Debit Card Fees Drop on October 1

image courtesy of zedomax.com

Many e-retailers* are not aware that the Fed (US) will drop debit card fees starting on October 1. According to a recent survey published on September 9 by IRNewsLink, the Fed will be capping the debit interchange at 21 cents per transaction plus .05% of the transaction amount.
*You are an e-retailer if you have a brick-and-mortar store AND you also sell online, or if you sell strictly online.

What does this mean for you? It may be wise to begin steering online customers away from using credit cards, which will cost more than accepting debit cards.

You'll have to weigh the benefits and judge consumer reaction if you decide to entice customers to use debit instead of credit. How much impact will depend on your transactions specifics like the percentage of debit vs. credit cards and the average sale amount. As a buyer, I'm more inclined to use my credit card since I'm protected against any fraudulent charges. If I use my debit card, I risk my bank account being drained if it's stolen!

If you decide you want customers to use more debit than credit, try what some e-tailers are planning to do:

• offer a discount for using a debit card
• if a customers uses debit, give your savings to a local charity
• have a note during checkout that states "using debit instead of credit helps keep our prices lower"
• begin to offer alternative payment options like PayPal, Google Checkout, or WorldPay.

The more payment options you can offer, the better. Less reasons to bail at checkout means more dollars in your pocket. And the fees may average out overall; you may not need to make any big changes. But it's worth a look to see if your business can benefit by this fee reduction.

The Internet Retailer Online Payments Table graphic from the survey.