Debit Credit Card Processing

Some merchants prefer not to have debit credit card processing because they feel it will slow down the line, especially if they are a busy counter service restaurant.  The same is true of fine dining and sit down restaurants, because business owners don’t want customers having to get up at the end of their meal and have to go over to the POS system or terminal to put in their PIN code, which is quite understandable. They simply put the transaction through as a credit card so a PIN number is not required to process and complete the transaction.

One reason you should consider accepting debit cards from your customers for payment, is because overall, the processing rates for debit cards are cheaper.

I do have some clients however, that don’t feel debit credit card processing is much of a delay at all and tell me their line of customers moves quickly during rush hours, even though they do debit card processing. They put the transaction through as a debit card, so the customer does have to put in the PIN number. If you have ever shopped at Costco you know what I mean, lots of people use their debit cards and it doesn’t slow things down much at all.  

If you don’t tell your processor you want to accept debit cards and you put them through as credit cards to save time, then you are paying more each month in processing fees. It might not seem like a lot, but a few dollars saved each month in processing fees can easily add up over the years. Also, keep in mind, currently you can't take debit cards for card not present transactions, like takeout orders.

Interchange is a small fee paid by a merchant's bank to a cardholder's bank to pay the cardholder’s bank for the value and benefits that merchants receive when they accept credit card payments. Believe it or not, there are over 200 different interchange rates set by the payment networks (ie., MasterCard and Visa). The reason why there are so many different Interchange rates is because there are so many different types of cards issued by banks that range from rewards cards, travel cards, corporate cards and government issued cards.  The Interchange rates range from a high of about 2.95% and $.10 per transaction for certain business credit cards to a low, thanks to the Durbin Amendment, of about 0.05% and $.21 per transaction for PIN Regulated POS Debit cards.  

The Durbin Amendment Regulates Debit Credit Card Processing Fees

In 2010 the Durbin Amendment was passed to limit debit fees.  The swipe fee for a debit card transaction averaged $.44 prior to the Durbin Amendment. As a result of the Durbin Amendment, the Federal Reserve set a cap of $.21 per transaction plus .05% (.0005) of the transaction total. This pricing only applies to Visa® and MasterCard® debit cards,  it does not apply to credit cards, and what’s more, it only applies to debit cards issued by non-exempt institutions with $10 billion or more in total assets.

The Durbin amendment, passed as part of the Dodd-Frank financial reform legislation in 2010, required the Federal Reserve to limit fees charged to retailers for debit card processing. The amendment was a last minute addition added by Illinois Senator Richard Durbin, after whom the amendment is named. Source:

 Properly downloading the credit card terminal and setting it up for the merchant is one of the things I take special care in doing. Some sales agents don’t test the machine and make certain adjustments so the processing goes quickly and smoothly. They fail to take the time to set it up properly or they just don’t know all the nuances and things to check before they deliver the terminal to the merchant.  This is especially important when it comes to debit credit card processing.