Elec Pay Brief

Electronic Payment Briefing
By Stuart Zlotnikoff
Senior Vice President
National Grocers Association
February 10, 2004

N.G.A. Annual Convention – Las Vegas, NV
© NationalGrocers Association 2004

All Rights Reserved
Special N.G.A. Briefing
“The Coming Revolution in

Electronic Payment”
New Cost Structure,

New Technology,
New Options for Grocers
N.G.A. BRIEFING OUTLINE
1. Trends in Cash, Check and Card Use
2. Cost Components of Electronic Payment
3. Implications of VISA Check and Master Money

Antitrust Litigation
4. Current Debit Challenge
5. Future ACH Opportunity
6. Coming Revolution in Payment Technology

Major Challenges for Grocers
• Transaction costs are the same order of magnitude as
profits for many grocers.
• Transaction mix is changing, in some cases quite rapidly.
• Higher cost transaction types (credit, on-line and off-line

debit) are growing considerably faster than lower cost
transaction types (cash, check).
• Reflecting both increasing costs and changing transaction

mix, transaction costs increased from 0.97% to 1.13% of
sales from ‘94 to ‘97. Cost per transaction increased 29%.
• Grocers need to find new solutions and strategies to reverse

this trend and bring transaction costs under control.
3 Key Trends
• Decreased use of cash and checks!
• Increased use of electronic payments!
• Increased growth in debit transactions!

TRENDS IN PAYMENT TYPES
• Total check volume has been declining about

3% a year since the mid-90’s!
• Six-fold growth has occurred in electronic

payments since 1979, from 5 billion to 30
billion transactions annually!
• Debit transactions continue to grow in

excess of 30% annually!
• Source: Federal Reserve

CASH AND CHECKS
2003 = 47%
2001 = 51%
1999 = 57%
Source: American Bankers Association – All Retail

Sectors
Federal Reserve Transactions By Payment Type
(1996 vs. 2000)
2000*
• By Check 42.0 (-14%)
• By Credit Card 15.0 (+44%)
• By ACH System 5.6 (+50%)
• By Debit Card 8.3 (+600%)
* In Billions of Transactions
Monthly POS Transaction Volume per
Consumer by Method
Total Trans./Consumer/Month: 32.54
Total Annual Trans.: 83 billion
Travel
CK/MO
Store Card 0.22
1.2 Gift Card 0.4
Credit Card
5.4
Cash 15.58
Debit Card
5.48
Checks 4.26
n=1087(All Respondents)
Consumers by Preferred Payment Method
at the POS
Total US Adult Consumers: 211 million
Debit Card
24%
Cash
41%
Credit
Card
19% Check
16%
n=1087(All Respondents)
RETAIL TRANSACTIONS:
GROCERY VS. OTHER RETAIL
Business PIN- Signature
Cash Check Credit
Type based -based
Grocery
17% 6% 37% 25%
25 15%
Store
Discount
10% 6% 35% 26% 22%
Store
Drug
10% 6% 42% 23% 18%
Store
C-Store 10% 6% 43% 7% 33%
Depart.
8% 8% 28% 20% 36%
Store
Rest. 4% 9% 54% 6% 27%
Fast Food 2% 1% 92% 2% 3%
Source: Dove Consulting, 2003

THE DEBIT CARD BOOM
• Grocery stores are the most popular place to use a debit card,
accounting for almost one out of every four transactions!
• Debit card usage has been growing 35% compounded annually.
• 242 million debit cards are in use.
• … and account for 29% of all 826 million payment cards.
• More than four out of five U.S. accountholders have an ATM/debit

card.
• 86 percent of users made a card purchase in the past 30 days.
• In 2001 VISA reported that VISA debit transactions outnumbered VISA

credit transactions for the first time.
Source: Dove Consulting

Why Consumers Prefer Debit Cards
• Closest to cash, yet safer than cash
• Need to carry less cash
• “Credit card” convenience, but no debt build-up
• More convenient than checks
• No need to carry a checkbook
• Get through checkout lines quicker
• Grocery store POS “cash back” with no ATM fees
• Better tracking and management of money
Sources: VISA, Star, Dove Consulting
3. Implications of VISA Check and Master Money


Options at the Point of Sale
(Source: JPMorgan)
Cash Pros Cons Cost
• Ubiquitous/universal acceptance • Difficult accounting
• Handling costs Varies
• Technology agnostic
• Security
Check Pros Cons Cost

• Technology agnostic • Costly processing/paper handling $0.30 - 0.60
• Few system requirements • Clearing time
• Fraud risks
Credit Card Pros Cons Cost

• Reliable, virtually guaranteed settlement • Discount rate
• Hardware investment in terminals up to 4% of
• Limited fraud risk
• Cost of chargeback/disputes transaction
• Easy accounting
Debit Card Pros Cons Cost

(Pin-based & signature) • Same as bank-issued credit cards
• Hardware investment in terminals fee (up to $0.40)
• Cash-back option increases merchant
traffic • Loss of cost benefits with utilization as + 1.99 - 3.95%
signature debit
POP/RCK Pros Cons Cost

Check to ACH conversion • Versatile for both consumers & billers • Hardware investment in terminals $0.05 + guaranty
(POP only)
• Limited recourse to source document
POS Pros Cons Cost

• Benefits of proprietary cards
ACH based card (PPD) • Consumer education/marketing necessary $0.05
• Leverage existing hardware investments
• Pre-authorization reduces risks
Electronic Payment Cost Components
• Interchange Fees and other assessed

pass-through fees and costs for credit
and debit card acceptance.
• Charge back Costs and adjustment

fees and losses.
• Technology Costs
• Communication fees and infrastructure.
• Equipment and Depreciation (POS system,

pin pads).
• Equipment upgrades to comply with new

credit/debit encryption standards, and
acceptance of smart card or wireless
transactions)
• Equipment maintenance and upgrades.

• Accounting/Financial Fees and Costs
• How much time to reconcile settlement

files?
• Value of money? When are you being

paid for transactions?
• Store Labor Expense
• How much time does it take to

complete a transaction at point of
sale?
• Biggest Cost = Interchange Fees

Interchange Fees
• The fee that the Card Associations (VISA and

MasterCard) charge the Merchant to get the funds
into his bank (Merchant Bank) and to get the billing
information to the Cardholder's Bank (Issuing Bank).
• Interchange is set by VISA and MasterCard.

Interchange and Discount Fees
• Think of interchange as the wholesale cost, and

discount as the cost to retailers.
• The discount fee incorporates interchange and other

card association fees and assessments -- plus mark-
ups for processors and other service providers --
and is paid by the merchant on a per-transaction
basis.
• AmEx and Discover do not charge interchange;

instead, merchants pay these companies discount
fees.
Interchange Fees
• Interchange fees vary:
• By Retail Sector (grocers typically have the lowest

interchange rates…while Internet transactions are
still the highest).
• By Type of Card (consumer versus commercial
versus check card).
• By Size of Transaction (large commercial versus
small consumer purchases)
• By Authorization Procedures.
Processing
• Credit Card Associations, such as VISA and

MasterCard, also make the rules that form the
contractual relationships between Issuers, Acquirers
and the Processing entities of the system.
• Issuers, such as Bank One, have a contractual

relationship with cardholders.
• Acquirers have a contractual relationship with

merchants.
Source: The Green Sheet

Processing
• Processing is a catch-all phrase that refers to the

management of transaction flows.
• Some processing companies handle everything

involved with a card transaction, while others merely
move transaction data between different parties
(e.g., card acquirers, card issuers and the clearing-
and-settlement systems).

Processing
• Authorization involves a communication between the

card-issuing bank and the merchant's bank verifying that
the cardholder has available credit or available funds in
his or her DDA to cover the transaction. The card-issuing
bank then sets aside the funds, and an authorization
code is assigned to the transaction.
• Settlement refers to the final accounting during which

debit and credits are posted to the appropriate accounts
at the card-issuing and card-acquiring banks.

TOTAL COST = The Sum
of It’s Parts
Credit PIN
• Interchange • Interchange
• Assessments • Sponsorship
• Access • Switch
• Processing-- • Processing
Authorization &/or
Settlement
VISA and MasterCard
Interchange Fee Trends
1.00
0.90
0.80
Visa
0.70
0.60 Visa Check Card
0.50
MC
0.40
0.30 MC Debit
0.20
0.10
0.00
1991 1994 1998 1999 Apr-03 Aug-03 Oct-03 Jan-04 Apr-04
2004 Interchange Fees In Flux
• Post-Settlement Debit market dynamics will
keep on changing Interchange Fees.
• More Retail Leverage to Influence/Negotiate

Fees.
• New Multi-Tiered Pricing Favoring Large-

Scale Retailers.
• Alleged Lower Credit/Debit Fees for Wal-Mart

and a few other Large-Scale Retailers.
3. Implications of ViSA Check and

MasterMoney Antitrust Litigation

Points of Dispute
• VISA and MasterCard required merchants to “honor all cards”.
• Merchants had to accept both signature debit and credit cards

by VISA and MasterCard, whether the merchant wanted to or
not.
• Merchants had to pay signature debit’s higher interchange

rates and absorb other costly characteristics.
• Merchants and consumers faced confusion at POS between

signature debit , PIN debit and credit cards.
Features of Settlement
• Payout of $3 Billion
VISA to pay back retailers $2 billion and MasterCard
to pay back retailers $1 billion over 10 years.
• Lower Interchange Rates

On August 1, 2003, VISA and MasterCard lowered the
interchange fees applied to their “off-line” signature
debit card transactions by roughly 33%.
• End of “Honor All Cards” Rule

On January 1, 2004 VISA and MasterCard’s signature
debit card transactions and credit card transactions
were “untied”.
• Product Identification
Both card associations will change the design of
signature debit cards to incorporate more prominent
branding and electronic identification.
• Suspension of Interlink Solicitation

VISA will not induce banks to join Interlink nor offer
incentives for banks to leave regional networks and
join Interlink until May 30, 2005.
VISA POS Debit: New Supermarket Rates*
($40 Transaction)
• Pre-Settlement 1.00% Fee $0.40

• Interim .65% Fee $0.26
• New (1/31/04) .88% Fee $0.35 cap
*Source: Constantine Merchant Advisory

VISA POS Debit: New Supermarket Rates*
($100 Transaction)
• Pre-Settlement .40% Fee $0.40

• New (1/31/04) .35% Fee $0.35 cap
MasterCard POS Debit:
New Supermarket Rates*
($40 Transaction)

• New (1/31/04) .65% Fee $0.26
MasterCard POS Debit:
New Supermarket Rates*
($100 Transaction)

• New (1/31/04) .26% Fee $0.26
Supermarket Debit Fee Analysis
($40 Transaction)
Off-Line Debit Card (Interchange plus other VISA and

MasterCard Fees and Assessments)
• VISA Check Card $0.39
• MasterCard Debit Card $0.34* (May raise in April?)
On-Line Debit Card (Interchange Fee Only)

• Star $0.22 (2/1/04)
• Interlink $0.22
• NYCE $0.22
• Retailers are now free to reject VISA

and/or MasterCard signature debit
transactions while continuing to accept
VISA and MasterCard credit cards.
• Retailers are also be free to reject VISA

and/or MasterCard credit card
transactions while continuing to accept
their signature debit card transactions.
• By December 31, 2006, all 200 million

ATM/Debit cards bearing the VISA or
MasterCard logos will be physically
rebranded with clear and conspicuous visual
“Debit” identifiers and will be given distinct
electronic identities.
• 80% of this visual and electronic rebranding

must be accomplished by June 30, 2005.
• All 100% must be accomplished by

December 31, 2006.
• By prominently placing the word “Debit” on

all of these cards, many retailers will for the
first time have an easy and foolproof way to
visually tell the difference between debit
cards and credit cards.
• Giving each debit card a distinct electronic

identity will allow retailers with point of sale
card terminals to electronically distinguish
debit transactions from credit transactions.
Follow-Up Options and Issues
• “N.G.A.’s goal is not to give you legal

advice, or to tell you what decisions to
make. That must be the result of each
of your individual business judgments.
• “Our objective is to make sure you

have the knowledge needed to exercise
your power wisely and in your overall
best interests.”
1. Each retailer must make an

individual and unilateral decision to
continue to accept or reject the
signature debit or credit products of
Visa and MasterCard.
• Any retailer can now tell its processor

or acquirer to block VISA and/or
MasterCard signature debit
transactions from authorizing at that
retailer’s store(s) and the
acquirer/processor must block these
transactions without charge to the
retailer.
2. A retailer’s decision is not a one-time only

choice. A retailer can decide to stop
accepting or continue accepting one or
both of the VISA or MasterCard signature
debit products at any time beginning now or
later on; weeks, months or years from now.
A retailer can also reverse that decision

later on, depending upon pricing, quality
issues and the response of the retailer’s
customers.
• Retailers can exercise their new rights by

submitting to their processor or acquirer
the form:
“Merchant Election to Stop Accepting VISA
and/or MasterCard Signature Debit or
Credit”*
*Available for downloading from N.G.A. web site at

www.NationalGrocers.org
• A retailer’s acquirer or processor must also

provide any retailer upon its request, a
complete and updated list of the BIN
numbers (Bank Identification Numbers) that
apply to all VISA and MasterCard signature
debit cards, payroll cards and pre-paid cards.
• The retailer can obtain these BIN numbers in

any form they reasonably request, such as in
an electronically readable file.
• The retailer is then free to use these BIN

numbers to assist it in rejecting signature
debit or in steering consumers to make
payment another way, if that is what the
retailer chooses to do.
• Retailers can exercise their new rights by

submitting to their processor or acquirer
the form:
“Merchant Request for VISA and/or
MasterCard Signature Debit Card BIN
Numbers.”*
*Available for downloading from N.G.A. web site at

www.NationalGrocers.org
• VISA and MasterCard Signage:

VISA and MasterCard have also agreed in the
Settlements to provide signage to retailers to
assist them in informing their customers
which types of Visa and MasterCard
payments they will continue to accept after
January 1, 2004.
Supermarket Debit Fee Analysis
($40 Transaction)
Off-Line Debit Card (Interchange plus other VISA and

MasterCard Fees and Assessments)
• VISA Check Card $0.39
• MasterCard Debit Card $0.34* (May raise in April?)
On-Line Debit Card (Interchange Fee Only)

• Star $0.22 (2/1/04)
• Interlink $0.22
• NYCE $0.22
Some Post-Settlement Bank Reactions
• Some banks, such as U.S. Bancorp, are

deactivating PINs on their cards.
• Some banks, such as Fifth Third, are
charging consumers a surcharge for PIN
debit use ($0.50 - $1.25).
• Credit card associations and banks are
promoting signature debit through increased
brand advertising, direct mail campaigns and
debit card consumer incentives.
3. Implications of ViSA Check and MasterMoney

5. Future ACH Debit Opportunity

The merchant has the right to attempt

to steer customers to a form of
payment other than signature debit,
such as PIN debit, check or cash.
PIN-Secured vs. Signature-Based Debit
• When the consumer enters a PIN the

transaction is processed through a debit
network.
• When a customer signs a sales ticket to

authorize the payment on their ATM/debit
card, the transaction will be processed
through Visa™ or MasterCard™.
• On-line debit is faster, safer, and cheaper for

all parties to the payment transaction - the
shopper, the store and the Bank, much
faster, much safer, and much cheaper than
off-line for the bank.
• PIN debit transactions also settle

instantaneously, guaranteeing the merchant
ready access to its receipts.
• Signature debit transactions usually take a

day or two to settle.
• PIN debit networks allow for faster check out

than signature debit networks. With a PIN
debit transaction, customers can enter their
PIN as soon as the first product is scanned.
• By contrast, customers cannot sign for
signature debit transactions until after the
entire order is totaled, prolonging the
checkout process.
• PIN debit networks also allow individuals to

receive cash back at the register when
making a purchase, a popular feature with
many consumers.
• Today, customers request cash back in
approximately 20 percent of all PIN debit
transactions.
• Customers cannot receive cash back when

making a signature debit purchase.
3. Implications of VISA Check and MasterMoney


ACH at Point of Sale to Help Retailers
To Control Transaction Costs?
• Significantly less expensive to the retailer

than competing transaction types.
• Cost savings can be shared to reward your

best customers via a loyalty program.
• Convenience and speed for consumers at

check-out
Basis for ACH Cost Advantages
• ACH has a batch processing system which

has very low costs.
• ACH has minimal advertising and promotion

expense imbedded in its charges.
• ACH transactions have lower financial risk to

banks than credit card transactions.
Options at the Point of Sale
(Source: JPMorgan)
Cash Pros Cons Cost
• Ubiquitous/universal acceptance • Difficult accounting
• Handling costs Varies
• Technology agnostic
• Security
Check Pros Cons Cost

• Technology agnostic • Costly processing/paper handling $0.30 - 0.60
• Few system requirements • Clearing time
• Fraud risks
Credit Card Pros Cons Cost

• Reliable, virtually guaranteed settlement • Discount rate
• Hardware investment in terminals up to 4% of
• Limited fraud risk
• Cost of chargeback/disputes transaction
• Easy accounting
Debit Card Pros Cons Cost

(Pin-based & signature) • Same as bank-issued credit cards
• Hardware investment in terminals fee (up to $0.40)
• Cash-back option increases merchant
traffic • Loss of cost benefits with utilization as + 1.99 - 3.95%
signature debit
POP/RCK Pros Cons Cost

Check to ACH conversion • Versatile for both consumers & billers • Hardware investment in terminals $0.05 + guaranty
(POP only)
• Limited recourse to source document
POS Pros Cons Cost

• Benefits of proprietary cards
ACH based card (PPD) • Consumer education/marketing necessary $0.05
• Leverage existing hardware investments
• Pre-authorization reduces risks
What is Automated Clearing House
(ACH)?
• Electronic exchange of payments between

banks and Federal Reserve Board or private
Clearing Houses.
• Governed by regulations, including

consumer protection regulations.
• Supports both debits and credits.
• One day settlement.

Participants
• Companies
• Financial Institutions
• Members/Consumers
• Third Party Processors
• ACH Network--FRB, NYACH, VISA, AACH
• National Automated Clearing House
Association (NACHA)
• Local ACH Associations
ACH “Credit” Uses
Prearranged Payment and Deposit
• Direct Deposit of Payroll

• Tax Refunds
• Interest and Dividend Payments
• Benefit Payments
• Pensions
ACH “Debit” Uses
Prearranged Payment and Deposit
• Loans
• Insurance premiums
• Dues/memberships
• Tuition
• Child support
• Fund investments
• Utilities and Telecom
ACH Check Conversion
Point of Purchase Check
• Collection providers allow merchants to

scan MICR data from the consumer's
check at the point of sale and then
process the payment electronically as an
ACH debit.
Card-Based ACH Debit POS
• Merchant handles sign-up (consumer solicitation,
authorization, account info collection, card
issuance, PIN management, user agreement).
• At check-out, consumer presents card to clerk who

captures identifier info to tag transaction.
• Customer selects preferred transaction type,

inputs PIN.
• Sales receipt should indicate consumer

benefits.
Card-Based ACH Debit POS?
• A retailer-controlled program to lower
your stores’ payment costs.
• Your stores’ own debit card.
• Card might become “interoperable”
with other stores or retailers.
• A means of funding your loyalty card
shopper rewards from the savings of
not paying interchange fees.
• Technology available today.
3. Implications of VISA Check and MasterMoney


Revolutionary Payment Technology
• Stored Value Cards
• ACH POS Debit (+ Store Debit Loyalty Cards)
• Electronic Bill Payment and Presentment
• Smart Cards
• Transponders/Wireless Transactions
• Biometrics
• Online Debit and ACH over the Internet
• Internet Currencies
• Telecom Wallets
• Stored Value Cards
• Gift (Store-only or Interoperable)
• Loyalty/Promotional Incentive
• Consumer ACH/Debit Cards

• Store Issued
• Interoperable
• Tied to store loyalty program
• Employee ACH/Debit Payroll Cards
• ACH Check Conversion

• Reduce cost of POS check acceptance
• Require check imaging and MICR reader devices at check
stand
• Smart Cards
• Gift Cards (Target)
• State EBT (Ohio)
• Electronic WIC program

• Biometrics
• Finger Print (“BioPay”)

• Facial
• Retinal scan
• Palm print
• Under Development: A retail fingerprint identification

device having a computer display that lists customer’s
bank accounts. Customer simply chooses one of the
accounts and effects the payment. No card, no
telephone, no PIN number.
“Pay By Touch”
February 3, 2004 Press Release:
“Pay By Touch” today announced an agreement

with IBM that would offer retailers using Pay By
Touch technology the opportunity to give their
customers the option of paying for purchases on
IBM point-of-sale (POS) systems using a finger
scan to access their financial accounts.”
“Pay By Touch”
Pay By Touch™?
• Transponders/Wireless Transactions
• Radio Frequency ID “Speed Pass”
• RFID Product “Tags”
• RFID-Enabled Self-Check Out

• MasterCard “Pay Pass”

• Embedded microprocessor chip to transmit account
data wirelessly through RFID.
• Orlando 2003 test with 60 retailers (Chevron,
McDonalds, Loews, Eckerd).
• Targets $20 or less purchases.
• Pay Pass transactions 12-18 seconds faster than
cash.
• Transaction volume increase 23%.
• Readers cost several hundred dollars.
• Mobile Phone Transactions
• It is now possible to load the relevant information from

dozens of cards into the processor of a cellular
telephone or a "smart" card.
• A customer can then simply "call up" the merchant's

payment number, choose which card to use, and
authenticate their identity with a PIN.
• Next Generation Payment Terminal
• Touch Screen Flat Panel, PC “Tablet” Design
• Adaptable for Self-Service Kiosks and Self-Check Out
• Reads and Writes 3 Magnetic Stripe Tracks, MICR, Smart Card
• Proximity Radio Frequency
• Biometric Fingerprint Image
• Signature Capture
• Check Imaging
• ADA Keypad -10 digit,yes, no, back, extra keys
• Upgrade Plug ‘n Play

• Advertising
• Customer Display
• Signature Capture
• Smart Card
• Surveys
• Multiple Language
• Biometrics
• Remote Software Download Supported
• Dual Sided Magnetic Stripe Reader
• Voice Prompting and Music output
• Animated Graphics and Full Motion
• Video RFID
• MasterCard Pay Pass, AMEX Express Pay,
Speed Pass, ISO 14443 A&B
• Compact Flash Cards (Wireless)
Major Challenges for Grocers
• Transaction costs are the same order of magnitude as
profits for many grocers.
• Transaction mix is changing, in some cases quite rapidly.
• Higher cost transaction types (credit, on-line and off-line

debit) are growing considerably faster than lower cost
transaction types (cash, check).
• Reflecting both increasing costs and changing transaction

mix, transaction costs increased from 0.97% to 1.13% of
sales from ‘94 to ‘97. Cost per transaction increased 29%.
• Grocers need to find new solutions and strategies to reverse

this trend and bring transaction costs under control.
2004 Electronic Payment Options
• Exploit post-settlement rights (declining

signature debit, steering to PIN).
• Question lower credit/debit interchange
fee structure and special deals for a few
large retailers.
• Explore less costly networks (ACH) and
retailer-controlled debit cards (store
cards).
Electronic Payment Briefing
By Stuart Zlotnikoff
Senior Vice President
National Grocers Association
February 10, 2004

N.G.A. Annual Convention – Las Vegas, NV
© National Grocers Association 2004

All Rights Reserved
THANK YOU!
Contact: szlotnikoff@nationalgrocers.org

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Electronic Payment Briefing

February 10, 2004

© NationalGrocers Association 2004

“The Coming Revolution in

New Cost Structure,

2. Cost Components of Electronic Payment

3. Implications of VISA Check and Master Money

4. Current Debit Challenge

5. Future ACH Opportunity

6. Coming Revolution in Payment Technology

• Transaction mix is changing, in some cases quite rapidly.

• Higher cost transaction types (credit, on-line and off-line

• Reflecting both increasing costs and changing transaction

• Grocers need to find new solutions and strategies to reverse

• Decreased use of cash and checks!

• Increased use of electronic payments!

• Increased growth in debit transactions!

• Total check volume has been declining about

• Six-fold growth has occurred in electronic

• Debit transactions continue to grow in

• Source: Federal Reserve

Source: American Bankers Association – All Retail

Total US Adult Consumers: 211 million

C-Store 10% 6% 43% 7% 33%

Rest. 4% 9% 54% 6% 27%

Fast Food 2% 1% 92% 2% 3%

Source: Dove Consulting, 2003

• Debit card usage has been growing 35% compounded annually.

• 242 million debit cards are in use.

• … and account for 29% of all 826 million payment cards.

• More than four out of five U.S. accountholders have an ATM/debit

• 86 percent of users made a card purchase in the past 30 days.

• In 2001 VISA reported that VISA debit transactions outnumbered VISA

Source: Dove Consulting

2. Cost Components of Electronic Payment

3. Implications of VISA Check and Master Money

4. Current Debit Challenge

5. Future ACH Opportunity

6. Coming Revolution in Payment Technology

Check Pros Cons Cost

Credit Card Pros Cons Cost

Debit Card Pros Cons Cost

POP/RCK Pros Cons Cost

POS Pros Cons Cost

• Interchange Fees and other assessed

• Charge back Costs and adjustment

• Equipment and Depreciation (POS system,

• Equipment upgrades to comply with new

• Equipment maintenance and upgrades.

• Accounting/Financial Fees and Costs

• How much time to reconcile settlement

• Value of money? When are you being

• Store Labor Expense

• How much time does it take to

• Biggest Cost = Interchange Fees

• The fee that the Card Associations (VISA and

• Interchange is set by VISA and MasterCard.

• Think of interchange as the wholesale cost, and

• The discount fee incorporates interchange and other

• AmEx and Discover do not charge interchange;

• Interchange fees vary:

• By Retail Sector (grocers typically have the lowest