Debit Card Processing Fees: A 2024 Guide for Small Businesses

Each time a customer uses a debit card at your business, you’ll pay a debit card processing fee to have the funds moved from their checking account to your business’s merchant account. How much it costs depends on interchange rates, your payment processing company’s markups and their payment processing model.

Here’s a breakdown of those factors and the institutions involved in how debit card processing works.

How much do debit card processing fees cost?

Debit card transactions cost an average of 34 cents (or 0.73% of the transaction total) in interchange fees, according to the Federal Reserve. Interchange fees, which go to the card-issuing bank, usually make up the bulk of the processing cost. However, payment processors also charge their own markups on top of interchange. These vary from one provider to the next.

What determines your debit card processing fees?

A handful of factors impact how much debit card processing costs your business. Here are the major ones to know.

Interchange fees

Interchange fees, which make up a large portion of debit card processing fees, are determined by card networks and paid to the card-issuing banks. These fees vary depending on the following:

• Whether the transaction is regulated or unregulated: Debit card-issuing banks that hold more than $10 billion in assets are subject to strict transaction regulations. These banks cannot legally charge more than 0.05% plus 21 cents (and an additional 1 cent in some cases) in interchange fees per debit card transaction. Those regulations do not apply to banks that hold less than $10 billion in assets.  

• Whether the debit card is present: Interchange fees for card-not-present transactions are usually more expensive than for card-present ones, due to the additional security risk. Card-present debit card transactions typically require the customer to either sign a receipt or provide their PIN number as an added layer of security. 

• Your business’s industry: Each business is assigned a merchant category code depending on its industry. Interchange rates vary from industry to industry and, in particular, are higher for ones considered high risk. 

• What the current interchange rate is: It’s also important to note that interchange rates often change over time — sometimes even twice per year. For example, Visa updates interchange fees semiannually. 

Payment processor markups

On top of interchange fees, your payment processor will add a markup for facilitating the debit card transaction. The amount will depend on your processor’s pricing model. For the most part, this takes one of two forms for small businesses: interchange plus and flat rate.

Flat-rate processors combine your costs into one fee — usually around 2.6% plus 10 cents for in-person transactions — regardless of the underlying interchange fee. If you use a flat-rate processor, expect to pay the same amount for debit card transactions that you pay for credit card transactions.

If you work with an interchange-plus processor, however, debit card transactions should be less expensive to process. That’s because interchange-plus processors pass interchange rates, which tend to be lower for debit versus credit card transactions, to the business and charge a consistent markup on top of it.

Interchange-plus processors are transparent about how much that markup costs, whereas the bundling that flat-rate processors do makes this harder to tell. If you’re unsure of how you’re being charged or have specific questions about your business’s debit card processing fees, reach out to your payment processor for more information.

Debit card processing fee examples

Here are some examples of what payment processing companies charge for debit and credit card transactions.

A version of this article originally appeared on Fundera, a subsidiary of NerdWallet.

Dan Marticio contributed to this article.