May 31, 2011

Debit: Is It Worth It?

Nothing worth doing is ever easy. Nowhere in the payment industry is that more true than with debit card processing. Unlike processing credit payments with relatively few variables, debit card processing involves numerous organizations, devices, networks, and – perhaps most confusing of all – encryption keys.
As your advocates in the payments arena, we’re committed to helping you through the debit maze and ensuring that you are able to process these transactions. However, beware that it can be an involved and time-consuming process. In the words of Shift4 CEO Dave Oder, “We’ll support the process, but we certainly didn’t invent it, and there’s a lot of it we just don’t have control over.”

What Makes Debit Different?
Debit cards tie directly to a consumer’s bank account. They are secured by PINs (personal identification numbers) that are sent along with the card information to the processor. With this PIN being the primary defense in keeping thieves from accessing entire bank accounts, it makes sense that they are closely guarded.

The PIN pad devices that allow consumers to input their PIN immediately encrypt the digits of the PIN, and after pairing it with the card information, send it off to a debit processor. The encryption keys used in this process vary depending on the device manufacturer, bank, and processor. This means that any time you change devices, banks, or processors, your PIN pads will have to be injected with a new encryption key.

Key Injection
Unfortunately, this re-keying process cannot be done remotely – nor is it something Shift4 can handle for you. The device must be sent back to the bank (or the third-party injecting company they designate) and re-keyed, or else all new devices must be purchased from the bank. Speaking from experience, let us say that (all things considered) the additional expense of buying new devices is often substantially less than the cost of lost productivity, wasted man hours, and frustration involved in re-keying. Another shortcut not worth the expense: buying used PIN pads. Yes, eBay may seem a tempting option, but the additional work required to get those devices ready for use all too often negates even the most amazing deals.

Diagnosing Debit Issues
Because there are more players and more steps involved in a debit transaction, it is exponentially more difficult to troubleshoot. Trace data can often help Shift4 track down the source of the issue (even when, as is often the case, the trouble does not lie with Shift4). From there, we can help you determine the best way to fix it.

So, Is It Worth It?
Looking at the frustration that it can cause, some may wonder if debit is worth the hassle. For most merchants, it absolutely is. Not only are debit cards increasingly gaining market share, they are also often more cost effective for the merchant because they are processed at a flat fee. For transactions more than $20-30 (depending on discount rate), the fee is less than the interchange rate for a similar credit transaction.

Yes, debit is difficult, but we’ll continue to walk our clients through the process of getting it set up and keeping it running. We’re grateful for your patience as we work with you to maintain your debit card processing capabilities – even if sometimes coordinating all of the groups involved takes longer than we’d like.