Debit Markup is one of the ways that Merchant Account Providers make money from merchants. The reason why Merchant Account Providers make so much money off of debit transactions is that Mastercard and Visa charge the processor less for debit card transactions than credit card transactions.

Explanation

Typically, a debit card transaction costs between 0.50% and 1.00% less than credit card transactions (see What Is Interchange for more details), the cost of which is usually NOT passed on to the merchant. 

The exact mix of credit and debit are dependent on what kind of customer your business serves, but in 2004 Visa Announced that the value of Debit Card transactions had surpassed the value of Credit Card transactions, so you can bet that a big portion of your transactions are actually debit.

 If your processor charges you based on Interchange Plus pricing, then you are having the debit card discount passed on to you. 

However, most merchants are charged using 3-tier pricing, in which case your debit card transactions are being grouped into your standard credit card rates and you are being charged too much. 

 What you can Do about it

You should call your Merchant Account Provider and demand that debit card transactions be split out on your bill and the price reduced, just ask them "but debit cards are cheaper, right?" and then ask why you are being charged the same for them as for the credit transactions.  Usually the Merchant Account Provider will get the idea and change your billing.  If they don't, then go shopping for a new Merchant Account Provider.

Or you can ask to be given Interchange Plus pricing, which is the best solution.