Do Merchants Pay a Fee for Using Debit Cards?

by Sara Melone - Updated September 26, 2017
Merchant accounts allow businesses to accept debit payments online or by phone.

Virtually every business that sells any type of goods or service requires the ability to accept credit card payments. A merchant account is a specialized type of account that allows a business to accept credit card payments. A merchant account can also be used to accept debit cards that display a Visa, MasterCard, American Express or Discover logo. Merchants are typically charged a fee for the ability to accept debit card payments.

Merchant Account Fees

Most merchant account providers charge the merchant a monthly fee for access to the merchant services. Monthly fees can vary depending on the service provider. A merchant account through your local bank may cost anywhere from $15 to $30 per month, while an Internet-based merchant provider such as Intuitpayments.com indicates their monthly service fee is $12.95, as of 2010.

Payment Discount Rate

Every merchant account is charged a fee known as a discount rate. The discount rate is charged on every credit or debit card transaction that is processed on behalf of a merchant. According to Website Marketing Plan, the discount rate is calculated as a certain percentage of the total transaction amount. The discount rate may vary depending on the type of transaction and the merchant provider, and it typically ranges from 1 to 2.5 percent of the total transaction amount.

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Transaction Fees

In addition to the discount rate, most merchant providers also charge a transaction fee for each transaction that involves a debit or credit card. Depending on the terms of the contract, a merchant can expect to pay as little as 5 cents per transaction up to 35 cents per transaction.

Minimum Fees

If a business does not meet the merchant service provider's minimum monthly sales amount, the merchant provider may charge a monthly minimum fee. Monthly minimum charges typically range from $15 to $40 per month.

Batch Fees

The majority of merchant service providers require merchants to close out their transactions several times a week. Closing out transactions requires a merchant to log into a specialized payment gateway and finalize payment transactions so the funds can be transferred into the business bank account. Most merchants must pay a batch fee to cover the cost of the software and batch payment processing network.

About the Author

Sara Melone is a mother of three and a graduate of UNH. With prior careers in insurance and finance, photography, as well as certifications in fitness and nutrition, Melone draws directly from past experience and varying interests. She contributes with equal passion to birth journals, investment blogs, and self-help websites.

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