Debit card pricing is usually below that of credit cards but has many things to consider. When deciding on payment processing it is unlikely you will focus just on debit transactions. You will likely work with a merchant services company that offers a package of solutions to accept multiple forms of digital payment. Here are two great resources for understanding debit card prices and credit card prices. Every time a customer comes into your store they will likely have a different type of card with a different debit card network. As a merchant, you are expected to process the transaction with whichever form of payment they prefer. Here are several things that will impact interchange fees which are the bulk of the transaction costs.
- Type of card: Signature debit cards run on the credit card network and have more risk associated with them so have high fees. Pin debit cards run on different networks and lower fraud risks so have lower fees.
- Associated financial institution: Credit unions and small banks have different rates and operating costs than larger banks.
- Rewards: Cards with additional rewards and loyalty programs have increased costs to accept.
- Type of merchant: interchange fees are based on merchant type.
- Debit network: The specific network being accessed for a purchase will have a different pricing structure to meet the needs of their customers.
HOW TO PICK A PAYMENT PROCESSOR FOR YOUR PAYMENT NEEDS
Card networks care more about their banking customers than merchants or consumers. It is important to understand that the least valuable entity in the entire digital payment process is the merchant. This might seem a bit counter-intuitive because as a merchant you are paying them money. The organizations that make the most money out of the average digital transaction is the issuing and Acquiring Bank. Card networks like Visa take an average fee of 0.11% but keep the rates high on their network so that banks choose to work with their card network.
As a small retailer Square is usually the best option because of their easy and transparency of price. They are built for underserved retailers and act as a third party to run your transaction. Many retailers will grow out of Square and require a more customized solution for their business. When you open a bank account for your business the bank will potentially offer a solution to you from the large payment companies like First Data or Verifone. Pre or post-launch you might have other 3rd parties come knocking at your door. This is where independent sales organizations (ISO) come in. Good ISOs will have relationships with the right payment gateways, financial institutions and card networks in order to provide a more customized solution for your business.
With more options comes more confusion when it comes to prices. A good payment processor will work with you to make sure that the average cost per transaction across debit and credit networks meets your needs. As challenging as it might seem to find the right fit it is a significant cost to your business if you do not have a partner that is willing to adapt to your needs.
When choosing an ISO you want to find a trusted partner. Pricing is going to be confusing because of the variety of potential consumer payment solutions. A trusted partner will walk you through the process and make sure that you have the support you need to get your business up and running no matter what the situation is. These are important things to consider when working with an ISO:
- Pricing: Make sure there are no surprises. Here are some questions to ask:
- Is your business being properly categorized?
- Do they have the right average ticket value?
- What are the basis points per transaction?
- What is the percentage per transaction?
- If you combine all of the average costs per transaction do they meet your needs for your average ticket values?
- Will the pricing still work with smaller average ticket values?
- Support: Make sure that your business is up and running as quickly as possible if there is a problem. Here are some questions to ask:
- If your terminal goes down how long until you are up and running again?
- Will you have a technician in a minute, hour, day, week, month?
- Can you call somebody directly to get your problem solves?
- Do they genuinely want your business to be successful?
- Services: What other things do they do to support the success of your business. Here are some questions to ask:
- Do they include training?
- Do they provide marketing services?
- Do they charge for other types of support?
- Do they provide management or accounting solutions?
- Do they integrate with other business solutions?
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More revenue, more charitable, more affordable, more effective and more local.