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.
Notes:
- .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?
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.