Comments on: PIN and Signature Debit http://www.merchantaccountblog.com/207/pin-and-signature-debit Merchant Accounts, Ecommerce, Processing Equipment Tue, 09 Mar 2010 09:36:53 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: John Mertz http://www.merchantaccountblog.com/207/pin-and-signature-debit/comment-page-1#comment-21042 John Mertz Wed, 28 Oct 2009 00:38:04 +0000 http://www.merchantaccountblog.com/archives/207#comment-21042 The idea that merchants pay a flat fee for pin debit is no longer true. While most networks do cap their interchange, Interlink, for instance, for Retail transactions charges 0.0075 plus $0.15 - with no cap. Pulse doesn;t have a cap, either. The idea that merchants pay a flat fee for pin debit is no longer true. While most networks do cap their interchange, Interlink, for instance, for Retail transactions charges 0.0075 plus $0.15 – with no cap. Pulse doesn;t have a cap, either.

]]> By: Sarah http://www.merchantaccountblog.com/207/pin-and-signature-debit/comment-page-1#comment-20616 Sarah Thu, 30 Jul 2009 00:16:23 +0000 http://www.merchantaccountblog.com/archives/207#comment-20616 Given the rise of compromised and fraudulent PIN debit transactions, how can you claim that "PIN debit transactions are almost impossible to dispute because only the card holder knows the PIN?" PIN skimmers have appeared at ATMs and merchant locations (e.g. Stop & Shop grocery stores) alike, and malicious software has been found in large ATM networks. If your anti-fraud system is based on pretending the PIN is always secure, then your system is wide open to compromised Point of Sale equipment, ATMs, and other compromised devices nearby. Not to mention anyone involved with the creation or distribution of PINs, including the mail system, can obtain the PIN. Even a simple camera or good set of eyes can record the few digits in a PIN being entered, so it is preposterous to suggest that only a card owner will ever know the PIN. How does a card owner know that the equipment collecting their personal identifiable number is trustworthy? She can't. At least with PIN-less debit, fraudulent transactions can be disputed, they often have a no-fraud guarantee, and the cardholder isn't providing highly sensitive information into a questionable point of sale device. Given the rise of compromised and fraudulent PIN debit transactions, how can you claim that “PIN debit transactions are almost impossible to dispute because only the card holder knows the PIN?” PIN skimmers have appeared at ATMs and merchant locations (e.g. Stop & Shop grocery stores) alike, and malicious software has been found in large ATM networks. If your anti-fraud system is based on pretending the PIN is always secure, then your system is wide open to compromised Point of Sale equipment, ATMs, and other compromised devices nearby. Not to mention anyone involved with the creation or distribution of PINs, including the mail system, can obtain the PIN. Even a simple camera or good set of eyes can record the few digits in a PIN being entered, so it is preposterous to suggest that only a card owner will ever know the PIN. How does a card owner know that the equipment collecting their personal identifiable number is trustworthy? She can’t. At least with PIN-less debit, fraudulent transactions can be disputed, they often have a no-fraud guarantee, and the cardholder isn’t providing highly sensitive information into a questionable point of sale device.

]]> By: Douglas J. Mack http://www.merchantaccountblog.com/207/pin-and-signature-debit/comment-page-1#comment-14088 Douglas J. Mack Wed, 16 May 2007 16:22:36 +0000 http://www.merchantaccountblog.com/archives/207#comment-14088 This article is dead-on and very educational. I’d like to point out that while some companies sell flat debit rates, merchants with even the smallest ticket environments can benefit from an “Interchange Plus” pricing structure. For example, Interchange On Star—one of the nation's largest networks—is .65% + .12 (interchange-max of $0.60) + .01 (acquirer fee) + .0325 (switch fee). Add the authorization fee the processor charges (say $0.25) and you have a maximum fee of $0.6425 + $0.25 = $0.8925. While this may be higher for some transactions compared to a flat $0.50, look at a $10 transaction... it is only $0.47. “Interchange Plus” pricing essentially makes any PIN-based transaction less expensive than signature debit transactions, regardless of ticket size, and is generally a much better pricing structure than a flat per transaction fee. Merchants can also benefit from debit cards because they can offer cash back to clients. Merchants can include this offer when customers use PIN debit to increase floor traffic and conversion. Additionally, merchants can surcharge for the use of PIN debit transactions—this is not possible with regular credit cards. I was at a gas station in California once that took advantage of these debit benefits. The gas station didn’t accept credit cards; they only took PIN-based debit and charged $0.50 for it. So you could offer PIN debit to pay for items @ no cost and offer cash back for $1.00. That's far less than the customer would pay using a foreign ATM @ $3 plus their bank fees. Imagine the possibilities. Douglas J. Mack, president of OHMS, Inc., has over 11 years of experience in the Merchant Service industry. He is a small business advocate and an active member of his local business community in Columbus, Ohio. He is an advisory board member for the Green Sheet and has been featured in a number of industry related publications. Have a question for him? You can reach Doug at 888.708.8948 x104 or via e-mail at dmack1@cpsoh.com. This article is dead-on and very educational. I’d like to point out that while some companies sell flat debit rates, merchants with even the smallest ticket environments can benefit from an “Interchange Plus” pricing structure. For example, Interchange On Star—one of the nation’s largest networks—is .65% + .12 (interchange-max of $0.60) + .01 (acquirer fee) + .0325 (switch fee). Add the authorization fee the processor charges (say $0.25) and you have a maximum fee of $0.6425 + $0.25 = $0.8925. While this may be higher for some transactions compared to a flat $0.50, look at a $10 transaction… it is only $0.47. “Interchange Plus” pricing essentially makes any PIN-based transaction less expensive than signature debit transactions, regardless of ticket size, and is generally a much better pricing structure than a flat per transaction fee.

Merchants can also benefit from debit cards because they can offer cash back to clients. Merchants can include this offer when customers use PIN debit to increase floor traffic and conversion. Additionally, merchants can surcharge for the use of PIN debit transactions—this is not possible with regular credit cards.

I was at a gas station in California once that took advantage of these debit benefits. The gas station didn’t accept credit cards; they only took PIN-based debit and charged $0.50 for it. So you could offer PIN debit to pay for items @ no cost and offer cash back for $1.00. That’s far less than the customer would pay using a foreign ATM @ $3 plus their bank fees. Imagine the possibilities.

Douglas J. Mack, president of OHMS, Inc., has over 11 years of experience in the Merchant Service industry. He is a small business advocate and an active member of his local business community in Columbus, Ohio. He is an advisory board member for the Green Sheet and has been featured in a number of industry related publications. Have a question for him? You can reach Doug at 888.708.8948 x104 or via e-mail at dmack1@cpsoh.com.

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