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Robert Neville

wrote:

Presumably they are charged less by the clearing house on
debit card transactions.

They were. Credit transactions used to average around 3% of the total, whereas
debit transactions were set at a fixed amount - around .25 on average depending
on the size of the store. So it didn't cost the store any more of offer cash
back and in fact may have reduced their cash handling (counting and transport)
expenses.

This led to banks encouraging consumers to "press the credit key" for debit
transactions and offering cash back on such transactions, where stores would
encourage consumers to default to debit sales by programing the terminals to
assume debit unless cancelled (aka Kohls).

The clearing houses progressively raised the cost of debit transactions which
led to some lawsuits by Walmart and others, and then the Dodd Frank Consumer
Extortion bill, so the economics have changed.