Satisfying your customers often means providing options. Offering the right payment options is vital when it comes to your core products and services.
Debit cards have grown to become an essential payment option for small businesses to offer their customers.
Today, retailers everywhere know that accepting debit cards is an essential component to serving their customers. found that in the US, debit cards account for 20% of eCommerce spend and 35% of in-store purchases.
Despite the rise of alternative payment methods debit cards are expected to maintain their strength in North America. Worldpay’s 2018 that in 2022 debit cards will retain a 19% share of consumer spending online, with 32% of spend in-store.
Let’s take a look at why accepting debit cards makes sense for businesses like yours.
The advantages of debit card processing
The enduring popularity of debit cards stems from their remarkable utility. Indeed, debit cards offer a wide range of benefits to consumers:
- Purchases are withdrawn directly from consumer checking accounts
- Debit cards have fewer and lower fees than credit cards
- Consumers can access electronic payments without incurring debt
- Debit cards are easier to obtain for those with poor credit histories
Accepting debit cards also benefits merchants. Your business may offer the best product or service at the best price. But if you don’t let your customers pay the way they want, they’re very likely heading to your competitor. You’ve worked far too hard to lose customers over their payment method.
What are the differences between debit cards and credit cards?
For consumers, the difference between debit cards and credit cards is how payments are funded.
As the names imply, “debit” cards take money out of an account—typically a checking or savings account held at a financial institution. Funds are simply debited from customers’ accounts and the transaction amount deducted from their balance.
Similarly, “credit” cards rely on a financial institution extending credit to the consumer. Financial institutions extend credit to consumers who make purchases at businesses that accept credit cards. Credit terms vary with credit extended either on a revolving or fixed basis, predetermined fees and interest rates, and repayment schedules that meet the needs of both the lender and the consumer.
How is debit card processing different for merchants?
Debit card processing differs from credit card processing in six key ways:
- Business that accept debit cards are prohibited from establishing minimum payment stipulations. Credit cards allow merchants the option to establish a $10 minimum purchase transaction.
- Merchants are prohibited from attaching any surcharge for accepting debit card transactions. Regulations vary by jurisdiction and are always subject to change. Talk to your payment processor about all regulations affecting your business.
- The process of settlement of funds to merchants has historically been faster for debit card transactions relative to credit cards. That said, like most things, technology is changing and settlement times are shorter than ever.
- Debit cards are processed differently than credit cards with regard to fees, like the interchange fee. The introduced limits on how debit card transaction fees were applied in an effort to reduce the costs of acceptance to merchants.
- Debit card fees can differ based on whether the issuing bank is regulated or unregulated which is a matter of the financial institution’s size (over or under $10 billion in assets). Your payment processor can help you understand these and other factors that determine interchange and other fees.
- Debit card transactions are routed on different networks than credit cards. PIN-based debit networks are used to route ATM withdrawals and debit card transactions between consumers and merchants.
A future of secure payment innovation
The landscape of payments is evolving rapidly with disruptions from all sides and innovations emerging at blinding speed. That makes it more important than ever for small businesses to select a payments partner to provide for your needs today—and in the future.
If you’re at the stage of your business journey where it’s time to set up payments, obtaining debit card processing is essential. Worldpay helps navigate the world of payments, crafting solutions that best serve your business. We help merchants of all sizes with debit card processing, EMV-compliant hardware, mobile payments and more.