California's Debitman Card has signed Wal-Mart and Sam's Club to its retailer-issued debit card programme, which is promoted as a cheaper alternative to bank-backed debit cards.
Merchants accepting Debitman cards issued by other retailers pay only a flat 15 cents per transaction and receive a portion of the interchange whenever those cards are used.
Utilising the automated clearinghouse (ACH) system and PIN-based debit transactions, the scheme is designed to provide merchants with a low-cost electronic payment alternative to bank-issued debit cards and escalating interchange fees. Previous merchants who have signed up include Best Buy, Walgreen's and Duane Reede.
Separately, First Data has issued research which indicates that on average, PIN-based point-of-sale (POS) transactions cost approximately 50% less than signature debit transactions for financial institutions. The study also found the average net fraud losses were more than four times greater for signature debit than for PIN schemes.
Debra Janssen, president of First Data debit services says the study illustrates the value that PIN debit transactions bring to financial institutions.
She says: "Financial institutions should take a close look at their investment in signature rewards and other programmes, which are designed to drive transactions to signature debit over PIN."
The POS Debit Issuer Cost Study identified back office expenses – like risk/fraud management, chargebacks, settlement and accounting, collections and customer service – and processing as the primary cost-drivers for debit programmes.