Question

You own a business. Your card reader fee will be 2.65% of the total transaction amount for any credit or pre-paid card-present payment types. Your fee will be 0.75% + $0.07 per transaction for debit card-present payments. What type of card should you encourage customers to use: debit or credit? Explain your reasoning.

Answer 1

As a business owner, you should encourage customers to use debit cards. Here's why:
1. Lower Fees: When customers use a debit card for a card-present payment, the fee is 0.75% of the total transaction amount plus $0.07 per transaction. This is generally lower than the fee for credit or pre-paid card-present payments, which is 2.65% of the total transaction amount. By encouraging customers to use debit cards, you can minimize the fees you have to pay for each transaction.
2. Cost Savings: The lower fees associated with debit card-present payments can result in significant cost savings for your business over time. By encouraging customers to use debit cards, you can keep your expenses down and potentially increase your profitability.