Credit Card processing is like any business, there's a wholesale cost and a retail markup.

Entering a PIN number on a debit card means that the transaction is now going thru the Debit networks instead of the traditional Visa, Mastercard networks. Examples are Star, Plus, Shazam, Cirrus, etc. The debit networks charge different rates, that are often cheaper than credit cards, so there have definitely been benefits to accepting PIN numbers.

That is, until the Durbin Amendment, which once again, changed everything.

The Durbin amendment regulated most of the debit cards to .05% and .22 regardless of PIN or No PIN so the benefits of PIN numbers now only apply to a small percentage of the debit cards a business takes. This means we need to recalculate the fees involved in accepting PIN numbers to be sure it's worth it.

Now, PIN numbers are more secure because anyone can sign a receipt and, lets face it, no one checks ID anymore. So, by getting the PIN number your chances are much better that it's the card holder and therefore reducing the likelihood of a dispute or chargeback. However, the increases in debit network fees are making it less and less attractive for the basic small business.

First of all, a lot of processors charge $5.00 per month for access to the debit networks so we need to make that up in the savings.

Second, over the last couple years, the Debit networks have each been adding annual fees of around $15.00 and that now exceeds $100.00 per year in additional fees and that negates any savings for most small businesses.

Don't get me wrong, PIN numbers still save money for merchants doing over 100K per month and doing larger individual sales.

Not sure if you should be taking PIN numbers?

Call us today for a free analysis and consultation.

If a merchant is accepting commercial cards (corporate, business, purchasing) and/or government cards (GSA) they can obtain a lower Interchange rate by submitting Level 2 or Level 3 data with the transaction. Therefore, it is always in the merchant's best interest to submit Level 2 or Level 3 data when they are processing commercial cards and/or government credit cards whenever possible.

Retail merchants will often encounter Level 2 "prompts" when they process a commercial card and the credit card terminal prompts for a "Customer Code" or "PO Number". If the merchant passes all the Level 2 data with the transaction, the transaction will qualify at a lower Interchange rate savings, on average, twenty-five basis points.

Level 1, Level 2, and Level 3 Processing Credit card processing information fits into three levels: Level 1, Level 2, and Level 3. Each level is defined by the amount of information that is required to be passed to the card issuing bank.

Level 1 processing is very easy to be achieved through any electronic processing method as it only requires standard transaction details such as merchant name, transaction amount, and the transaction date.

Level 2 (also known as Level II) processing adds the requirement of sales tax as well as a customer code to the transaction.

Level 3 (also known as Level III) will have fifteen plus line-item details that must be sent along with the transaction. To receive Level 3 processing rates merchants must accept either commercial cards and/or government cards issued by Visa or MasterCard.