cost for Visa Debit Key-Entered is 1.71% + $0.1695 (Visa Interchange + Assessments), allowing PayPal's charge to the merchant for processing a debit transaction to be 1.19% + $0.13. The charge for Processing Services for the same transaction on Interchange Plus could be as little as 0.10% + $0.10, or less.
Square charges 3.75% + $0.15 for keyed transactions, allowing a charge for processing services of 2.04% + $0.02, and 2.75% for swiping (-1.16% + $0.2195) for a fee to the merchant for processing services of 1.59%). The charge for Processing Services for the same transaction on Interchange Plus could be as little as 0.10% + $0.10, or less.
Burlington Bank Card offers secure and reliable interchange plus credit card processing, clear pricing, and one-on-one support.
Please call 1-800-758-1002 or contact us to learn more.