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Table of Contents

Lead Story

A political action plan for ISOs


Industry Update

New best practices for data storage

Financial reform bill passes. What now?

Cash-only holiday to protest Durbin Amendment

ETA/Strawhecker report: Reason for optimism


Research Rundown

Top 25 privately held industries for the last 10 years

Selling Prepaid

Prepaid in brief

Evolution Benefits ties prepaid to philanthropy

What's next in gifting technology

Walter Paulsen
Giiv Inc.


Three kinds of consolidation to watch

Brandes Elitch
CrossCheck Inc.


Street SmartsSM:
Is dial dead?

Ken Musante
Eureka Payments LLC

Agent or employee: Which are you?

Adam Atlas
Attorney at Law

Budgeting: A crucial management skill

Vicki M. Daughdrill
Small Business Resources LLC

Best practices for crisis communications

Peggy Bekavac Olson
Strategic Marketing

Putting the cold call in its proper place

Jeffrey Shavitz
Charge Card Systems Inc.

More than PCI

Tim Cranny
Panoptic Security Inc.

Avoid 'always be closing' and other old traps

Jeff Fortney
Clearent LLC

Company Profile

Voltage Security Inc.

New Products

Determine the best interchange for each transaction

Merchant Warehouse

Layered protection for ACH

ProtectPay ACH
ProPay Inc.


Focus on success with self-help CDs



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

August 09, 2010  •  Issue 10:08:01

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New Products

Determine the best interchange for each transaction

Product: BINSmart

In addition to signing up with a low-cost provider, merchants trying to save money on interchange have a bag of tricks they can reach into at the POS. But using it the right way can be tricky.

A service from Merchant Warehouse called BINSmart is designed to help merchants lower interchange costs by calculating - using a host of factors - the competing interchange rates on PIN debit- and credit-based purchases. For any given purchase where the consumer uses a debit card, the program determines whether interchange would be lower as a PIN debit or credit purchase, and then prompts the customer to pay with the cheaper option.

"It's a technology that is able to determine or best estimate the best way to take a transaction," said Marianne Rocco, Marketing Director for Merchant Warehouse. "If the customer were to swipe their card, BINSmart would actually go through an algorithm and estimate the best cost and whether it should be credit or debit and also prompt the merchant for any additional information. A lot of merchants aren't savvy enough to be sure whether they should get PIN debit or not."

The service also produces savings by helping merchants avoid "downgrades" on card acceptance that can raise interchange. One way it does this is by prompting merchants who take corporate cards to enter "level 2 data," including customer code and tax information. By gathering this data, merchants can qualify for better rates with corporate card acceptance.

The service also has a feature that automatically batches out a merchant's transactions at the end of each day, helping avoid downgrades applied to late batching, according to Rocco.

Merchants who don't batch out within 24 hours are commonly downgraded to a higher, qualified rate for interchange, while those who wait more than 48 hours can drop to an even higher nonqualified rate. BINSmart subscribers avoid these scenarios by using the program's "autobatch" feature.

PIN not always cheaper

Regarding the choice of PIN debit or credit, it is common to think that PIN transactions are invariably cheaper, and many merchants automatically push customers to use that option, according to Rocco. In fact, whether one is cheaper than the other depends on a range of factors, she said.

For example, PIN debit tends to be cheaper than credit for high-cost transactions, but credit is often cheaper for low-cost ones. Determining which rate is better can also depend on such things as the merchant's Standard Industry Code, ZIP code (because the various regional debit networks charge different rates), and the card brand or type. All of these things are factored in by BINSmart.

BINSmart is a web-based service hosted by Merchant Warehouse, but merchants without web-based terminals can still integrate the service using the Merchant Warehouse API. Some merchants can integrate the service into an existing POS system, and it is also available with certain Hypercom Corp., Ingenico and DejaVu Software Inc. terminals, Rocco said.

A second or two

For merchants who take card transactions using BINSmart, the first six digits of a swiped card are automatically routed to the Merchant Warehouse server, which returns a message that prompts the customer to enter PIN information or to accept the transaction as a credit card purchase.

"You swipe the card, the POS system grabs the first six digits of the card, sends it to us over the web, and it takes one to two seconds," said Markiyan Malko, Program Manager for Merchant Warehouse. "It's pretty seamless."

Rocco said customers who want to pay a different way than how they're prompted have the option of cancelling the transaction and starting over. Malko added that, because only the card's first six digits are transmitted over the network (which is enough information to determine the type of card being used), the program exists outside the scope of the Payment Card Industry Data Security Standard.

Merchant Warehouse

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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