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Here are three options for merchants to consider when looking to reduce the costs of in-store payments acceptance:
1. Decoupled Debit
Decoupled debit (also known as ACH) is a payment method that is not tied to a card network or financial institution. Instead, these merchant-sponsored programs allow customers to link their checking account information directly to the retailer's loyalty rewards program. In doing so, the merchant cuts out the middle man, the customer can pay using their loyalty program information/PIN, and the merchant can realize significant cost savings.
Although decoupled debit is a relatively new way to pay, consumers are excited about its prospects. According to a recent Vantiv survey of 500 consumers, onethird are interested in linking their checking or savings accounts to their loyalty rewards programs to make purchases.
However, they're expecting special offers and rewards in return for making this change. The primary motivator for enrolling in a decoupled debit program would be receiving a percentage discount at the time of purchase. Free items, buy-one-get-one, and store credit or rebates are acceptable secondary incentives.
In essence, decoupled debit functions like an electronic check that's accessed through a customer's loyalty account. For example, a customer can scan their loyalty card or enter their phone number at a retailer and the retailer can ask if they would like to pay via their loyalty account. After the customer verifies the amount and enters their PIN, a money transfer is initiated between the consumer's personal checking account and the merchant's account. In addition to facilitating the payment, this approach also helps reduce the cost...