Services charges are charged to debit card holders for using the card as a mode of payment. There are many types of service charges implied on debit cards that generally originate from two sources; the issuing bank or institution and the merchant. Banks and financial institutions that issue debit cards have a pre-defined schedule of fees for every plan that they offer.
Annual or monthly maintenance charges, ATM fees, fees to use the card on the point of sale which are imposed by the bank,overdraft fees and charges on the frequency of usage are some of the major charges that the customer has to bear. In a debit card transaction, not only the customer is imposed with some charges, but even the merchants have to pay some charges to the banks or the processing networks. Here are few other charges that may be involved in a debit card transaction:
Interchange Network Charges
Internet network charges or interchange fees is the amount charged to the merchants by transaction processing networks such as Visa or MasterCard. These fees are charged on every transaction that is sent through the process across these networks. The payments that are transferred to these networks are passed on to the bank of the receiver with the exception of some amount which is the interchange fee. The charges for online debit systems is almost half that of the payments processed through the offline system.
Merchant surcharges are those fees that are implied to the customer at the point of sale. In United States, merchant surcharges are prohibited in 10 states but can be implied by the merchants in the other states. The reason why merchant surcharges were brought up is because of the difference between interchange fees on online and offline debit systems. These charges would take away a substantial amount of profit from the merchant and hence the merchant surcharges came into existence.