Whether you are a large company, an SME or a simple consumer, the impact of the pricing policy related to new debit cards is a matter of debate. Let us explain.
Debit card or credit card?
Let's start with the basics. A debit card is not a credit card.
The first one debits your account immediately upon a purchase.
The second gives you credit in the sense that your account will be debited later. So it's your bank that pays the bill first.
Note that you also have prepaid cards. As the name suggests, you load your card before making any purchase with a predetermined amount.
Until now, Maestro has been the reference brand for debit cards, along with MasterCard and Visa, which largely represent credit cards.
Why two types of cards?
This can be put down to supply and demand. Whether you are young, older, with or without a fixed income, travelling a lot or little... The diverse needs of consumers have led to a variety of offerings.
Behind these maps are financial institutions or financial and technological interest groups. Supply and demand have come together to create brands with an international resonance that have become essential in the private transactions sector and the retail sector.
Since then, thanks in particular to the development of fintechs, other players have appeared.
Who pays?
It is the merchants who pay. These are charged either a fixed fee (the case for Maestro) or a fixed fee and a percentage on the transaction (the case for MasterCard and Visa).
A large merchant such as a supermarket chain can negotiate the rates applied. On the other hand, an independent does not have enough clout to discuss rates.
The debate at the moment is centred around the significant increase in transaction costs applied with the arrival of the new debit cards from MasterCard and Visa. These costs far exceed the fees applied so far.
The impact? Merchants are thinking about favouring cash payments, but this is less certain. In addition, because of Covid, contactless payments are of course still being promoted.
So, plan b. We raise prices to preserve our margins.
Yes, but then, who really pays?
It's you, it's me, it's us.
As is often the case, it is the end consumer who will pay the bill. That's how our financial system is designed.
The merchant, anxious to protect his bottom line, will simply pass on additional fees to the final prices applied.
Which card should you choose?
As with credit, it all depends on your needs and your budget.
If you want to maintain a lot of control over your spending, it's best if you use prepaid cards. This way, there are no unpleasant surprises. You're the one pulling the strings.
For those wanting a little more flexibility, a debit card might do the trick. Your account is debited directly and serves as a safety valve to avoid over-indebtedness.
For those with sufficient means and good cash management, the credit card remains the master. It often includes travel insurance and offers maximum flexibility.
And what about Milenia?
We inform, we advise.
As a responsible partner, we want to represent added value for our customers. We offer balanced solutions that respect our clients' means. Always in the spirit of carrying out their projects but within a framework of trust and transparency.
The same goes for credit cards. In particular, we have an interesting partnership with BonusCard. In the end, it is the responsibility of all of us to be well informed and to choose the formulas that are most in line with our reality and our ability to repay. This, whether it's for a personal loan, a home loan or a debit card.
This is the reason for the articles published by Milenia and the blog on our website. An information service made by people for people.
