Unleash hidden savings: boosting your bottom line with debit optimization

Wednesday, August 28, 2019 6:33 am EDT

By:

Karen Aaron, Head of Strategic Markets – Retail, Elavon

Saving money while improving the overall customer experience is a winning strategy for any retailer. And while there may not be many opportunities to do both in your business, card payments optimization is one of them.

Card payments optimization means using best processing practices to achieve the lowest fees possible for each transaction. Not only will you save money, but by implementing best practices it can help to enhance your payment validation process resulting in a reduction in fraudulent card use.

You can identify opportunities to optimize payments by understanding how and why card transaction fees increase or decrease. Processing fee rates can vary based on several factors, including:

  • The type of card used – e.g. credit, debit, reward
  • Where the transaction occurs – e.g. in-store POS, online, mobile app
  • How the card data is captured – e.g. swipe, tap, insert
  • Your industry – e.g. retail, hospitality, airline

While most of these factors are out of your control as a retailer, you can lower your transaction fees by focusing on payment authentication. To decrease the cost of accepting card payments and reduce exposure to security risks, businesses can implement measures to 1) improve card validation across various payment channels, 2) seamlessly collect more transaction attributes, and/or 3) give debit card customers the ability to choose PIN entry instead of signature.

I recently wrote about how Elavon has enabled our customers to implement these acceptance practices and realize savings through interchange management. In this companion blog, I’ll explain how you can do the same through debit card management.

Debit optimization

PIN debit. Did you know that most businesses that accept debit cards today are processing them with signature authorizations?[i] In fact, a full 80% use signature authorizations and 20% use PIN.  If you’re still using signature authorization, you may want to consider offering your customers the option to choose to enter a PIN for debit transactions.  By offering customers the option to enter a PIN for debit transactions, businesses can lower their overall cost of debit acceptance and reduce chargebacks.  

This is because PIN debit offers cardholder validation that can stop fraudulent use before the debit transaction is authorized or settled. That’s why the top 25 merchants in the United States offer PIN entry as an option at the point of sale to validate that the debit cardholder is actually the card owner. When PIN debit is used to authorize a transaction, businesses secure a lower PIN debit interchange rate and protect the business against fraud-related chargebacks.[ii] 

PIN debit authentication also helps protect businesses from inaccurate chargebacks. This is especially helpful since we know that 86% of chargebacks are probable cases of so-called “friendly fraud,” where a transaction isn’t actually fraudulent but cardholders are trying to avoid going back to the business for a return or refund.[iii] Because PIN transactions are presumed to be authorized, face-to-face transactions, the bank requires more information from the cardholder when they attempt to dispute a PIN debit charge. The added information requirement encourages cardholders to take their issues directly to the business for a refund rather than relying on the chargeback process. By having your customer come back to your business for a refund, you’ll save on chargeback fees and have the opportunity to resolve any issues they may be having with your product, including by offering them an exchange instead of a refund.

Putting strategy to practice

At Elavon, we have dedicated resources available to our customers to enable them to achieve card payment optimization. For example, we helped one of our national retail customers with over 200 store locations realize $600,000 in annual savings by improving transaction processing and settlement practices and implementing PIN entry as an option to validate debit card transactions.[iv]

Getting started

This is a great primer to get started, but identifying the opportunities to save on debit transaction fees within a large enterprise can be complex. That’s where we can help. At Elavon, our payments professionals will work with you to analyze your unique business and payment data to find ways to efficiently process transactions while delivering a fast, convenient and secure payment experience to your customers.

Click here to learn ways that we’re helping our customers reduce the cost of payment acceptance through debit optimization.

About the author: Karen Aaron is the VP and Head of the Strategic Market Retail team at Elavon. In her 25-year career in the payments industry, she has held a variety of leadership roles in both sales and relationship management, working with large national customers across all industry segments. In her current position she manages a team of 21 that spearheads business development efforts and supports the existing retail client base. Prior to joining Elavon, Karen had a lengthy career at First Data where she held various management positions in both sales and relationship management.


[i] Elavon, “Optimizing Debit Processing for Cost Savings” Webinar, April 16, 2019.

[ii] Elavon, “Optimizing Debit Processing for Cost Savings” Webinar, April 16, 2019.

[iii] Statistic for 2017, chargebacks911.com.

[iv] Elavon, “Optimizing Debit Processing for Cost Savings” Webinar, April 16, 2019.

Elavon’s Media Contact:

Katie Lopez 
Corporate Communications 
+1 678-731-5915  
Katie.Lopez@elavon.com

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