Debit vs. Credit Cards

[Eagle1]

How does my bank make 3% when I use my debit card?

That is about what I (merchant) pay for every CC or Debit transaction. Not all goes to the issuing bank but it is out of my pocket.

Most people don't think about it but it means raising prices at least enough to cover costs, since everyone likes using cards. Just wait and see what happens if we go cashless...

 

[scootr]

I do too. And yes I’ve had them hacked twice over the years. Both times the bank closed the card, issued a new one, and refunded the fraudulent charges.

Me too. One time for $11k travel package in London. Hello paypal.
Now I carry 2 debit cards on the same account. If (when) 1 gets compromised I report and cancel it while continuing to use the other and wait for a replacement... never skipping a beat. I use these cards for online business so yeah they can get illegally shared. Paypal has always been very good about erasing the fraudulent charges and issuing a new card. My BofA debit card has never been hacked... it been abused but it turns out that was the wife

 

[Jstpssng]

I check my accounts often, to prevent fraudulent activity. One morning I discovered that Amazon had done a query on my main account to see how much money I had available. There is no way they should have had that number; I only used it as an ATM card. I called the CU as soon as they opened and had it turned off.

That's the account which most of my paycheck is deposited to; I pay all of my bills through it. I also have overdraft protection which comes out of my savings account; they could have wiped me out. The bank may reimburse you for the fraud, but you are SOL for any overdraft fees occuring because the money wasn't there when you wrote a check or paid a bill.

 

[Jstpssng]

That is about what I (merchant) pay for every CC or Debit transaction. Not all goes to the issuing bank but it is out of my pocket.

Most people don't think about it but it means raising prices at least enough to cover costs, since everyone likes using cards. Just wait and see what happens if we go cashless...

I've seen people try to swipe for a cup of coffee and the store owner just gave it to them; stating that it would cost more than they would make. Some people will take advantage of that and do it intentionally, but I prefer to pay my own way.

 

[JethroB]

I've seen people try to swipe for a cup of coffee and the store owner just gave it to them; stating that it would cost more than they would make. Some people will take advantage of that and do it intentionally, but I prefer to pay my own way.

I remember a few small businesses that had a minimum purchase of $4-5 to use a card.
On the drink my dad used to say the same about his drugstore soda fountain drinks in that the cost of the cup was more than the drink itself. We could have all the Coke or Sprite we wanted but we had better reuse the same cup.

 

[Eagle1]

I remember a few small businesses that had a minimum purchase of $4-5 to use a card.

At one point it common for small business to pay ~$1 per transaction plus %. Merchant services still has monthly fee to use their system on top of %. Most small business went to higher % rather than per transaction fees.
A dollar fee on a $3 sale is pretty much a complete profit killer.

 

[MossRoad]

Wife and I go to a lot of craft shows, art shows, outdoor events, etc., where small purchases are common. Multiple vendors in tents. Things like that. ALL of them have credit card readers for their phones and prefer that over cash, as they don't have to keep change, it interfaces with their book keeping, etc.

If transaction fees were that much, they wouldn't use them. I'm sure they add in the price of doing business to the price of their products.

I do know of many restaurants that only take cash. I'd like to know the reasoning. I'm pretty sure several of them are anti-establisment don't let the man track me kind of places. That's fine. But I'm also pretty sure a couple of them are doing it because cash is easy to mis-report on taxes. I really doubt much of it has to do with the transaction fees.

 

[Sprinkler Fitter]

They charge the vendor you are doing business with. How do you think that banks can afford to pay 2% back on purchases?

That is about what I (merchant) pay for every CC or Debit transaction. Not all goes to the issuing bank but it is out of my pocket.

Most people don't think about it but it means raising prices at least enough to cover costs, since everyone likes using cards. Just wait and see what happens if we go cashless...

I own a food truck so I know how it works but me using my card to buy something I don’t pay 3%, if they want charge 3% I’ll pay cash

 

[Jstpssng]

I own a food truck so I know how it works but me using my card to buy something I don’t pay 3%, if they want charge 3% I’ll pay cash

You are right, you don't pay. The vendor pays the fee.

 

[Sprinkler Fitter]

You are right, you don't pay. The vendor pays the fee.

That is why I asked how I pay 3% like someone said I pay every time I use my card but it’s the person selling it pays the 3% unless they want to charge 3% more for using a card but like I said that I pay cash