As we are all rolling out EMV cards and budgeting for the added expenses of the new technology to support it, I want to share an alarming issue that I was just made aware of.

In addition to the added expense of core updates, hardware, software and training to support this new “safer” technology, we now have to plan on significantly reduced non-interest income!

Kroger stores per stateIn Ohio, Kroger grocery stores have converted to chip-readers. With the conversion, we’ve learned that all debit card transactions now must be PIN based at Kroger. They do not provide another option.

Let me repeat that so it sinks in …

Kroger, with 2,774 stores in 35 states. The nation’s second largest grocery chain, behind only Walmart. A store that people religiously use and drop hundreds of dollars on every single week – to the tune of more than $100 billion annually! Yeah, those guys … they now demand PIN based-transactions for every debit card used with a chip.

In general, we earn less on PIN transactions. Yes, we’re talking pennies here, but with 50+ debit transactions per month per card, those pennies are going to pile up to one hell of a big ol’ mountain very soon!

This is a fluid situation. I’m making the assumption-leap that if Kroger in Dayton, Ohio is doing it, all 2,774 stores are. I’m also speculating that, if Kroger can do this within regulatory approval, Walmart and Meijer won’t be far behind (if they are not already far ahead). Then, the world…

So what?

  • You may want to seriously re-look at your 2016 budget for interchange income because it’s about to take a punch in the nose.
  • You know all those folks that we’ve spent the last 5 years training and rewarding to do all debit transitions with a signature? They’re about to be thrown a curve ball – including being stuck with a conveyor belt full of food and not knowing the PIN for their debit card. Prepare your call center now.
  • What about daily transaction limits on PIN-based debit use. Do you have them? If so, are they now going to be high enough?

So what do we do?

We’ll have to make it up in volume! Focus more on new checking accounts. Incent staff for opening debit cards. Track usage and communicate with those who do not use their cards.

Debit cards are, in fact:

  • Safer
  • More convenient
  • Easier to track
  • Make budgeting easier

Comment Section:
We are all in this together. Let us know what you’re seeing in your market. How are you being impacted by EMV? What other retailers are not accepting signatures on debit transactions? What are you doing in reaction?

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