Forums: Discussions for entrepreneurs and small business.

With so many debit cards being issued and now that there are more of them than credit cards, why is it important to ask my customer what kind of a card it is?  How can I train my personnel to ask  and/or know what the card is?  Is there a cost savings for me as a merchant?

Debit card transactions should have a lower processing cost when used in person and the pin is entered. If we are talking about phone orders, it doesn`t matter as they will all have to be run as credit card transactions.
The cost savings of debit transactions are one low fixed per fee transaction versus a flat rate plus percentage fee on credit cards. Most current credit card machines will recognize when a customer is using a debit card and will default to the debit transaction when the card is swiped. If it does not, ask your service provider. The machine may just need programmed. The last business I was involved with saved $300 a month in fees by educating employees on the difference and the financial savings of debit transaction vs credit

Good facttual post from GreenChip.  A few minor corrections:

Most credit card machines will NOT automatically figure out if the card is debit or credit.
The operator must decide which network to `route` the transaction to, either debit or credit.
If no selection is made, the default is `credit`.  This is the case for `signature debit` card, aka `check card`, which is basically a debit card disguised as a credit card by virtue of showing the Visa or MC logo.  A TRUE debit card aka an old fashioned `ATM card` without the V or MC logo will often be automatically routed to the debit network by most machines since that is the only option--that kind of card cannot be processed on a credit network.

Also, true debit which requires a pin pad device (either external or built-in as now featured on many modern machines) is not necessarily for everybody.  The rule of thumb is:  If your average ticket is say $75 or greater, then the investment in a pin pad and expense of encrypting same is well worth it as your payback will come quickly.  If your average ticket is much under $75 or so, then the saviings are far less dramatic and significant; in other words, it doesn`t make much difference cost wise whether the merchant processes the transaction as credit or debit.

If anybody needs more information of debit processing, including the difference between debit and credit, and the difference between signature and pin debit, here`s a resource for you:

http://www.MerchantServices-help.com/debit-card.html

AMSPCS
amspcs@juno.com

Helpful info. Thanks guys.

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Rosanna Tussey
Owner
New Mexico Candle Co.
http://www.nmcandleco.com