I have searched on here and haven't found an answer yet. I'm curious why certain apps like CashApp can accept a debit card with no fee to the user. Doesn't the bank need to pay the Discount Rate, or is that only for accepting credit cards?

Or, are all of these apps taking a ~3% loss when accepting debit cards and they're ok with that to get users?


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    I’m voting to close this question because it is not about personal finance.
    – littleadv
    Commented May 15 at 0:01
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    The simple answer is "cost of doing business", like advertising or any other operating cost. It's budgeted for, it's accounted for, and the business pays what's necessary to bring in and retain the customers who are on average producing enough profit to cover it.
    – keshlam
    Commented May 15 at 0:42
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    It's not 3%. In the US, per the Durbin Amendment, any mid- to large-size bank gets 21 cents + 0.05% on debit.
    – user71659
    Commented May 15 at 5:21
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    Cash App (and the like) are personal finance tools, and questions about how they work are on-topic.
    – Ben Miller
    Commented May 15 at 17:15
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    @littleadv This is not really a question about corporate finance. We get questions here periodically about how merchant fees work, and this is along the same lines. Also, this question is about assessing the sustainability and legitimacy of a personal finance tool. We often tell people to be wary of free services where it is unclear how the company makes money. The question posed here is legitimate, and is of interest to anyone using their services in their personal finances.
    – Ben Miller
    Commented May 16 at 1:41

1 Answer 1


Whether to price some fees separately is a business decision

A business sets the price based on various factors. This includes competitiveness in the market, cost, long-term business strategy, public relations, etc.

Debit card processing fees are just one kind of cost. Businesses can choose to include it in their price, or list it as a separate fee. This goes for other costs, related to payment processing or not.

This also applies to optional "addons", like paying with a debit card or a different method. A business can choose to charge the addon separately, or to offset the cost equally to every customer regardless of whether the customer uses the addon. Again, some possible basis for such a pricing decision are listed in the first paragraph. Cost accounting is one knowledge domain that businesses rely on to make such pricing decisions.

A list of examples regarding whether an addon is priced separately:

  • While most airlines in the US charge checked bags separately, SouthWest includes the service in their ticket price, regardless of whether you check bags. But checking bags cost money (management personnel, additional weight, etc.). Southwest and other airlines in the US have made difference pricing strategies regarding checked bags.
  • Starbucks currently offers "free" wifi. To put it in a different way in terms of pricing, Starbucks includes the cost of providing wifi services into the price of their coffee, no matter the customer uses the "free" wifi or not. On the contrary, before 2008, Starbucks charged the wifi service separately. Starbucks has different pricing strategies for the same wifi service before and after 2008.
  • Most auto insurance policies in the US are priced regardless of how much the insured drives when it's under a reasonable limit. Metromiles offer policies that charge based on the mileage. The more the insured drives, the more on average the insurance carrier has to pay for claims. Metromiles and most other US auto insurance carriers have made different pricing decisions regarding the mileage.

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