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
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 $2.75. This could have a
major impact on your bottom line.
Let me explain how charges are determined for online debit cards.
There are two components to debit card charges. First, there is
the 16 cents per transaction charge that Credit Card Processing
Services’ processor charges. The second component is what
the actual debit network charges using the terminology Debit Network
Acquirer Fee. Depending upon your region of the country and the
network that the cardmember’s issuing bank belongs to determines
which debit network the individual transaction will clear through.
There are ten primary regional and national debit networks with
the major national networks highlighted in bold print. Please see
the list below along with their network acquirer fee.
||$.03 + (.60% + .$.10) (max of $.48)
|Credit Union 24
||$0.13 + .40% (max of $.32)
||$0.25 + (.75% + $.015) (max of $0.525)
||$0.25 + (.75% + $0.15) (max of $0.525)
||$0.375 + (.65% + $.10) (max of $0.6875)
|Pulse (Includes Money Station & Tyme)
|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
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:
PIN Pad 1000
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:
- 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.
- 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.