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Debit Cards


The use of debit cards in retail merchant locations has grown tremendously in the United States. In fact the numbers are staggering, with an estimated 16 billion online point of sale debit card sales predicted for 2007, up from only 2.9 billion debit card transactions in 1999. The reason for this growth in debit card usage is that many of the cards being issued by banks today are dual use credit / debit cards. There are two major categories of debit cards that your customers carry in their wallet – offline check cards and online debit cards. How you process these debit cards at the point of sale could have a significant effect on how you are charged for a debit card sale.

By having an encrypted PIN pad a merchant who conducts face-to-face business can ask the customer if she would like to pay with debit or credit. By having your customer key in their private four digit pin number into the PIN pad when prompted, you as the merchant will pay a lower online debit card rate on that sale depending upon the dollar amount of the purchase. Typically the higher the sale the more you will save when the customer enters their pin number. For smaller sales you are usually better off when they present a traditional credit card.

To give you a general idea of the savings, if your customer presents a MasterCard or Visa on a $100.00 sale you will pay approximately $2.00 versus approximately $0.50 when they use their debit card with their pin. Your savings are even greater if they were to present an American Express card as this same sale would cost you approximately $3.25, therefore your savings would be $2.75. This could have a major impact on your bottom line.

Let me explain how charges are determined for online debit cards. There are two components to debit card charges. First, there is the 16 cents per transaction charge that Credit Card Processing Services’ processor charges. The second component is what the actual debit network charges using the terminology Debit Network Acquirer Fee. Depending upon your region of the country and the network that the cardmember’s issuing bank belongs to determines which debit network the individual transaction will clear through. There are ten primary regional and national debit networks with the major national networks highlighted in bold print. Please see the list below along with their network acquirer fee.

Accel $.03 + (.60% + .$.10) (max of $.48)
AFFN $.21
Alaska Option $.07
Credit Union 24 $0.13 + .40% (max of $.32)
Interlink $0.25 + (.75% + $.015) (max of $0.525)
Maestro $0.25 + (.75% + $0.15) (max of $0.525)
NYCE $0.375 + (.65% + $.10) (max of $0.6875)
Pulse (Includes Money Station & Tyme) $0.24
Shazam $0.24
STAR (Includes MAC, Cash Station & Honor) $0.1625 + .65% (max of $0.6425)

• Debit rates subject to change by each individual network
• Grocery stores use a different schedule, please ask if applicable

Accepting debit cards is a real convenience to many customers who cannot get approved for credit cards or prefer not to use their credit cards for certain types of purchases. For the merchant it means guaranteed funds without the concern of accepting a check that might later bounce.

In order to accept an online debit card you must have an encrypted PIN pad. The type of PIN pad you will need depends upon the make and model of terminal you will use to process credit cards. Here are the two most popular PIN pads for standalone credit card terminals:

Verifone PIN Pad 1000
Verifone
PIN Pad 1000
Hypercom PIN Pad S9
Hypercom
PIN Pad S9

If you would like to purchase a Verifone or Hypercom PIN pad in order to accept debit cards when you sign up to process credit cards from Credit Card Processing Services then we will be glad to charge you only $100.00 for each encrypted PIN pad. If you have already been accepting debit cards through another processor and already own a PIN pad then we would be happy to swap out your existing PIN pad at no charge.

Another great option that Credit Card Processing Services offers is our Free Terminal Program in which every terminal that we provide automatically includes an internal encryption so that your customer can simply enter their PIN number using the terminal’s regular key pad as the PIN pad.

Now that you have probably come to the conclusion that accepting debit cards would be beneficial to your retail business. However, you probably have the same confusion over debit cards that most merchants have – What is the difference between the terms debit cards, ATM cards, check cards, online and offline debit?! Here is a brief explanation:

Online Debit - ATM Cards

An online debit card allows the cardholder to access their checking account by keying in their PIN (Personal Identification Number) when prompted by the PIN pad. The terminal will then dial out in real-time and check to see if there are enough funds in the cardholder’s account to complete the sale. There is no need for the customer to sign the sales draft. You are charged 16 cents plus the debit network acquirer fee.

Offline Debit - ATM or Check Cards

The vast majority of debit cards issued by banks today are dual purpose ATM/Check cards and have the MasterCard or Visa logo on the front. These cards combine the checking or other designated account access of the traditional ATM card (Online Debit) with the universal acceptance of a credit card. These check cards give the customer two options:

  1. The customer can pay with the online debit component by using this card just like a debit card by entering their PIN. No customer signature is required.
  2. The customer can pay using their debit card in the offline mode just like a regular credit card. The merchant swipes the card through the terminal and does not request for the customer to use the PIN pad. The customer then signs the printer receipt or manual sales draft. Accepting a debit/check card in this offline mode will typically cost you your regular credit card rate plus an extra nickel.

A Word About Encryption

All PIN pads used for debit and check card networks must be encrypted. Encryption is a security protocol used by the industry to provide a security trust for the consumer and it is closely guarded on their behalf by law. There are multiple types of encryption programs used by processors so that each one is unique. The current protocol is called Triple DES, which is the highest level of encryption. These programs must be physically downloaded to each PIN pad by the specific merchant processor by injecting the encryption keys in person and as such cannot be down via a download such as when a new program is downloaded remotely over the phone or through the Internet. That is why every new merchant either has to purchase a new PIN pad or have CCPS swap it out for you.

If you would like to accept debit cards in your retail store please let Kevin know when you are establishing your merchant account.


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