Consumers use credit and debit cards to fuel their daily lives. There is no doubt that your business needs to have the ability to process both credit and debit cards in today’s eCommerce world.  The following information explains everything you need to know about debit card vs credit card processing.Debit vs Credit Card, Payment Processing, Merchant Account

Credit Card Processing

When consumers use credit cards, whether online or in person, they are purchasing the goods or services on an approved line of credit an issuing bank extends them. The issuing bank then pays a merchant, and the purchase is added to a monthly statement for the consumer to pay at a later point in time. The credit card company takes a significant financial risk whenever a credit card transaction occurs – they lay out the money for a purchase with no real guarantee they will ever be paid back. Credit card debt is overwhelmingly considered unsecured debt, meaning no assets back the consumer’s account.

The credit card companies charge a fee to the merchant for resources utilized to process the payment transaction. The fee is typically based on a small percentage of the purchase price. Credit card companies also charge the consumer interest if the purchase amount is not paid in full by a specific date. The advantage of credit card processing is that a lot of consumers have access to one. If you do not offer it as a payment option, chances are they will go directly to your competitors. Credit card processing fees are merely the cost of doing business in today’s marketplace.

Debit Card Processing

When consumers pay with debit cards online or in person, they are purchasing goods or services with money that is directly withdrawn from available funds in their checking or savings account. Entering their personal identification number, or PIN number for short authorizes the withdrawal. The transaction happens in real time, and the merchant will know immediately if the customer has sufficient funds to cover the costs of the purchase amount.

Accepting debit cards can lower than your payment processing fees since the bank’s risks are all but eliminated. Your customer is using funds they have on hand and not putting the purchase on a line of credit. The advantage of accepting debit cards is many consumers don’t have access to a credit card but do have a checking account.

Payment Savvy specializes in providing businesses with the best credit and debit card payment processing solutions available on the market today. Please contact Payment Savvy to review your options, apply for a merchant account, and to obtain answers to your questions. We look forward to hearing from you and working with your company.

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