Debit Card Charges

It seems that banks are constantly coming up with new ways for us to pay bills and withdraw money. First, there were paper checks, and credit cards and ATM cards and debit cards linked to bank accounts, and now ACH electronic funds transfers. Of course, with each new payment method is a new series of costs passed on to account holders and merchants. The smart merchant will weigh the advantages and disadvantages of each method with regard to safety, liability and cost of treatment and to develop its business practices to maximize profits without compromising customer service.

This article will help merchants this by comparing two very similar charges to pay by debit card and bank account ACH methods-direct-flow. He will explain how the customers who pay by debit card switching to direct debit transactions can significantly reduce merchant processing costs.

What is a debit card?

A debit card is a bank issued card that allows its user to access funds in their account to pay for goods or services. A debit card acts like a credit card, and is often associated with a brand of credit card like Visa or MasterCard, the difference being that funds are immediately deducted from checking or savings accounts of cardholders Once purchased.

What is Direct-flow?

Direct debit is an easy way to deduct a payment directly to the bank account of a client. It uses the principle of a paper check, but it takes at the next level with the electronic transfer of funds. With direct debit, the need to write paper checks is completely eliminated. Your customer simply gives you permission to take funds directly from his savings account or checking and transfer them to yours. Direct-flow is typically used for automated billing of recurring transactions, such as monthly rent, so that the written authorization of transfer of funds is required only once, and customers no longer need to write checks month. But it can also be used with an online payment gateway to allow your customers to buy products or pay bills directly from checking or savings account instead of a credit card or flow.

What are the differences between a debit card transaction and a direct debit transaction?

transactions by debit card and direct debit transactions are at their core the same, each authorizing a transfer of money directly from the cardholder's account on the merchant's account. And the point of view of consumers, they are exactly the same.

From the perspective of the merchant, but they are very different. Transactions are processed by different networks, and the cost of processing payments differ substantially.

transactions by debit card require the merchant to obtain a merchant account and credit cards often sign a long term contract and pay a fee to open an account. transactions by debit card are processed by the same network as the credit card transactions, and funds are deposited, minus a commission (called the discount rate "), a merchant account. The discount rate for debit card purchases are generally lower than for purchases by credit card (because the bank is taking less risk with a debit card that deducts funds immediately from a bank account by credit card.) But there are processors that do not haggle extend this reduction to their customers. Typically, 2-3% of the transaction, plus a fee of 30 cents investigation will be deducted from a payment by debit card and the balance will be deposited into the merchant's account.

Direct debits using the Automated Clearing House (ACH) to transfer funds from one bank account to another. Thus, you can use your regular business checking account for direct debit transactions. You DO.