APRIL FOOLS!

An Internet PIN Debit Application Based on Software?
Without the Swipe, I've got a Gripe

Over the past couple of weeks there's been a lot of press regarding Acculynk's Internet PIN Debit solution. 

Curiously, not ONE journalist has shown the gumption to ask the most obvious question...one that simply begs to be asked.  So, being a 3rd-rate blogger,  what the hell...I'll  ask it!  Here goes!

"Why do you call it an "Internet PIN Debit" solution when the card isn't  swiped?  Without the mechanism (hardware) to swipe the card, it's not PIN Debit...it's a "Card Not Present" transaction.  And since there's no such thing as a Card Not Present PIN Debit transaction, I have two more questions!  1. What's the scoop?" 2. What are you trying to pull here?  (hint...has to do with wool over eyes)

Let me point out something I find profoundly amusing.  Digital Transactions, along with a host of others in the media, have apparently fallen hook, line and sinker for Acculynk's "software PIN Debit" propaganda.  The amusing part is this: Digital Transactions News reports on the payments industry, so they are a source of knowledge...and it's "that very knowledge" which simply cannot subconsciously allow them to "buy into" said propaganda.  They know the emperor is naked...yet they ooooh and aaaah about his "new close" 



Allow me to demonstrate how the subconscious exposes the truth.  (I'll use a picture because it's worth a thousand words!)



Take a look at the cover page to a Digital Transactions (on right) story on "PIN Debit Meets the Web" from last May.

What do you see? More specifically...

I ask you... "What's that device to the right of the LCD screen?

At first glance I thought it might be one of those "floating" PIN pads...and yes..I'm being sarcastic, maybe even sardonic.

But upon further examination (and sarcasm) ..well, allow me to quote the legendary Chicago baseball announcer Harry Caray...

It might be!
It could be!
IT IS!...
A "Hardware" device!

Why?  Because PIN Debit transactions (and the Interchange Fees) are only available if the card is "SWIPED."  So what's all this stuff about a "software" based Internet PIN Debit offering?  It's a house of cards...not present!  (and no, I'm not being sarcastic...I B. Frank this time.

Here's an article on Merchant Account Fees.  Notice what it says about PIN Debit Transactions!...  Merchant Account Fees | Kelsey Publishing Knowledge Base  Merchant Account Fees - by Bobbie McKee

Whenever a merchant or a business owner is choosing a merchant account provider, looking at and trying to understand the numerous fees is always confusing. Let us try to look and try differentiate these dizzying fees.  The Discount rate makes up the majority of the costs when getting and paying for merchant account service. This is a fixed percentage amount that is deducted from the purchase cost or charged on every transaction. It usually range from 1.49 to 4 percent for every transaction...depending on the type of transaction.  Credit, Signature Debit, PIN Debit, Card Not Present etc. 

Transaction fees are charged by the processor to process each transaction. It is charged on every transaction, regardless of whether or not the transaction is approved or declined. It’s amount ranges from 20 to 30 cents.

"PIN Debit transaction fees are only applicable if cards will be swiped and only appy to debit cards. This is a fixed transaction fee and is usually around 70 cents."

Editor's Note:  Translation: In a transaction, whereby the card is "NOT SWIPED" ...it is NOT a PIN Debit Transaction.  Plain and simple deductive reasoning. 

Thus...a software based Internet PIN Debit transaction, (whereby the card is not swiped) by definition, CANNOT POSSIBLY EXIST. 

Take the PIN Payments Blog's "Cannot Exist Challenge."  Go to Visa or MasterCard's Interchange Rate pages and try and locate that mysterious "Card Not Present - PIN Debit Interchange Fee".  If you have any trouble finding it, don't think it's because it's "elusive".   It's because a CNPIN Interchange Rate, just plain ole' doesn't exist bro!

Therefore, now that we all agree that there's no such thing as a software based PIN Debit solution, we have all just technically eliminated the power of the Software PIN Debit propaganda machine.  It never really existed in the first place...it was simply a figment of the PIN-agination!...

Ironically, while the "house of cards" IS present..."the card itself"...ISN'T...therefore, neither is a software-based PIN Debit application.  Call it what you will, an alternative payment, a CNPIN (pronounced "SinPIN?"), propaganda, emperor's new clothes, etc...but what you CANNOT call it is a genuine PIN Debit transaction.  If a true Internet PIN Debit Solution is what you desire, only HomeATM can provide that with our PCI 2.0 certified PIN Entry Device. Period. 

What's that famous line from "Honest Abe?"  Oh, I remember...

"You can fool some of the people some of the time but you can't fool ALL of the people ALL of the time!" - HA!

Back to the article:  But first, let me tell you what's really going on here.  It took a Wal*Mart Antitrust Lawsuit against Visa and MasterCard to bring the lower PIN Debit Interchange rates to the bricks and mortar world.  Banks and V/MC don't like PIN Debit because the lower risk also brings with it, a lower interchange rate.  As it sits,  V/MC and the banks are making a KILLING on eCommerce transaction fees as CNP provides one of the highest Interchange Fees. 

Acculynk doesn't have PIN Debit rates because it's CNP.  Therefore the rates will be considerably higher.  They say it will approximate "signature debit" fees but look for the fees to be higher than that when they are eventually announced.  Still, the rates will be lower than the CNP rates currently being charged Internet Retailers.

Because the fees will be higher than "true" PIN Debit fees, it leaves more margin to share with the EFT networks and the financial institutions.  So, let's make the math simple.  If the rate is lower than current rates for the web, but higher than PIN Debit rates, then the difference can be shared with the EFT Networks and the Financial Institutions.  A third each.  Nice strategy, but it's an alternative payments strategy, NOT a PIN Debit strategy.  Let's call a spade a spade, shall we? 

Ex: Let's use a $200.00 sale on the web.  At afixed rate (quoting the article above, our fee would be .70 cents.  A2% rate would be $4.00 plus a minimum of a .20 cent transaction fee. (Call it $4.20 vs. .70 cents)  Wow...does that mean that a HomeATM transaction costs SIXTIMES less!  YES it does!

Now we can return our attention back to the article, which, "truth be told" isn't what this post is really about anyway.

Address Verification Service

Transaction Fee (AVS) applies only to merchants who are not swiping cards. AVS provides address and zip code lookup on the cardholder and reduces the possibility of fraud.

Daily Batch Fee is charged by some processors when merchants settle daily batch and transfer the settled fund into the merchant’s account. No transactions, no charged.

Monthly statement fee is charged at the end of each month. It is a fixed fee, regardless of the number of transactions made in a particular month.

The Internet Gateway Fee only applies if you are using an Internet Payment Gateway. The gateway fee is a monthly fee assessed by the gateway provider and is usually billed directly by the provider.

Voice authorization fee is only charged when you call in your transaction an 800 number. It is used if the terminal or software the merchant using is not working and the merchant need to perform an authorization.

Monthly Minimum Fee is based on the merchant transaction and discount rate fees from the card sales every month. This is not an extra fee but a minimum amount that the processor or merchant account provider needs to have in fees.

Surcharge fee can be under a different name like partially-qualified fees or non-qualified fees. These fees are additional discount rates that some cards are charged and may apply only on certain card types.

Application or set up fee is only charged one-time. This is only charged when the account is setup. There are some merchant service providers who do not charge this fee anymore.

Programming/Reprogramming fees apply to retail merchants who have changed from one provider to another. For reprogramming, it is applied whenever there is a need to reprogram a piece of existing equipment software.

Annual fee are sometimes charged by the providers.

Chargebacks and retrieval fees are related to customer or issuing bank disputing a transaction that was processed. A large number of chargebacks can cause your merchant account to be dropped totally and leave you in a bind when trying to get another merchant account for your business. As a merchant, it is important that a merchant take the necessary steps to reduce and potentially eliminate the instances of chargebacks.

Cancellation fee is significant cost in setting up and maintaining a merchant account for a business and this fee helps recoup some of those losses should a merchant cancel, especially in the beginning.

There are hidden or junk fees that merchants are not aware of. Some of the hidden fee is for a merchant account provider to offer a teaser rate that is extremely low, but the teaser rate is just temporary and goes up after a few moths while the application is still in process.

Knowing and understanding the merchant account rates and fees will enable the merchant to identify the best service or account provider. It is also important to know the different fees, so that you know where you’re hard earned money go to.