Thursday, December 27, 2012

Pin pads and cash registers

Many cash registers process credit cards directly rather than the old school method of having a standalone credit card terminal next to the register. Processing credit card directly on your cash register makes a lot of sense and can help you make more money for many reasons. The question I'm addressing however in this post is do you also want to take pin based debit cards through your cash register or even if you should take them at all?

What we have seen over the course of installing hundreds of merchants cash registers and credit card machines is it is all about the average ticket size in regards to whether you should take pin based debit or not.

Let's first clear up what "Pin based debit" is. Most debit cards carry the Visa or MasterCard logo and as far as the POS equipment knows they are a Visa or MasterCard however these same cards have the ability to work as a debit card when the user enters their pin at POS on a pin pad and the register treat them differently as does your merchant services.

It is the Fee's associated with a Pin Based Debit cards that are the problem for you the merchant. Almost all cash registers that take credit card can in fact have a pin pad added enabling you to accept Pin Based Debit transactions as well, and there are times when you will want to. Most merchant services will tell you there is a $0.10 to $0.25 fee per debit card transaction however they fail to mention there are also debit network fees with each one as well that can be another $0.20 to $0.60 each making a grand total of $0.30 to $0.85 per transaction. Does not sound like a lot of  money does it? However lets look at a $10.00 transaction and compare the cost between a credit card and a debit card

$10.00 sale fees for a credit card (average) $0.21 transaction fee plus discount fee of 1.8% which is $0.18 for a total of $0.39 leaving you with $9.61 of the original $10.00 sale. Now lets look at the same $10.00 sale using pin based debit with average Debit card fees $0.20 for the merchant services fee plus $0.40 for the debit network fee leaving you with $9.40 from the original $10.00 sale and it could be worse it might cost you $0.80 to $0.85 for that transaction!

If your average ticket is $25.00 or less than stay away from pin based debit as you can see over time that small difference adds up. If you save $0.20 on 4000 transactions over the year than you have saved $800.00 and if you are really busy maybe you would save double or triple that amount.

Now on the other hand if your average transaction is $25.00 and up it may make much more sense to take pin based debit. If you have a $100.00 transaction it is much cheaper to take a pin based debit than a standard Visa/MasterCard!

The average cost to add a pin pad to your SAM4s cash register is about $200.00 maybe more if looking for a fancy one that is also a swipe and pin pad

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