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.








How does card reader and pin debit pad with Skipjack compare to CenPOS?

Credit card processing is evolving from dial up terminals to web based virtual terminals, even for the retail environment. These hosted solutions are not all alike. Addressing just the pin debit function for payment processing, CenPOS and SkipJack perform differently. The hardware set up for each in this scenario is a virtual terminal, magnetic stripe card reader and pin pad.

  • The Skipjack user must look at the consumer card and ask if it will be ‘debit or credit’.
  • The CenPOS user will automatically prompt the customer for their pin number IF it fits the merchant settings.

What’s the difference?

With Skipjack, employee decisions at the point of sale impact merchant risk and cost of accepting credit cards. With CenPOS, the customers and employees are prompted automatically to achieve the desired result at the point of sale. CenPOS is an intelligent payment platform that routes transactions based on merchant settings for risk tolerance and payment costs.

Statistically, CenPOS merchants achieve a national average of over 75% pin debit conversion. Merchants can verify this information for their account in the executive dashboard, and also create alerts for their conversion rate, such as if it falls below a certain percent.  While I don’t know other product statistics, published reports of aggregate retail merchants are substantially lower- less than 30%; most businesses I encounter  have under 10%.

What’s the merchant benefit to increase pin debit conversion?

  • 14 days for a dispute period vs 120 day for signature debit.
  • Tougher to lose disputes.
  • Dues and assessments do not apply.
  • Additionally, the Durbin Amendment requires 2 debit networks on every card. With CenPOS least  cost routing, the debit transaction will be routed to the lower cost network, according to all applicable rules.

DISCLAIMER: This review uses publicly available information posted on the competitive product web site as of 7/01/2012. The article does not address all features, just the pin debit conversion. Skipjack is a registered trademark of Skipjack Financial Services, Inc.


  • According to their web site|4347063|2831168, “PIN-based debit is currently available only for Canadian merchants.” However, I don’t think that is accurate.
  • Regardless of the features you need, CenPOS generally outperforms Skipjack when all the facts are compared, especially for automotive and business to business applications.
  • API is available to integrate into ERP and other software packages.


Contact Christine Speedy of 3D Merchant Services, authorized CenPOS reseller.  Click here to become a customer or call the hotline at the top of this web page.

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.

Debit Interchange Modifications October 2011

The semi-annual Visa and MasterCard interchange update for October 2011 is coming soon. Merchants can expect debit interchange modifications in support of the Dodd-Frank Wall Street Reform and Consumer Protection Act in addition to other interchange changes.

As a review, there will be two types of debit interchange- regulated and non- regulated depending on whether the card issuing bank is exempt or not. A Card Issuing Bank is considered nonexempt from the regulated debit interchange rates when the banks assets, together with its affiliates, exceed $10 billion.  Under the law, the maximum interchange fee that a non exempt card issuer may receive for an electronic debit transaction (signature and pin debit) will be $0.21 per transaction, plus 5 basis points. This provision is effective on October 1, 2011. That is not the maximum merchants will pay to processors, just the maximum the card issuing bank can receive.

The Board also approved an additional $0.01 adjustment towards the issuer’s debit card interchange fee if the issuer develops and implements policies and procedures designed to achieve the fraud-prevention standards outlined in the interim final rule, which is still open for public comment until September 30. Banks will likely quickly qualify for the extra $.01 as they try to eek out as much as they can under the new regulation.

For merchants to receive the new non-exempt debit rate:

  1. The merchant must have a price plan ( schedule A) with pass through interchange indicated.
  2. OR

  3. The merchant processor must pass on the savings.

If you’re not sure whether you can qualify for new interchange rates, contact us for a free consultation. We’ll need to see a merchant statement and a copy of your contract pricing, usually with “Schedule A”  at the top. A proposal you received is not adequate for review.


Durbin Amendment spurs misleading sales tactics

I just received a robo call pitching how due to changes under the Durbin Amendment I could now save money and process direct from Visa & MasterCard, not from a broker. Most deposits are the next day.

I couldn’t resist. I pressed 1 to speak to an operator.  A nice man came on the line, whom I’ll call Eric,  and said “We have new national pricing” and I can  “lower your rate to .5% and save you $1000’s per month.” That was in Eric’s first sentence. I asked and Eric said he was with North American Bancard. The phone number and ID matched up to the company.

Just for the record, North American Bancard is a registered Independent Sales Organization/Merchant Service Provider for HSBC Bank USA,National Association, Buffalo, NY and Wells Fargo Bank, N.A.,Walnut Creek, CA.

I’m not sure what the difference between a broker and an ISO is. Individuals cannot decide they want to be in the merchant services business and then just start accepting contracts. Everyone has to be part of a registered company. But let’s leave that aside.

The biggest savings potential for merchants under the Durbin Amendment is via debit. Merchants can achieve maximum savings only under these conditions:

  1. They have a “pass through interchange” price plan that enables the merchant to fully take advantage of the new debit fees.
  2. Their processor must pass the savings on to them. Some will, some won’t. It’s entirely up to the processor.
  3. The card is swiped- the magnetic data must be read, and the consumer can sign or enter their pin.

Don’t be suckered by misleading sales pitches. What rate was Eric talking about? Effective rate? Rate above interchange? Rate for signature debit?  if you want to save money under the new rules, you need an expert not only in interchange, but in help to convert more sales to lower cost debit. That’s where we come in.