Most merchants can process both credit and debit cards. The two work very differently, though, for both the customer and the merchant. For the customer, those differences are obvious. The source of the funds on a credit card is an account the consumer holds with that company. It’s often an agreement to borrow money from that company and pay it back. A debit card, though, gets its funds from a bank account. From a processing perspective, that difference is less obvious.
Credit Card Processing
When a customer chooses to use a credit card to make a purchase at your store, the processing takes place through the major digital networks of each credit card company. The payment processor sends the details to a credit card network like Visa or MasterCard, then the card’s issuer accepts or declines the transaction. Naturally, the entire process takes only a matter of seconds. Interchange fees on a credit card transaction tend to be higher than those on a debit card, and those fees increase with web or mobile credit card transactions.
Debit Card Processing
When a customer swipes a debit card, the data can go through Visa or MasterCard, but it can also go through other options like Interlink, STAR Network, or Maestro, just to name a few. That data is then forwarded to the issuing bank, and then the transaction is either approved or denied. Debit cards have a unique set of regulations that govern payments. Processing costs are lower, but the amount depends on whether the card is regulated or unregulated. It may also depend on the total amount of the transaction. Additionally, the smaller the bank, the more likely a PIN or signature will be required, which can affect the fee structure.
What works for your company will depend a bit on the differences between payment processing solutions and what forms of payment your company currently accepts. Search around to find the best payment processor not just for you, but for your customers as well.
Contact Y2Payments today at 888-693-1850 to learn how we can help provide you with a superior payment system.