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Friday, February 17, 2012

Debit Card Processing

What It Is and How It Works
Debit cards work with the same ease as credit cards and allow customers to deduct funds for purchases from their bank account (usually their checking account). True debit cards require a PIN number to be entered before a purchase can be complete. Many people refer to the Visa/MasterCard Check Cards as Debit cards since they do the same as true Debit cards, except for the fact these check cards do not require a PIN number to make purchases. You can easily identify check cards as they will have the familiar Visa or MasterCard logos on them.

The process works just like accepting credit cards except when you enter in the customers debit card information the amount to cover the purchase is deducted from the customers’ bank account.
Do you operate a retail establishment? You can save bundles on processing costs by accepting debit cards with the addition of a PIN Pad. Unless the swipe terminal you’re using includes an internal PIN pad, you will want to invest in an external one.
Processing debit/check cards as a regular credit card transaction can mean paying twice the amount for processing. By using a PIN pad for debit transactions you only pay a per transaction fee (between $0.35 and $0.55), sometimes no discount rate of any kind. Also, it should be noted that in order to ONLY incur a per transaction fee (if your processor is able to do this) the customer MUST input their 4-digit PIN number into the PIN pad or your processing terminal (if the unit has an internal PIN pad). If the customer doesn’t enter their PIN number, the typical per transaction and discount rate will be charged to those using debit cards with Visa or MasterCard logos on them (also called check cards).

True debit cards like Star, MAC, Honor, NYCE, Pulse, Interlink, and Maestro will only incur a per transaction fee because the customer must input their PIN number in order to use the card — it’s optional for Check Card customers, but it will save you money so encourage them to enter their PIN number, if they know it. This is ONLY available for retail establishments.
If you’re an Internet merchant you will still incur the same charges for debit card processing as you do with credit card processing. There is currently no special Debit card acceptance system in place that only incurs a per transaction fee for Internet businesses. You can save money by using an electronic checks (eChecks) service for your website.

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