Re:The debit card fee driving US banks crazy
by dangrossman on Tuesday January 27, 2015 @04:43PM
(#8956187)
This applies to debit cards when used online, too.
Say you charge 1000 customers using a Visa/MC debit card an average of $50 per month each. Use a flat rate processor like Stripe/PayPal (2.9% + $0.30 per transaction) and you'll pay $1750 a month in fees. The interchange rate would only be $235 a month in fees. My merchant account provider charges 0.04% + $0.10 over interchange as their markup, so that volume would cost $355 a month. I have a few other fees to pay with that account, but they don't come close to that 5X difference.
For my SaaS businesses, regulated debit is 26% of the card mix. Flat rate processors are making a killing on their debit markup.
Say you charge 1000 customers using a Visa/MC debit card an average of $50 per month each. Use a flat rate processor like Stripe/PayPal (2.9% + $0.30 per transaction) and you'll pay $1750 a month in fees. The interchange rate would only be $235 a month in fees. My merchant account provider charges 0.04% + $0.10 over interchange as their markup, so that volume would cost $355 a month. I have a few other fees to pay with that account, but they don't come close to that 5X difference.
For my SaaS businesses, regulated debit is 26% of the card mix. Flat rate processors are making a killing on their debit markup.