Signature debit and card-not-present transactions are subject to the card network’s interchange rates mentioned above.Interchange rates for non-regulated or exempt banks are generally higher, but they are still far lower than interchange rates for credit card payments.This is one result of the Durbin Amendment ( 15 U.S.C. Interchange fees and rates for debit card payments are capped at 0.05% + $0.22 for debit cards issued by so-called “regulated banks” (bigger banks with assets of $10 billion or more in assets).Debit card fees are generally lower than the fees for accepting credit cards because a credit card payments are essentially short-term loans (and hence riskier for card issuing banks).The technical differences between signature debit and PIN debit transactions often don’t matter much to most businesses, but the processing fees involved can make a big difference depending on how your business works: Related: How Credit Card Processing Works If the transaction is approved, the issuing bank transfers the funds for the payment back through the relevant network and to your business’s merchant account for settlement. The issuing bank checks the customer’s available funds and either approves or denies the transaction.The network then sends the transaction data and authorization request to the bank that issued the customer’s debit card.The network could be a PIN debit network or a credit card network (Visa, MasterCard, etc.) depending on whether it’s a PIN, signature debit, or card-not-present transaction. The payment processor relays the transaction and card data to the appropriate network.This portal could be a physical payment terminal or an online payment gateway. The merchant transmits transaction information to a payment processor through a payment portal of some kind.For in-person payments, the cardholder could have the option to choose “credit” (signature debit) or “debit” (PIN debit) and either sign a receipt or enter a personal identification number (PIN). The cardholder presents their debit card as payment (either in person, over the phone, or online).The debit card payment process is the series of steps every debit card transaction goes through between the point of sale and the money from the transaction ending up in your business’s bank account.Īccepting debit card payments at your business is a lot like accepting credit card payments, but there are a few key differences merchants need to know: Because a payment will only be authorized by your customer’s bank if the relevant funds are available, debit card payments present fewer risks of fraud and payment disputes (called chargebacks) and have lower processing fees as a result. Unlike credit cards, debit card processing works by withdrawing funds from your customer’s bank account. The merchant’s end of this service is provided by payment processing companies, so you will need access to a merchant account through an agreement with a payment processor or payment facilitator to accept debit card payments at your business. Debit card processing is a service that allows your customers to make purchases or payments with their debit cards.
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