Ka-Ching's financial experts at Edina-based Accredited Investors Inc. can be reached at kaching@startribune.com.

Q I have heard that there are fees that merchants must pay when I use my credit and debit cards. Is that true? Also, does it make a difference whether I sign or use my personal identification number (PIN) when using my debit card?

BRETT

A You have heard correctly: Merchants pay fees when you use your plastic for purchases. Those charges are called "interchange fees," although there may be some fees with other names built in as well. The system is fairly complicated, but the fact is that if you spend $100 using plastic when shopping, the merchant likely will see only $98 or $99 of it. Credit-card and debit signature transactions typically cost merchants between 1 percent and 2 percent of the purchase amount in fees, depending on the type of card and the banks involved.

Debit transactions using a PIN cost the merchants much less, around 0.2 to 0.5 percent. These fees are divided among the bank that issued the card, the credit-card network (Visa, MasterCard, etc.), and the merchant's account provider.

Some have called those fees an implicit tax, because merchants pass the costs on to customers in the form of higher prices. My local dry cleaner told me that she accepts credit and debit cards, but she encourages her customers to pay with cash or a check because that helps keep the cost of her services down.

The answer to your debit-card question depends on a couple of variables. Banks receive much more in fees when you pay using a debit signature transaction than if you use your PIN.

In an effort to "encourage" their customers to elect the signature transaction, some banks charge a fee when you enter your PIN to authorize a debit transaction. If it costs you money to use the PIN, then the signature option likely is better for you.

The second consideration is security. Many experts say they think a debit transaction using a PIN is more secure. Others argue that the more times you use your PIN in public, the greater the chance it could be stolen.

LUCAS BUCL, CFP