You walk into your local corner gas station/convenience store, go straight to the soda fountain, pour a small soda and walk over to the register. Your friendly clerk smiles at you at first until she sees you pulling out your debit card. She realizes that the store profits on your purchase just plummeted. The soda's price of $1.29 was just reduced to approximately $0.89. You however will still pay $1.29. The other $0.40 cents is going to the bank that issued your debit card and the interchange that processes the transaction. Quite an eye opener, isn't it.
Most people believe that the cost of using debit cards is absolutely free as opposed to using their credit card. This is definately not the case. There are many costs hidden to the average consumer, however, painfully visible to the business accepting your cards. I have been employed for a little over a year at a top ten processor. During this time, I have learned a great deal about merchant processing and the costs and tricks involved. The bottom line that I've
concluded is that we are all paying dearly for the priveledge of carrying that piece of plastic in our wallet rather than good old fashion cash.
Here is a brief example of a merchants cost of processing your credit cards:
Monthly Processing Fee: $10.00
Monthly Equipment Rental: $25.00
Monthly PCI Compliance Fee: $15.00 (Supposedly guarantees no security breaches of customer information)
Monthly fixed costs total: $50.00 (This is before any transaction fees)
Typical Transaction Costs:
.75 % to 1.49% of total sale
$0.05 to $0.35 Authorization fee per transaction
$0.05 to $0.75 Transaction fee per transaction
Lets look at an example.
$100.00 Purchase X .075 = $0.75
Authorization fee - $0.20
Transaction fee - $0.20
Total transaction fee - $1.15
For those of us that have been using our debit cards for just about all our "cash" expenditures, you can definately see where spending 1 or 2 thousand dollars a month can add up to tremendous fees. Of course, we are normally oblivious to this because "we" aren't paying this fee. The retailer we are dealing with is. Well WAKE UP!!!! Where do you think the retailer is getting the money to pay these fees?
I'm not going to go into the cost of processing regular credit cards, but, keep in mind that they are 2 to 4 times more costly than processing a pin-entered debit card.
I have decided to do my part by carrying and paying by cash whenever possible. I know that I will not make enough of a difference to effect the retailer's cost, but at least I'll feel better about it.
Then next time you view a commercial on tv with some bank telling you about the convenience of using a debit card, determine whether or not the additional cost is fair to you or your retailer.
