Did you know there can be a potentially substantial difference in costs to you, the merchant depending on how you process debit transactions? On-line is when you have the customer enter their pin # into the pinpad. Off-line is when you swipe the card as if it simply a credit card. To the customer, it doesn't matter how you run the card since they know it is simply coming out of their bank account. To you, however, the cost diffence could be significant. Let's look as some statistics.
National Averages of Debit Transactions based on Average Ticket Size
Retail Signature Debit
Ticket Range Est. % of Debit Trans
<$10.00 78.72%
$10.01-$25.00 75.55%
$25.01-$50.00 51.0%
$50.01-$100.00 40.2%
$100.01-$500.00 31.9%
$500.01-$1000.00 23.1%
>$1000.00 17.8%
Restaurant Signature Debit
Ticket Range Est. % of Debit Trans
<$9.99 83.5%
$10.00-$24.99 68.2%
$25.00-$49.99 55.16%
$50.00-$99.99 39.14%
>$100.00 26.84%
As you can see from the above chart, the larger the size of the transaction, the less likely the customer will use their debit card. They'll put larger transactions on their credit cards that pay them some form of reward and simply pay the bill at the end of the month.
Now let's look at some cost differences. For sake of this example we'll use the STAR debit network which tends to be one of the largest, nationwide. Let's say you're a retailer and your average ticket is $55.00 (nationally 40.1% of your sales will typically be debit). And, your processing rate for card present transactions is 1.59% + $.25 (an excellent rate, by the way and yours isn't likely this low). If you swipe that card for the $55 sale, your costs would be $1.12. If on the other hand, you had the customer input their pin number and it was processed thru the STAR network, your cost would be $.83. Now granted, it's only a $.29 savings but those can add up to HUGE money over the period of a year.
Post any questions or comments that you have here and I'll help you figure it out.
Thanks for reading
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