Auto dealer pin debit vs signature debit cost comparison 2012 and technology influence

Does pin debit still matter in a post-Durbin Amendment credit card processing world? Yes, and technology can make a huge difference. This example shares how much money auto dealers will save based on two different sales amounts. In addition to pin-debit as a transaction type, routing to the lower cost pin debit network can also reap substantial savings.

Cost Comparison Analysis for Signature versus Pin Debit effective 9/2012 with an average $200 ticket

Average Ticket Debit Card Markup Credit Card Auth Fee Pin Debit Auth Fee Signature Debit Cost Pin-Debit Cost Savings % savings
Regulated Debit $225.00 0.0500% $0.04 $0.10 $0.75 $0.47 $0.28 37.13%
Non-Regulated Debit $225.00 0.0500% $0.04 $0.10 $2.59 $2.35 $0.25 9.60%

Cost Comparison Analysis for Signature versus Pin Debit effective 9/2012 with an average $25 ticket, common for oil changes. 

Average Ticket Debit Card Markup Credit Card Auth Fee Pin Debit Auth Fee Signature Debit Cost Pin-Debit Cost Savings % savings
Regulated Debit $25.00 0.0500% $0.04 $0.10 $0.33 $0.37 -$0.04 -12.37%
Non-Regulated Debit $25.00 0.0500% $0.04 $0.10 $0.47 $0.55 -$0.07 -14.98%

Merchant Discount is the basis points you pay your merchant processor. Your discount may vary.


  • .9% pin debit network rate used in this example. Debit network rates vary and under new regulations, all debit cards must offer two networks for processing.
  • Visa/Mastercard dues and assessments apply to signature debit, but not pin debit.
  • Regulated cards average 65-70% of all debit card transactions
  • With your current credit card terminals, who decides whether to prompt customers for pin debit or signature debit?  Is that the best option for you to control costs?
What is your pin debit costing you now? For non-regulated debit example, did you know that Interlink has a special pin debit rate for business cards of  1.70% + $0.10, but Pulse does not? Their retail rate is 0.85% + $.18. Under the Dodd-Frank act, all debit cards must have two network options for merchants to choose from, but there’s no way for the average cashier to know which one will cost less. If there’s one thing that certain, it’s rates will continue to change and get more complicated.
What percentage of eligible debit transactions are you converting? How long does it take for you to figure that out?

Why do dealers need debit routing technology?  It’s evident from the above examples that merchant costs vary depending on multiple factors. The fact is that leaving it up to employees to make decisions about pin debit is not going to result in the greatest savings to the dealership. With our SaaS technology, the intelligent payment engine will dynamically route transactions based on internal intelligence, plus rules you create.  Do you always want the lowest cost? Or do you want to reduce risk even if it costs more? (Consumer dispute period is 14 days on pin debit vs 120 days for signature debit.)

DEALER COMMENT: I already use a virtual terminal in our dealership.

CHRISTINE:   What is your average pin debit penetration? Do you know? How easy is it to find out? Does your virtual automatically route to the lower cost debit network? What percentage of your transactions qualified for the best qualified rate possible? A virtual terminal often works just like your old dial up terminal- it has no intelligence and does very little to help merchants reduce costs or mitigate risks.

DEALER COMMENT:  How will I know if your routing technology works?

CHRISTINE: Our merchant portfolio averages 76% of all eligible debit transactions converted to pin debit. Merchants have this information in real-time by user, by store/department, by enterprise. Additionally, some dealers choose to have a report emailed automatically if the percent falls below a certain rate. This alerts them of a potential hardware or other problem. The executive dashboard has many easy to read graphical and downloadable key metrics that auto dealer groups have asked for. Additionally, you can create and distribute custom reports on any metric to a distribution list on any schedule. You can also dig into your merchant statement.

DEALER COMMENT: We don’t want to change processors.

CHRISTINE: You don’t need to. We’re processor agnostic and connect to all the major processors.

DEALER COMMENT:  What’s involved to get set up? How much does it cost?

CHRISTINE:  Most dealers choose to use a signature capture terminal. You can buy from any source, or we’ll help you get them wholesale. Cost varies by dealer, with pricing on a transaction basis. Dealers rarely choose our  CenPOS payment technology for cost savings. It’s just one more benefit- efficiencies and reporting are the two key reasons auto dealer groups use our technology.

Contact Christine for more information on pin-debit routing solutions.








Visa Debit October 2011 Regulatory Change Fraud Incentive Adjustment

Effective October 1, 2011, Visa introduced new interchange rates to ensure compliance with the final U.S. Federal Reserve Bank rules for the debit regulation provisions of the Dodd-Frank Act. The interchange rate assessed to regulated card products including debit, prepaid, commercial prepaid, and business debit cards is 0.05% + $0.21 + $0.01 fraud adjustment. The $0.01 fraud adjustment component of the interchange rate charged was approved as part of an interim rule that allows card issuers to receive additional interchange, on a per transaction basis, if the issuer certifies adoption of specific fraud prevention policies and procedures.
Visa has confirmed that most regulated card issuers have certified their adoption of the fraud prevention policies. For the card issuers who have not certified, Visa will utilize a manual adjustment process to debit card issuers of the fraud adjustment amounts paid, to ensure compliance with the Act. Visa will utilize the following manual process to facilitate adjustments:

  • Visa will manually submit debits to non-certified issuers and will pass the appropriate credits to affected acquirers.
  • The first round of adjustments will begin January 12, 2012 for transactions occurring between the timeframe of October 1, 2011 through December 31, 2011 (adjustments will be made at the BIN level).
  • The manual adjustment process will continue quarterly, with the next adjustment occurring in April 2012 for transactions processed from January 2012 through March 2012.
  • The process will remain in effect until the U.S. Federal Reserve Bank communicates the final fraud prevention standards and timeline.

Federal Reserve approves final rule in Dodd-Frank Act

The Federal Reserve Board on Monday, October 17, 2011, announced the approval of a final rule to implement the resolution plan requirement in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The final rule requires bank holding companies with assets of $50 billion or more and nonbank financial firms designated by the Financial Stability Oversight Council for supervision by the Board to annually submit resolution plans to the Board and the Federal Deposit Insurance Corporation.

Each plan will describe the company’s strategy for rapid and orderly resolution in bankruptcy during times of financial distress. A resolution plan must include a strategic analysis of the plan’s components, a description of the range of specific actions the company proposes to take in resolution, and a description of the company’s organizational structure, material entities, interconnections and interdependencies, and management information systems.

Under the final rule, companies will submit their initial resolution plans on a staggered basis. The first group of companies, generally those with $250 billion or more in non-bank assets, must submit their initial plans on or before July 1, 2012; the second group, generally those with $100 billion or more, but less than $250 billion, in total non-bank assets, must submit their initial plans on or before July 1, 2013; and the remaining companies, generally those subject to the rule with less than $100 billion in total non-bank assets, must submit their initial plans on or before December 31, 2013.

Debit Fees Interchange Regulation Video- Will you get new Rates?

Which merchants will receive the new low debit fee rates? This video provides a detailed look at rate differences and how to examine your merchant agreement schedule A and statement. While all merchants qualify for them, only a fraction will actually have debit discounts passed down from their processor. Will you be one of them? Pull out your merchant statement, then watch the video so you can compare data.

On October 1, 2011, new debit interchange rates go into effect as a result of the Durbin Amendment, part of the Dodd-Frank Wall Street Reform Act.

Pinless debit on hold

What is the value of pinless debit in a post Dodd-Frank / Durbin Amendment environment? It’s too soon to tell. The intracacies of debit fees are still being worked out. Even though there is a debit fee limit on what non-exempt card issuing financial institutions can collect, there are many details still being worked out.

Merchants have yet to see the final impact on what their merchant processor will charge them, and what interchange and debit network fees for exempt card issuing banks will be. Additionally, the new federal legislation is still lin flux. Dodd-Frank created a framework for new regulations to be created. We can expect more regulations to come.

Due to significant pending legislative updates and marketplace changes affecting debit fees, including the Durbin Amendment and interchange updates, we recommend holding off on any business changes for the purpose of acquiring pinless debit until after January 1, 2012. Quite simply, the benefits of pinless debit are too cloudy for the future and merchants would probably be better off investing resources in other areas until more information is known.

If you were thinking of adding pinless debit, what are the most important reasons for you to do so?