lhl12 wrote:I follow all your math, but I thought you said earlier that the rate a merchant pays on debit purchases is 0.05% + $0.21. How do you get to a base level debit card discount rate of 1% on a $1000 purchase with that formula?

Just trying to keep the numbers simple. We could have used the real rates. The point I was trying to make is that I don't think any merchant will give you a 3% Debit discount. You might have some luck with 2%, and you almost certainly will have luck with 1%, but then you're better off not using Debit and you might as well use your 2% cash back card.

edit for real rates, since I'm bored enough to run the numbers:

Debit: 0.55% + $0.21 (assuming a very high 50 basis point acquirer markup on top of the 0.05%)

Credit 3.45% + 0.10 (assuming the same markup)

Debit: Merchant gets $994.29, you pay $1,000.00

Credit: Merchant gets $965.40, you pay $980.00

Debit with 3% discount: Merchant gets $964.46, you pay $970.00

Debit with 2% discount: Merchant gets $974.40, you pay $980.00

In this case with exact numbers, it looks like the merchant would be wise to accept your offer for a 2% Debit discount, but would be foolish to accept a 3% discount! For this particular set of numbers, the break-even discount for the merchant appears to be 2.9%

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Keep in mind, we've used a ridiculously high rate for Credit that very few merchants actually pay, even for the best rewards cards, so in reality, I don't think the 2% discount would be very feasible.

You might have better luck asking for a cash discount, as many business like to keep their revenue "off the books," so to speak