Understanding Debit Card Merchant Accounts "Rates & Fees" In Canada

An example Debit Transaction rate would be: 12 cents per Debit Transaction. It does not matter whether the Transaction processed was for $5 or $5000 the fee would be 0.12cents for the transaction to take place.

Now some Payment Processing Companies will charge you a Low Transaction rate on your Debit Transactions (like 0.05cents) and a % of your sales (like 0.0025%) that is a quarter of 1 percent. This may seem like a good deal, but rarely is.

Debit Card Merchant Account Example 1:

Debit Transaction at 0.12 cents

576 Debit Transaction that month

Total Monthly Debit Business Volume $13,876.00

Average Ticket: $23.56

0.12 cents X 576 = $69.12 in you monthly Debit Fees

Debit Card Merchant Account Example 2:

Debit Transaction at 0.05 cents + 0.0025%

576 Debit Transactions that month

Total Monthly Debit Business Volume $13,876.00

Average Ticket: 23.56

0.05 cents X 576 = $28.80

$13,876.00 X 0.0025% = $46.94

$28.80 + 46.94 = $75.74 in your monthly Debit Fees

You can see that Example 1 is cheaper by $6.62 even though it may initially look like Example 2 would have been less expensive. Typically, it is always better to have a flat Debit Fee only on your Debit Merchant Account.

The only time the lower Debit Fee + % works in your favor on Debit Merchant Accounts is if you have a very high Debit transactions on with a very low average Debit ticket price.

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