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The Wall Street Journal reports this morning that there is a small but definable movement on the part of retailers around the nation to encourage their customers to use PIN-based debit cards with low transaction fees instead of higher-fee signature-based debit cards.

The Journal writes, “Fed up with the rising cost of accepting plastic, a growing number of merchants are taking matters into their own hands. In the industry, the practice is known as "steering" -- encouraging customers to pay using methods that carry low transaction fees, in particular PIN-based debit cards.

“Steering may be a boon to merchants, but there's a potential downside for consumers. Banks rarely offer debit-card rewards if customers use a PIN. That's because banks want to encourage customers to sign, which earns them a higher fee. In some stores, it can be hard to figure out how to sign when payment devices are set to ask for a PIN.”

However, “banks are trying to make signature-debit payments more attractive for customers. In one of the most popular strategies, banks are developing debit-rewards programs that dole out points for signature transactions. PIN-debit users typically don't receive rewards for purchases.”
KC's View:

We’ve been urging retailers – both through MNB and whenever we go into a store – for years to push the PIN-based cards. While retailers have been willing to get involved with lawsuits challenging the banks’ practices and transaction fees, many have seemed unwilling to go this far. Until now.

We’ve always been amazed that a number of retailers didn’t seem to understand why we, as a consumer, would care. (Gee, we’d say, if your costs go up our prices go up. Make sense? And they’d stare at us like we’d begun speaking in tongues.)

We got particularly annoyed when Visa started spending millions of dollars to promote the Visa Check Card, an entity that, as far as we could tell, has little practical value beside the fact that it generated higher transaction fees for Visa.

Retailers need to stand up for themselves and their consumers. And we’re glad to see that this is finally happening.