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Did you actually read your EFT network rules?

What you got into is what you signed up for, if you left money on the table

Obvious and mediocre won’t be found here—but “Why didn’t I think of that?” will! Challenging the banking status quo is Dan Fisher’s personal mission. Obvious and mediocre won’t be found here—but “Why didn’t I think of that?” will! Challenging the banking status quo is Dan Fisher’s personal mission.

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?

Absolutely no.

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!

Sound familiar?

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.

—The Wombat!

Dan Fisher

Dan Fisher is president and CEO of The Copper River Group, a consulting firm headquartered in Fargo, N. D., that focuses on technology and payment systems research and consulting for community financial institutions. For nearly 30 years, Fisher has worked in the financial industry using technology to improve the bottom line. He was CIO of Community First Bankshares (now part of Bank of the West), has served as a director of the Federal Reserve Board of Minneapolis, the chairman of the American Bankers Association Payment Systems Committee, and was a member of the Independent Community Bankers of America Payments Committee. Fisher has written numerous articles on banking technology and the payments system. He has authored or co-authored six books and recently published a book titled, "Capturing Your Customer! The New Technology of Remote Deposit." You can contact Fisher at [email protected] or at 701-293-6222.
P.S. To understand Dan's nickname, check out "About the Wombat" on his website.       

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