Debit Cards Gains in eCommerce

Apply Online Now

According to Javelin Research, alternative payments for online shopping will double by 2015.  Credit cards will continue to be the primary method of online payments for US customers for the next 5 years.  However, credit cards will lose ground as alternative payment methods continue to make substantial inroads into ecommerce.

Ecommerce will increase to $443 billion in 2015 compared to $249 billion in 2010.  This is a compounded annual growth rate of 12.2%.  Ecommerce share of total retail sales will increase to 9.2% in 2015 compared to 6.4% in 2010

Credit cards will still comprise a large part of online sales, growing from $99.9 billion in 20105 to $163.6 billion in 2015.  This is a compounded annual growth rate of 10.4%.  However, by 2015, credit card sales will account for 37% of sales, compared to 40% in 2010.

Debit cards are being used more online with volume to growth to $124.4 billion in 2015, compared to $71.8% in 2010.  The compounded annual growth rate is 11.8%.  Younger buyers particularly like debit cards because they have grown up using the cards.

For more information, contact

High risk merchant accounts have similar pricing component as non-risk high risk accounts.  The main difference in pricing elements is reserves, which are required for high risk accounts but are generally not for a non-high risk accounts.

Here are 6 elements which comprise rates for high risk merchant accounts.

  • Discount rates.  A discount rate is a fixed percentage of the value of each transaction processed through a high risk merchant account.  Generally, an acquiring bank that accepts a high risk merchant account will charge a premium to cover the increased risk associated with processing.
  • Transaction fees.  A transaction fee is a flat amount per transaction.  High risk merchant accounts include more extensive fraud fighting tools, which can drive up the cost per transaction compared to non-high risk merchant accounts.
  • Monthly statement fees.  The monthly fee is usually similar for high risk merchant accounts and non-high risk merchant accounts.  Be wary of companies which charge expensive monthly fees because these are simply extra profit to the provider and no benefit to the merchant.
  • Gateway fee.  A gateway is a secure connection between high risk merchant accounts websites and the processing network.   In some cases a high risk merchant will connect directly to a payment processor.  In this instance, no gateway fees apply.
  • Setup fees.  In most instances high risk merchant accounts in the US do not have a setup fee.   Some international banks assess a small setup fee once the high risk merchant account is approved, before live processing begins.
  • Reserves.  Reserves are funds set aside against potential chargebacks in high risk merchant accounts. Reserves for a high risk merchant account range from 5-10%.  Reserve accounts can be renegotiated once high risk merchant accounts have established a payment processing history with the bank.

For more information, contact

High risk merchants are the leaders when it comes to implementing successful payment processing technology. 

Companies are classified as high risk merchants because of the greater likelihood of chargebacks and fraudulent transactions associated with particular industries or business models.  Because of this, high risk merchants benefit greatly by offering alternative payment options in addition to card processing.

Electronic checks, of course, are a good alternative payment option for high risk merchants.  Electronic checks can be processed either through the ACH payments network or by using Check 21 technology.  The decision of which to use is based on the particular needs of each high risk merchant.  High risk merchants can capture 8-20% more sales simply with the addition of electionic checks as a payment option.

Another excellent alternative payment option for high risk merchants is online PIN debit.  This exciting new payment option allows consumers paying with debit cards online to input a pin number.  For merchants, the pin based transaction is much more difficult for a consumer to dispute.

Yet another good alternative for high risk merchants is to accept payments from buyers through what is known as a “push payment”.  At checkout, buyers using this payment option are automatically directly to their online banking system.  After logging in, buyers authorize the payment be made or “pushed” from the buyers’ bank account directly to the merchant.  This form of payment is very difficult for a buyer to dispute and chargebacks are negligible.

For more information on alternative payment processing for high risk merchants, visit

The Federal Reserve released results from a major study of US payments.   As one would expect, the study confirms that electronic payments are increasing,  Paper checks are decreasing as more checks are being converted to electronic transactions.

Over 75% of non-cash payments were performed electronically in 2009, an increase of about 66% from 2006.  Electronic payments of all types increased 9.3% per year, to 84.5 billion in 2009.

Debit cards continue to be the most popular form for electronic payments and accounted for 35% of non-cash payments in 2009.  Debit cards usage grew by 14.8% annually over the past 3 years, from 25 billion in 2006 to 37.9 billion in 2009.  ACH made up 18% of payments and credit cards were at 20%.

Paper checks accounted for 22% of all payments.  Paper checks written and paid as checks ( not converted to electronic transactions), fell to 24.4 billion in 2009 from 30.5 billion in 2006. The report estimates that 96% of checks paid are now cleared electronically, primary due to Check 21 image exchange, an increase of 43% in the last 3 years.

Prepaid cards are another fast growing payment segment.   Prepaid card transactions were 6 billion in 2009, almost double the 3.3 billion transactions reported in 2006.  General-purpose prepaid cards, transactions increased from 300 million in 2006 to 1.3 billion in 2009 and accounted for 22% of all prepaid volume.

For more information on innovative payment processing solutions, visit