Debit card transaction rates and fees are usually cheaper than credit card transaction fees, but it is still important to understand what they are and exactly how much they are costing your business. Some debit transactions cost less, depending on the type of debit transaction (PIN vs. Signature), card brand, and ticket size.
PIN Debit is (Generally) More Expensive Than Signature Debit
It is important to note that running PIN debit transactions costs more in interchange than signature debit transactions. This is because PIN debit transactions must be routed through a PIN debit network, which charge debit network fees. Alternatively,signature debit transactions are routed through the card brand’s network, and therefore do not charge debit network fees. Instead, the card brands charge debit interchange rates, which tend to be cheaper for small-ticket transactions.However, since PIN debit fees are primarily flat fees and the interchange rates are generally lower, if a merchant runs more large-ticket debit transactions than small-ticket ones, PIN debit can actually be cheaper in the long run.
Debit Interchange Rates – Regulated vs. Unregulated
Due to the Durbin Amendment, passed in 2011, debit interchange rates and fees are divided into two categories: regulated and unregulated. For a bank to fall under the “regulated” category, they must be worth more than $10 billion in assets, while the opposite is true for the unregulated category–if the issuing bank has less than $10 billion in assets, they fall into the “unregulated” category. For regulated debit, all PIN transactions are 0.05% + $0.21, with a fraud adjustment of $.01 for higher risk transactions. For unregulated PIN debit, see the chart below.
