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    More Retailers Pushing PIN-payment to Lower Card Fees

    Merchants are encouraging customers to use a PIN with their debit cards instead of signing for purchases.

    NEW YORK -- Fed up with the rising cost of accepting credit and debit cards, a growing number of retailers, according to the Wall Street Journal, are "steering" customers to pay for their purchases using alternative methods that carry lower transaction fees, such as personal identification card (PIN)-based debit cards.

    The article warns consumers that they may lose potential debit card rewards if they use a PIN because banks don't want to encourage this form of payment. On the other hand, for retailers, PIN-based transactions are among the least costly of all fees they pay to process plastic.

    Although some big retailers, like Wal-Mart and CVS, have been steering customers to PIN-debit machines for years, the article says the practice is gaining steam, especially among smaller mom-and-pop retailers.

    One small bicycle retailer told the Journal that using PINs could cut his card-processing fees by 25 percent. Last year, his $2 million store rang up card processing fees of about $40,000.

    Citing figures from VISA USA Inc. -- the nation's largest credit card network -- the Journal reports that a typical grocer would pay 24 cents in fees when a customer buys $40 worth of groceries with a debit card and PIN. The fee would be 35 cents for a signature-debit transaction and 50 cents or more when a regular credit card is used.

    The costs paid by the retailers depend on many factors, including the size of the company, the type of business and the type of card. As the use of plastic has grown, banks and credit card issuers have been pitching new credit cards loaded with perks and rewards -- all of which cost retailers in higher fees than other credit cards.

    The rising cost of credit and debit card transactions has raised retailers' ire. Currently, a class action lawsuit is pending in federal court in Brooklyn, N.Y., against the credit card companies. Retailers charge the credit card companies with price fixing, collusion and conspiracy.

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