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On a $100 purchase, VISA and MasterCard impose processing fees of $1.49 plus whatever processing fee is imposed by the credit-card intermediary. The fee is a percentage of the transaction, rather than a flat fee, although I think there is a minimum of about $0.25 to use VISA/MasterCard - and the fees are identical for both Credit Card and Check Card transactions, even though credit is not being extended with the Check Card. VISA and MasterCard prohibit merchants from imposing a surcharge to the customer for using Credit or Check Cards, except for a handful of exceptions like government agencies.

On a $100 purchase, a PIN-based debit transaction has a processing cost of $0.09. Unfortunately, a few merchants (i.e. fast-food outlets) impose surcharges of around 50 cents which pay for the rental cost on the Point-of-Sale terminal and for the 9 cent transaction-processing fee. They are allowed to impose surcharges by the PIN-based POS networks.

Some Check Card issuers like USAA Bank and US Bank provide rebates on Check Card transactions because they choose to pass on to the customer the portion of the 1.5% fee that is being collected from the merchant.

By contrast, PIN-based transactions don't have a huge markup other than the 9-cent processing cost.

In fairness, one weakness in the merchants' argument is that while they correctly note the high cost imposed by VISA and MasterCard vis-a-vis the PIN-based debit transactions, it is difficult to get sympathy from customers since they won't necessarily receive lower retail prices by using PIN-based cards....and merchants don't necessarily want to deal with even more currency and coins.
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