PIN Debit Network Fee Schedule Fall 2010

With 2010 debit fee updates, signature debit and pin debit potentially can cost about the same to merchants. 70% of pin debit transactions recently qualifed for either .95% + $.235 per transaction or .80% + $.2125. With Visa signature debit interchange now at .95% and $.15 per transaction, the cash benefit of pin debit transactions has eroded.

However, it’s important to look at your payment processing price plan. Are you paying percentage merchant discount on both debit and credit transactions, or just credit?

Pin debit benefits include reduced risk. Consumers cannot initiate a chargeback on a pin-debit transaction, but they can on a signature debit.

The list below is a compilation from various sources.  If you have interchange pass-through pricing, these are listed under “interchange costs” on your merchant statement. Interchange costs are hard costs and do not include any processor fees. Please recognize that processors also have a cost of doing business, plus a profit margin, so your actual costs will be higher.

* These networks offer pin-less debit.

Accell Effective November 1, 2010

ACCEL “All Other PINless” Bill Payments Cap 0.80% + $0.25, cap $1.75

According to ATM debit news, Interlink, Star, Pulse, and NYCE have the largest the market share for PIN based POS debit transactions. The shares are Interlink 39.8%, Star 30%, Pulse 10.7%, NYCE 10.1% and rest other 15%, as of March 2008.

CenPOS will dynamically route pin debit transactions to the lowest cost network, in compliance with the rules that apply for that card. What does that mean? If a consumer card can be used on three debit networks (see logos on back of card), including for example-  Interlink, and there is a rule that Interlink must be used first if the transaction is in the state of Alabama, then the transaction is routed to the Interlink network if the transaction is in Alabama. However, if there are no applicable rules, then the transaction will be routed to the lowest cost network, such as Star, for example.

Finding someone who can offer you Pin-less debit is not as easy as finding a merchant processor. Not every merchant processor offers this service.

Nor can every business offer pin-less debit. Only those who provide regulated services, including utilities, lenders and government agencies can offer it.

Online debit has increased from <20% to over 45% in recent years. This represents a huge opportunity for eligible businesses to reduce costs. Pin-less debit costs a lot less than traditional online debit transactions.

As merchants demand relief, there may be additional regulatory changes in this area.

3DMerchant.com is the web site for First Payment Systems representative Christine Speedy. First Payment Systems is an Independent Service Organization for First Data, Chase Paymentech and others, all of whom offer pin-less debit. Not all ISO’s offer pin-less debit.

If you are ready to implement pin-less debit now or you need additional information, please call us at 954-942-0483. It could save you a bundle.

New TowerGroup Research Examines Obstacles to Success of Alternate Payment
Mechanism

NEEDHAM, Mass., Sept. 11 /PRNewswire/ — In the mid-1990s, the electronic funds transfer (EFT) networks debuted PINless debit, or PINless bill payment, as a new, low-risk way for billers to collect payments from consumers. New research from TowerGroup estimates that PINless debit bill payment volume in 2007 will be at least 40 percent higher than in 2006. However, various obstacles to its adoption will cause PINless debit to remain a small percentage of overall bill payments (0.45 percent).

PINless debit allows consumers to pay bills through a remote channel by entering their debit card number without the personal identification number (PIN). Since its introduction, transaction volume has grown steadily as billers and their customers explore this alternative. However, adoption of PINless debit continues to face many challenges, including: inconsistency in industries eligible for participation; functionality; and card eligibility.

PINless debit offers benefits to billers that “split the difference” between credit cards and ACH debits. PINless debit, like credit cards, provides guaranteed funds. ACH does not. However, PINless debit does not have the higher fee structure associated with credit cards. PINless debit can be used to pay bills for which credit cards as a payment method are simply precluded, such as credit card invoices themselves. It is also an
additional method to increase overall adoption of electronic payments, a common goal for billers and suppliers in the bill payment value chain.

The new research report, titled “PINless Debit: Finally Taking Off or Headed for a Crash Landing,” by Jennifer Roth, a senior analyst in the Global Payments practice at TowerGroup, identifies the challenges related to PINless debit bill payment, the methods for overcoming these obstacles, and the durability of PINless debit as an alternate payment method.

At TowerGroup, Roth’s research focuses on electronic bill and invoice presentment and payment, including the Internet environment and otherchannels in which it can be delivered. She also examines consumer funds transfer, remittance processing, and the domestic electronic funds transfer networks supporting payment processing infrastructures.

About TowerGroup: TowerGroup is the leading research and advisory services firm focused exclusively on the financial services industry. A respected source for trusted information and advice, TowerGroup brings many of the world’s leading financial institutions, technology companies, and professional services firms a deeper understanding of the business and technology issues impacting their organizations. Headquartered near Boston in Needham, Massachusetts, and with offices in North America and Europe, TowerGroup serves a global client base.