As merchants combat high interchange fees by increasing debit penetration, the debit networks are quietly increasing their fees at the same time. Interlink is the latest debit network to announce an increase.

For tier 4 merchants, the rate goes from 75 basis points and $.17 per transaction to 95 basis points and $.20, There is no cap on the percentage fee charged. That’s $.0095 times the transaction amount plus the per item fee. Compare this to the debit interchange cost of 1.03% and $10 per transaction and it’s obvious the numbers are getting closer.

Merchants will need to weigh cost and risk to make decisions about pushing pin debit. With pin debit, all risk is removed from the merchant for chargebacks.

New rates are effective April 16, 2010.

Report from NADA 2010 on Dealer Management Services. Christine’s observations and personal opinions after attending my first NADA show.

The Big Two, Reynolds and Reynolds and ADP had large booths and they pushed a broad array of dealer services.  As far as differentiation, I was unable to get a good idea because their booths were so busy with customers and prospects. The buzz about each was very different. Do you use ….“Love them!” “Never!” were dealer responses to my questions about who their DMS is currently. Certainly, dealers are very opinionated about their partners.

Reynolds and Reynolds customers I’ve met in the last year have told me it’s difficult or impossible (at least on their time schedule) to get ports open or access for third party companies. A quick search on this subject today revealed information about the growth of their third party access program, including claiming they have the largest program for access of any dealership services in the industry.  See Reynolds and Reynolds third party integration press release.

I met with George Kassis, President of DOCVision, a Reynolds and Reynolds ERA certified partner exhibiting at NADA 2010.  I also spent time in his booth listening to customers. Like many smaller exhibitors that could be overwhelmed by larger displays, DOCVision sometimes had difficulty drawing in prospects, however, once they were in, the company lived up to its motto “see what you are missing”. Dealers were amazed at the daily reports available from their Reynolds and Reynolds data. The reports provide transparency for financials and inventory, such as knowing what inventory has sales pending against it. Everyone I saw get a demo specifically asked for a follow up after the show. DOCVision also provides custom forms programming and anticipates integrating with ADP in Q2 2010.

ADP was so busy the entire show that I wasn’t able to spend any time in their booth. It would have been nice to learn more about the products my dealer customers use, but since I was attending as an exhibitor, not a prospective customer, I was happy to let them tend to their customers and prospects. There were two exhibitors with ADP 3rd party integration products of interest. DealerSafeGuardSolutionS and CenPOS. DealerSafeGuardSolutionS attacks identity theft issues with a simple, inexpensive solution. I really like the user interface. The solution secures documents, restricts access, and easily lets the right people access the documents at the right time. I recommend dealers attend a Webex demo. It’s worth your time, because even if you don’t think you need it, you’ll learn something valuable. CenPOS, (3D Merchant Services is an authorized reseller) mitigates risk, improves efficiencies and improves payment processing cost management. CenPOS also expects to integrate with DealerTrack and Reynolds and Reynolds later this year.

It was my impression that DealerTrack was competing head to head with ADP and Reynolds and Reynolds for their DMS business, though I understand that wasn’t always the case. I really liked DealerTrack’s booth graphics as a draw. One showed the percentage of customer attrition and satisfaction vs. their competitors. The competition was down 85% in 2009.  DealerTrack, up double digits. Their main graphic is switch your DMS and save 50%. I haven’t talked to a lot of dealers that are so in love with their DMS that they’d never consider changing in this economy where looking at numbers is more important than ever. No one wants to sacrifice value for dollars, but the impression I’m getting is that DealerTrack has built solutions from the ground up, delivering what dealers want.

Additionally, they encourage 3rd party integrators to expand meeting dealer needs with their OpenTrack solution. OpenTrack is an interface into the DealerTrack DMS. It gives third-party solution providers real-time bi-directional access to a dealership’s data.

In conclusion, it looks like there is a big battle for DMS market share and dealers can expect increased third party integration options as well as price competition in 2010.

Disclaimer: The article represents my personal observations opinions as a first time NADA attendee, as well as customer experiences prior to the show.

Reynolds Announces Continued Growth of its Third Party Access Program, serving Dealerships and Third Parties with Safe, Secure, and Verified Access to the DMS.
DAYTON, OHIO - FEBRUARY 13, 2010 - Reynolds and Reynolds announced today that its industry-leading third party access program continued to grow during 2009, increasing the number of independent third party providers who now access dealership data in a safe, secure, and verified manner. In its third party access program, Reynolds typically works directly with third parties of the dealer’s choosing to enable secured and verifiable access to data in a Reynolds dealership management system (DMS).

“For several years now, we have taken the lead on addressing data access and security as a DMS provider,” said Trey Hiers, vice president of Corporate Marketing at Reynolds and Reynolds. “We don’t want our customers or our systems vulnerable to uncontrolled – or unknown – access by unauthorized third parties, and we don’t want third-party access to compromise DMS performance for our customers. We take seriously our responsibility to continuously advance our DMS to meet the needs of dealers, including protecting the integrity of the dealership’s data and helping dealers operate in compliance with regulations around protecting consumer data.”

As automobile dealers continue to become more sophisticated in applying new technologies to improve their business performance, they typically are collecting and storing increasing amounts of customer data in the DMS. At the same time, dealers are frequently turning to the expertise of third parties to assist them in different parts of their business. These relationships often require access to customer data stored on the DMS; too often, the access involves unmonitored information exchanges between parties. In the wrong hands, access to this data can violate privacy regulations and pose a threat to a dealership’s business integrity.

Hiers concluded: “Ultimately, dealers want to know that their data is safe and secure; that it is accessible by third parties, with appropriate safeguards and verification; and, that it will stay that way. That’s the peace of mind we offer with safe, secure, and verified access.”

The Reynolds third party access program provides a number of methods for dealerships to work with the vendor of their choice in a safe, secure, and verified manner when handling dealership data.

About Third Party Access Reynolds and Reynolds provides the largest program for third party access of any dealership services provider in the industry. Dealerships that use a Reynolds and Reynolds DMS to run their business can choose from more than 100 third parties who can provide safe, secure, and verified handling of a dealership’s data.

About Reynolds
Reynolds and Reynolds is the automotive industry’s leading provider of automobile dealership software, services, and forms to help dealerships improve business results. The company is headquartered in Dayton, Ohio, with major operations in Houston and College Station, Texas, and Celina, Ohio. (www.reyrey.com)