Debit card network gives companies a way to deliver instant funds electronically. It’s an infrastructure that enables users to enter a PIN number and have money instantly withdrawn/transferred.

Card Associations- Visa and MasterCard have associations. The banks pay membership fees to the associations and can then issue Visa and MasterCard branded cards. The associations process the transactions, and earn a fee to do so. Risk against credit card fraud is spread among associations, which provide payments technology around the world connecting businesses, consumers, banks etc. The associations do not issue credit, therefore have no risk assoiciated with consumer debt.

Discover and American Express issue their own cards, and assume related risk.

A merchant processor handles the indiviual transaction processing.
The merchant, well, you know what you do!

The merchant must use a processor. The processor is the merchants connection to accepting all types of card payments. A processor can also be a card issuing bank, though this does not necessarily equate to cost savings. A merchant with pinpad in which consumer enters pin number bypasses the card association (and their fees) by instead routing the transaction through the alternative debit network. The debit network has a different set of fees.

If consumer signs the receipt instead of entering pin number, using their debit card, the transaction is a signature debit, which goes through normal channels.

Think of processing as a highway with toll booths. You must stop here, decide where you’re going, and pay a fee to be routed in that direction. You have tolls with the processor, the card associations, card issuing bank (MOST MONEY HERE), and sometimes the debit network. Everybody pays the tolls rgeardless of where you set up your merchant account. That’s because they are different types of tolls, so even if you get a merchant account at a bank, you still pay each fee in the system.

What’s the cheapest way to get through the system? It changes all the time. Solutions like CenPOS for larger operations automatically find the least cost way for any given transaction, and can be adjusted based on merchant decisionable risk requirements.