In the first of this series, “This is your debit card wake-up call,” we talked about the PIN-less debit programs.
Well, the devil is in “the rules.” That’s right, your network’s rules.
Each processor has a PIN-POS network and with that they have the Network Operating Rules. You know, that 500-page document that you never read, but said you have.
Wait a minute, you say that you never said that?
Oh contraire! Every processor agreement contains a clause that states that you have read, understand, and agree to abide by the network rules.
Network operating governance
Every network has a board of directors and this body has the authority to make rules changes. More importantly, when have you reviewed the rules before you executed a contract with the processor?
When you looked at the governance, meaning the composition of the board ,and when you considered a price consequence if there was a rules change that impacted your income, could you opt out?
Could you cancel your contract?
Could you refuse to comply?
The bottom line: When you executed the contract, you agreed to the rules and to the future changes.
How do PIN-less debit programs hurt?
Networks have changed the parameters of transactions that qualify for PIN-less debit routing. Consequently, any transaction the meets the parameters will be switched and settled as a PINned transaction.
Even if the customer has selected Signature at the Point of Sale.
In some cases, the customer doesn’t get the choice. It is swipe and gone! The customer is waiting to sign, but the clerk says they don’t need to!
But there is more! Most processors have reviewed the Federal Reserve Debit Card Payment Study and realized that the average debit card transaction amount is around $38. So, they have set the top-end parameter at $50. Also, some processors have expanded the application of PIN-less debit transaction rules to a variety of transaction types.
Do you have an issuer-friendly processor?
Reading and understanding your network rules is very important, but your processor is even more important when it comes to your income.
Does your processor understand that your institution is the issuer, and it is your customers that drive the transaction volume?
Does your processor empower your organization to maximize your income and support your debit card portfolio decisions?
Remember, when your contract comes up for renewal, you have choices. There are processors that are issuer-friendly.
So, if your answer to the previous questions is no, then maybe you have the wrong processor.
We’ll continue our examination of this issue in the next two “Beyond The Bank” blogs.
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- Senior Official Recommends the Launch of a Real-Time Payment System to the Federal Reserve