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Credit vs. Debit: Which is Best for Your Business?

Last updated 6 years ago

If you’re like most businesses, more and more of your customers are paying with debit or credit cards every day. Because of interchange and credit card processing fees, this means that every transaction costs you money. Though it is probably unrealistic to think that you can stop accepting cards, you can try to minimize your costs. Here is a comparison of the costs of accepting debit and credit cards.

Debit Transactions

Debit transactions come in two varieties: PIN-based and signature. PIN-based is probably the cheapest option for you because these transactions do not require the so-called “assessment fees” that signature debit cards do, and customers generally prefer them because they register on their account summary immediately. PIN transactions are considered more secure because PIN numbers are difficult to guess or discover. However, there are more and more cases of hacked PIN pads that record customers’ key strokes to get their PINs.

Signature debit transactions, in which a customer signs a receipt instead of entering his PIN, are more expensive for merchants and can significantly cut into profits on smaller transactions. In some cases, signature debit fees actually mean that a merchant takes a loss on certain tickets. Signature transactions can take longer to post to a customer’s account, leaving him uncertain of how much money he really has available. Additionally, signatures are easier to fake than PIN numbers, creating security concerns.

Credit transactions

Credit card transactions are more costly for merchants because Visa and MasterCard deduct higher fees. Cards that offer rewards to the customer are actually even more expensive, with transaction charge rates up to 5%. If you have primarily larger tickets, in the hundreds or thousands of dollars, this may not matter to you as much, but merchants with smaller tickets definitely feel the pinch.

Let Merchant Advocate help you decrease your transaction fees. In some cases, this could mean switching to PIN-based transactions, or it could mean negotiating with your merchant accounts provider for the low rates you deserve. Either way, we’re committed to saving you money. To get started, call (732) 727-2073.


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