We will start with debit card profitability. Depending on the size of the bank, the type of transaction, and the network, banks make an average of $0.34 per use. Banks over $10B in asset size make closer to $0.23 per transaction, and banks under $10B are about $0.52 per transaction.
Average Debit Card Fees (2025)
The average interchange rate of an exempt debit transaction is 1.21% per transaction or $0.51. The average debit card interchange of a covered transaction is lower, at 0.47% or $0.23. All of these rates are significantly lower than the average credit card processing fees.
So every time you swipe your debit card, you're issuing bank is making money and their other payment services they provide. And the third leg are fees. So overdraft fees, account fees, wire fees, et cetera.
The majority of revenue for mass-market credit card issuers comes from interest payments, according to the Consumer Financial Protection Bureau. However, interest is avoidable. Issuers typically charge interest only when you carry a balance from month to month. Pay your balance in full, and you'll pay no interest.
With debit cards, you may need to enter your PIN (personal identification number), although many debit cards can be used to make purchases without a PIN. Debit cards draw the funds immediately from the affiliated account.
Credit card processing fees for payments made in person are typically between 0.7% and 3.4% of the total transaction amount and 0.4% – 1.7% for debit cards. Transaction fees for online or phone payments will be slightly higher due to the increased risk of fraud.
They make money from what they call the spread, or the difference between the interest rate they pay for deposits and the interest rate they receive on the loans they make. They earn interest on the securities they hold.
Do merchants pay a fee for debit transactions? Yes, you can expect to pay a fee for all debit transactions. The fees consist of a combination of the interchange and assessment fees that the card issuers and networks charge as well as service fees charged by your payment processor.
The main way that banks make money is by charging people or businesses to borrow from them. Banks have access to vast swathes of deposits that they can lend to others for a fee. The difference between the interest they need to pay on deposits and the interest they earn on lending is known as “net interest income”.
Debit Cards make transactions fast, easy and convenient to use. Debit Cards have the ability to give you cash. They double up as ATM cards and allow you to withdraw money from an ATM. Therefore, working as an emergency fund for you.
They earn revenue every time you use your debit card, yes. They get paid interchange, or "swipe", fees. The number that gets thrown around the most is an average of 1.7% of each transaction, but that value varies widely, depending on the value of the transaction and the merchant where you are shopping.
Debit cards make it easy to complete purchases without using cash, writing checks or charging to credit. Paying with a debit card won't lead to interest charges because it draws money from your checking account. Safeguarding your debit card number and PIN is just as important as protecting your credit card information.
Every time a card payment is made, you'll pay a transaction fee, which will typically be less than 3% (it's higher for Amex cards). If you've paid for your card reader upfront, this transaction fee is often fixed, although in-person payments are usually lower than those made online.
Interest income is the primary way that most commercial banks make money. As mentioned earlier, it is completed by taking money from depositors who do not need their money now. In return for depositing their money, depositors are compensated with a certain interest rate and security for their funds.
Banks make money by charging fees for checking accounts. Your bank might charge you maintenance fees or fees for using an ATM outside the bank's network. You may be able to avoid some fees. For example, a bank might not charge a maintenance fee if you make a certain number or amount of direct deposits.
The banking industry is highly competitive. Banks strive to differentiate themselves by offering attractive credit card and personal loan products. By doing so, they can attract new customers and retain existing ones, thereby increasing their market share.
If you overspend, you could get hit with costly overdraft fees: If charges to your debit card cause your checking account balance to go negative, you could suffer overdraft fees and other steep charges that far exceed the potential costs of using a credit card.
Can you track someone who used your debit card online? While you can't personally track someone who used your debit card online, banks have systems to trace such activities. If you report the fraud, they can investigate the source and potentially work with law enforcement to find the perpetrator.
You won't be able to buy things. Some banks and credit unions have overdraft protection. This lets you use your debit card even when there's not enough money in your account. But you might have to pay an overdraft fee and interest.
Both debit and credit cards require sellers to pay a range of fees every time a transaction occurs because a lot of entities are involved whenever a card is used—and all of these entities want something in return for their services.
It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.
Earning from Credit Cards
Credit cards are another large revenue stream for banks, through interest and fees like those for late payments, going over your limit, and using your card in other countries.