PIN-debit cards interchange costs rise

The costs merchants pay on debit card transactions to cover the electronic interchange of financial data across the debit networks continues to rise. According to Digital Transactions, an industry magazine, the cost of the average $50 PIN-debit sale a small retailer quadrupled over the past decade (from '96-2007).

This means that merchants accepting PIN debit card prepaid or regular on typically the Visa or Mastercard branded networks paid an average of 40.1 cents. Ten years ago that amount was less than a dime.

What does this mean for consumers? It means the gap between the interchange rate charged to retailers for signature transactions vs. PIN transactions is narrowing. So they have less incentive to prefer and guide consumers to PIN transactions. They also may raise prices to recoup their costs.