Does Visa’s Interlink decision mark the end of PIN Debit Card Cash Advance in casinos?

What is Interlink? Visa’s Interlink brand is America’s largest online point-of-sale (POS) network with more than 1.4 million merchant locations. The Visa Interlink network makes your gaming patron’s ATM card work at the point of sale as a purchase card, commonly referred to as a PIN based debit card cash advance, by allowing cardholders using their PIN to withdraw funds directly from their checking account beyond their daily ATM limit. The Visa Interlink network represents as much as 70% of total debit transaction activity in gaming establishments. 

The effect on Visa’s Interlink interchange may reduce your commissions. Interlink debit card cash advance interchange gets paid by the cash access providers (like Global Cash and Global Payments) to the card issuer and prior to April 1, 2010 interchange was 1.80% plus 10 cents per transaction. However, as of April 1st of this year Visa’s Interlink has significantly raised the interchange to 2.30% plus 10 cents (the same interchange rate as a credit card quasi cash). This new change suggests that interchange paid by cash access providers will increase by 20-25%. Cash access provider’s contract provisions generally allow a pass thru to the gaming operator, but, before you agree to any pass thru attempts by your cash access provider it is important to know the background and what other options exist.

 The early days of PIN debit cash advance in gaming. It was my vision that brought PIN debit cash advance to casinos in 1994 at a time when use of debit cards at the point of sale was still a relative unknown for most people. Back in those days, debit cards were used by gaming patrons for getting cash from an ATM machine and very few patrons knew that their ATM card could also be used to make purchases. By happenstance, I learned that banks set different daily limits for ATM withdrawals and purchases and each limit is separate and distinct. The average back then was around a $250 daily ATM withdrawal limit and $500 for purchases.

Evolution of debit cash advance. As debit cards replaced cash and checks and gaming patrons became educated about a new source of getting cash by doing a PIN debit card cash advance, the industry enjoyed a decade of high teen double digit growth, until it reached maturity around 2005 and slowly began to decline to single digit growth because of rising interchange rates that pushed consumer fees higher and then the decline in growth from the subsequent economic downturn beginning in mid 2007.

Why PIN’s were required for debit card cash advances historically. Non-PIN based debit cards is a fairly recent phenomenon and all debit card issued in 1994 required a PIN to be entered for debit card cash advances. It wasn’t until the gradual adoption over the next decade to non-PIN based debit cards that became the standard by card issuers. Still today, many providers of debit cash advances require a PIN which I believe is unecessary- it is less convenient to the patron and results in many unnecessary customer service billing resolution issues.

Today’s Dilemma. Debit cash advances success was a logical transaction choice for patrons that exceeded daily ATM limits because the fees were less than a credit card cash advance. Those days may be over with the Visa/Interlink debit network announcing this month that interchange rates for PIN based debit card cash advances is increasing to the same rate as credit card cash advances. Interlink is the 10,000 pound gorilla with a dominant market share of PIN based debit card cash advance in gaming. If debit and credit cash advances have the same interchange the result will likely be cash access providers having pari-passu fees for debit and credit cash advances. If this scenario happens, why would a patron choose to have the money taken out of their checking account immediately with a debit cash advance versus taking advantage of a 30 day float and revolving credit card cash advance terms? Perhaps the reason maybe that credit limits have been cut back and patrons don’t have the capacity they once did, or maybe the educated credit cardholders know they will be charged an additional 3-5% back end fees in addition to the front end provider fees and high interest rates that start day one of the transaction. The jury is still out, but it will be interesting to see how it all plays out.

The Visa Interlink decision may also be the death knell for cashless gaming initiatives (purchasing TITO tickets with a debit card) which rely on PIN debit card networks. Unless these networks make major rule changes the viability of the business model will be an open ended question.

Solution. Sightline Payments LLC has a solution that will result in the highest level of approvals and the lowest cost. 

Copyright © 2010 Sightline Payments. All Rights Reserved

About the Author: Kirk Sanford, Sightline Payments CEO and principal founder, is a pioneer and leader in gaming payment and marketing solutions. Prior to this role, Mr. Sanford was the CEO and President of Global Cash Access for more than a decade and under his entrepreneurial leadership took GCA from a start-up company in 1994 to a more than $1Billion NYSE public company.  Mr. Sanford has also been involved with a number of other successful businesses including his role as Chief Executive Officer, President and Owner of Central Credit, a provider of gaming patron credit information services to casinos throughout the world. Mr. Sanford was featured by Business Week as one of the Top 100 CEO’s Under 40.

About Sightline Payments
Sightline Payments targeted mission is to be one of the gaming industry’s preferred cash access and ticket redemption providers by focusing on delivering outstanding value, continuous innovation, exceptional guest experience, and consistently fulfilling a Customer Focused promise. Sightline Payments is headquartered in Las Vegas, NV. For more information, please visit
www.sightlinepayments.com or contact Diran Kludjian at 702-851-4747 x 204.

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