Lines blur in payments: Time for banks and credit unions to focus

posted by Dan Heimann on Tuesday, July 3, 2018 in SHAZAM Blog

In recent years, the lines that once defined strict boundaries in the payments world have blurred. Signature (dual message) debit transactions previously had to be routed to one of the global networks using their credit network rails. PIN-debit networks were most often used by financial institutions and merchants for processing PIN-based debit (single message) transactions.

But today’s technology doesn’t follow those old boundaries. It allows both sides to venture into the other’s territory. PIN-debit networks can handle signature dual message transactions, and the global networks … well, they’ve been making incursions into PIN-debit territory for years.

Evaluate your net interchange

If you’re asking yourself how this affects your community financial institution, it comes down to your net interchange income. Every time one of your cardholders initiates a transaction, the merchant routes the transaction down a network affiliated with your cards. The selected network dictates the amount of interchange you’ll earn and the amount of network fees you’ll pay. For your greatest benefit, select the best combination of networks for your institution.

Today, it’s a tug of war over debit card transactions, and the payments system itself. Financial institutions and merchants have more choices, greater intelligence and stronger influence over which networks are used to process transactions. Consumers can use their cards in dozens of different ways and at thousands of different merchants locally, nationally and in the e-commerce world. Where routing choices were previously limited based on the type of transaction (PIN or signature), your institution now has more opportunity to maximize your net interchange income. Chose to belong to the right combination of a global and national PIN-debit network offering the widest range of transaction and technology support.

Fine-tune your card program

The old belief that signature (dual message) transactions deliver more interchange than PIN is out the window. PINless, card-not-present, chip, wallet and a host of other transaction types and technologies are offered by the PIN-debit and global networks. With this in mind, banks and credit unions have to fine-tune their card programs by partnering with networks that will deliver the best NET interchange. When evaluating the costs of these new transaction sets, even fractions of pennies can make a difference.

Make a decision

Will your card program be a dynamic, deliberate and customized contributor adding value to your institution’s bottom line? Or, will you allow outdated assumptions to drive your card program’s profitability into a blurred and uncertain future?

It’s time to choose.

This content was updated Oct. 29, 2019.


  1. fees
  2. net interchange
  3. payments

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