Retailers announce ACH decoupled debit programs

Retailers announce ACH decoupled debit programs

(2/12/2009)

Road Ranger, Quick Track, Guppies on the Go and Certified Oil are among the latest convenience retailers to partner with National Payment Card Association, the association said. Under the arrangement, the retailers accept ACH decoupled debit cards that carry significantly lower transaction fees than traditional credit or debit cards, the association said. The National Payment Card Association payment system processes transactions through the Federal Reserve Automated Clearing House (ACH), resulting in lower merchant fees and a self-funded loyalty program that provides immediate savings to consumers, according to a press release dated Feb. 11 and posted on the association’s Web site (nationalpaymentcard.com). Specifically, the program benefits retailers by helping them shift the costs normally associated with the interchange fees credit card companies normally charge on each transaction to the National Payment Card Association lower cost, fixed transaction fee. The merchant can then use some of the savings between the two to change customers’ payment behavior by passing some of that savings along to them. “Even when the economy was healthier merchants were being squeezed by high transaction costs, so in our current state the need for a lower cost, more manageable solution becomes ever greater,” said Joe Randazza, president of National Payment Card Association. “Our programs capitalize on the lower cost ACH settlement platform, which can create a significant savings for the merchant and a self funded loyalty program that provides an incentive for consumers. It’s truly a win/win for both.” The transaction is debited from the customer’s account and is processed through the Federal ACH System that handles billions of transactions per quarter. The merchant settlement is the next business day. The system is cheaper, costing only a fraction of what most retailers normally pay in merchant service fees, because the funds come directly from the consumer’s bank account, removing the middlemen in the credit card and debit card networks altogether. National Payment Card Association first introduced ACH decoupled debit in June 2006. Since then, numerous retailers have partnered in the program, including MTG Management in Austin, Texas, which links ACH debit to a Driver’s License, and Flash Foods.