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How do banks make money off of debit cards?

I mean, other than ATM charges, how do they profit from debit cards? since they don’t operate with interest and take money directly off of your account?

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7 Responses to “How do banks make money off of debit cards?”

  1. Ralfcoder said:

    They pay you almost nothing for interest on your account, and loan it out at much higher rates. Plus, some debit cards can be used as credit cards, so they can charge you interest on the money loaned in that transaction.

  2. foilwrapped2000 said:

    The businesses that accept debit cards have to pay a certain percentage fee for accepting them. Credit cards are considerably more, where as Debit cards are only like 2.5% of the item value.

    You dont pay the fee. The fee is included in the items price and the business your buying from pays the bank. To you, its just like paying cash.

  3. Spock (rhp) said:

    merchants pay fees to the bank when they accept a debit card. the amounts of these fees and terms of acceptance of debit cards are negotiated between the bank and the merchant.

  4. Becca said:

    A lot of people have over drafts which have very high interest rates attached with them. Even if someone does not want an over draft, if they need it, it is readily available to them so if they need it, which people generally do.

  5. Philosophicist said:

    As well as the above answers, many people go overdrawn and the banks charge you heavily for this.

  6. Art effin' Vandelay said:

    Other than service charges at the ATM, which you have identified, a bank doesn’t make money from transactions with a debit card. They are provided solely as a convenient way for a client to access their account funds — and they offer a cheaper, more secure method of making a payment from your account than clearing a check that you have written.

    As far as merchant charges for transactions (described in other posts); these are not charged/earned by your bank. They are charged by the point-of-sale vendor (network) that the merchant uses at their terminal to run the transaction.

  7. SmartA$$ said:

    There are 3 major sources of income for the banks from debit cards:

    1, You already mentioned ATM fees

    2. overdraft fees. Since its so easy to swipe your card and go, people are more likely to overdraft their account and the bank will nail you with fees.

    3. Merchant processing fees. When you use the card as a credit card (meaning you sign for it instead of using your pin), the store pays about 3% of the transaction amount in fees for processing the transaction. Some of that money makes its way back to the bank.

    They also profit indirectly from it. By offering the convenience of a debit card, they attract more customers. More customers means more money deposited into their accounts, which means they have more money available to lend out (at higher interest rates).


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