How much are debit card transaction fees

Image source: Getty Images. Especially as card issuers continue to encourage online credit card spending with tactics like rewards for streaming services and food delivery bonuses Most merchants need to accept credit card payments, which makes credit card processing fees like these a cost of doing business. Key findings The typical credit card processing fee ranges from about 1. To accept credit card payments, merchants must pay interchange fees, assessment fees, and processing fees.

These fees go to the card's issuing bank, the card's payment network, and the payment processor. Payment processing fees are the only negotiable credit card transaction fees. American Express cards have the highest average fees, while Visa tends to be the lowest. There are four types of pricing models that payment processors use: interchange-plus, flat rate, subscription, and tiered.

Average credit card processing fees: 1. Payment network Average credit card processing fees Visa 1. Types of credit card processing fees and costs The two fees we looked at above, interchange fees and assessment fees, are non-negotiable.

Here are where those fees go: Interchange fees The bank that issues the credit card receives the interchange fee. Assessment fees The payment network receives the assessment fee. Payment processing fees This is paid to the company that accepts the credit card payment and sends the transaction to the payment network, either through a physical card reader or an online payment gateway.

Depending on the payment processing company, costs for this service could include any of the following: A per-transaction fee A monthly service fee The price of the equipment used to process transactions What makes Discover and American Express different Discover and American Express do double duty, because they issue credit cards and operate their own payment networks.

Average credit card interchange fees: 1. Payment network Interchange fee range Visa 1. What determines your interchange fees? Here are the most significant: Merchant category: Every merchant has a merchant category code MCC corresponding to its business type. Payment networks charge different interchange fees based on the business's MCC. For example, a supermarket has different fees than a restaurant. Type of credit card used: Networks have various types of cards with their own sets of benefits.

Cards that offer more benefits, such as travel rewards or purchase protections, usually have higher interchange fees. This is in part because the risk of fraud varies based on the processing method. How often do payment networks update their interchange fees? Average credit card assessment fees: around 0. Visa Mastercard Discover American Express 0. Credit card processing fees and costs While merchants must pay the interchange and assessment fees set by the payment networks, they have more flexibility with payment processors.

Sources: Helcim, National Processing, and Payline pricing pages. Flat rate. Payment processor Cost per swiped retail transaction Cost per online transaction Monthly fee PayPal 2.

Payment processor Cost per swiped retail transaction Cost per invoiced transaction Cost per keyed online transaction Monthly fee Intuit QuickBooks 2. Equipment costs In addition to the costs above, merchants that accept in-person transactions also need equipment.

The cost of accepting credit card payments When your business processes credit card payments, there will be multiple fees taken out of the total transaction amount. The non-negotiable credit card network fees can vary: From 1. From 0. Sources Fattmerchant Helcim Intuit QuickBooks Get started with Payments and Cash.

Mastercard Mastercard — U. Region Interchange Programs and Rates. National Processing Experience Transparency. Payline Payline Pricing and Processing Fees. Payment Depot Pricing Plans.

PayPal PayPal Merchant Fees. Square Understanding Square processing fees. Visa Wells Fargo Payment Network Qualification Matrix. Facebook Icon This icon shares the page you are on via Facebook. Blue Twitter Icon Share this website with Twitter. Email Icon Share this website with email. Recent Research. Credit Union vs. By separating out this unavoidable wholesale cost, you can ensure that you are not being ripped off on the markup. This is why we recommend interchange-plus pricing.

We've done in-depth research on each and confidently recommend them. Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. One would think the manual labor to handle checks would be more costly? I use my Health Savings Account debit card to pay any medical fees. Are banks allowed to charge for debits from an HSA?

I was told that even though the debit is from an HSA , their dental office still pays the bank a fee. However, my regular dentist accepts my debit as cash and I receive the cash discount she offers. I am solving the problem by having my bank print me up some checks now.

Guess the old-fashioned way still works. Unfortunately this reaches outside of our expertise, and we are not qualified to answer this question. Security is another selling point, since it is less likely that you will lose a chargeback dispute if your customer entered their pin number, but this mostly benefits the banks — not the merchant.

The credit card processing industry revolves around percentages, and it is very important for business owners to understand Basis Points. When a debit card is run as Debit Pin number required it is processed through one of the pin-debit networks. This is all public information and can be confirmed with a quick Google search.

Are their two fee structures to consider where debit cards are concerned? The fee for merchant services and the fee for the interchange? Hi Melissa — Thanks for the informative article. How do the debit card fees work for ecommerce transactions? Since there is neither a PIN nor a signature. For eCommerce, those transactions are processed as Card Not Present, which have different rates associated with them.

Thanks for the great piece! That would be classified as a prepaid debit. The rates you pay will vary based on the markup charged by your merchant services provider. Your email address will not be published. Comment moderation is enabled. Your comment may take some time to appear. Please read the " User Review and Comment Policy " before posting.

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Check our help guide for more info. Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships , and we adhere to strict guidelines to preserve editorial integrity. Frank Kehl has been researching and analyzing merchant services, payment gateways, and international money transfer services since A signature debit transaction is where a customer uses her debit card to pay for a product or service without entering her personal identification number PIN into a PIN pad.

Instead, she completes the transaction by signing the sales receipt as if she used a credit card to make the purchase. Note: Signature debit transactions are often referred to as an offline debit transaction because a PIN debit network does not play a role in processing the transaction. Since both signature and PIN debit transactions must be card-present by nature, this article does not touch upon card-not-present debit interchange fees.

Card-present swiped debit interchange fees differ on a per-transaction basis depending on the size of a transaction. As our article on credit card transaction fees discusses in detail, the card brands have structured debit interchange fees this way because the transaction fee portion of credit card processing fees has a greater impact than the rate portion for businesses with a low average sale amount. As with all credit and debit card transactions, the interchange fee paid to the issuing bank is only one portion of expense; the processor needs to make money, too.

In the case of tiered pricing a business does not pay interchange fees. Keep in mind that processors will often have separate pricing tiers for credit and debit card transactions. A very expensive issue with tiered pricing is that it does not allow a business to reap the benefits of small ticket interchange fees. A PIN debit transaction is one where a customer pays for product or service by entering her personal identification number PIN into a PIN pad to complete a transaction.

In the case of a PIN debit transaction, the customer does not sign the sales receipt. Side Note: PIN debit transactions are often referred to as an online debit transaction because a PIN debit network handles the routing of transaction information instead of Visa or MasterCard.

A debit network charges an interchange fee and a switch fee to route transaction information over its network. Contrary to popular belief, PIN debit transactions incur more than just a flat fee. Debit networks charge a fee that consists of a percentage, a flat transaction fee, a switch fee, and an annual fee.

In fact, debit network fees are very similar in structure and complexity to the interchange fees charged by Visa and MasterCard. Debit network fees vary by merchant category code , transaction size and a few other less common variables.

Some debit networks cap the maximum fee that a business pays, while many have no cap. The following is accurate as of August , but keep in mind that PIN debit fees change often. Check with your processor or acquirer for the most recent information. All transactions that do fall under the Durbin cap carry a rate of 0. Similar to signature debit transactions, a business pays a debit network fee as well as a markup to the processor to process a PIN debit transaction.

Although, as of about processors are able to add a volume markup rate to PIN debit volume. In this example, the processor does not charge a percentage of the transaction, just a flat transaction fee.

However, the same business will also have to pay an interchange fee to the debit network that processes its transaction.