Sometimes, the pace of technology forces lawmakers to learn and adjust. But in the case of 2010’s Durbin Amendment, a senator’s legislation to limit transaction fees imposed upon businesses has ushered in a wave of fintech innovation. In July 2023, Durbin was revised to create more competition to Signature networks like Visa, Mastercard, and Discover, mandating that all debit cards issued in the US be branded by at least one additional unaffiliated network, such as NYCE, STAR, PULSE, and Accel.
The increased competition has led to lower costs for enterprises, but also increased complexity. There is currently a golden opportunity to optimize for higher performance as well as lower cost. Whether you’re a domestic enterprise trying to compete in North America, or a global enterprise looking to expand operations in the US, embracing financial technology that can increase your profit margin is now possible.
A massive profit opportunity today
How do you balance performance and cost-efficiency in a dynamic and competitive landscape? The answer lies in AI.
Adyen's new product, Intelligent Payment Routing for US Debit, is the only AI-based solution that simultaneously increases conversion and lowers costs. In a pilot of over 20 enterprise businesses including eBay, 24 Hour Fitness, and Microsoft, Adyen is helping enterprises achieve an average of 26% cost savings with a 0.22% uplift in authorization rates.
In addition, we saw:
It comes at the perfect time, as consumers increasingly love paying with debit cards. From 2022 to 2023, the number of debit card transactions increased by more than 27%. Adyen’s platform data, which naturally excludes cash and checks as a payment method, saw debit transactions make up 58% of all US transactions this June.
Enterprises that benefit most
While most enterprises in the US will see significant benefits from Intelligent Payment Routing for US Debit, there are a few industries in particular [those with low to medium average transaction values (under $100) and high transaction frequency] that see a large volume of debit payments whether online or in-store.
Retail and E-commerce: Shoppers at retail and grocery stores rely on debit card transactions for everyday purchases.
Food & Beverage: Both fast-food and sit-down restaurants frequently process debit payments for small transactions.
Insurance and Healthcare: Pharmacies and medical services often deal with debit card payments for routine healthcare expenses.
Entertainment and Leisure: Subscription services and event venues typically cater to budget-conscious consumers who prefer debit cards for everyday spending.
Travel and Mobility: Ride-sharing services and online travel agencies often see high transaction volumes with debit cards due to their convenience and spending control.
And don’t fear if you’re in a different industry. If your consumers use a large number of debit cards, you will undoubtedly see savings too.
The Adyen advantage
While Least-Cost Routing (LCR) has existed in the market, with Intelligent Payment Routing for US Debit, we’ve taken a giant leap forward. Using AI at scale, our solution has tremendous advantages.
Dual optimization: Minimizes interchange and scheme fees for least cost routing (LCR) while maximizing approval rates with AI.
An effortless integration: If you’re already an Adyen customer, no additional code is required. Just flip a switch to activate Intelligent Payment Routing for US debit networks.
Maximize US Debit-eligible traffic: Network token and digital wallet transactions can now be routed over US Debit networks and are eligible for Intelligent Payment Routing. This both reduces transaction costs by expanding US Debit eligibility, and improves authorization rates by increasing routing options.
Leverages cross-channel data: Utilize Adyen ecosystem data from both online and in-store debit transactions to maximize your bottom line across all sales channels.
Increase margin on sub-merchants (for platforms): Processing eligible transactions with Intelligent Payment Routing reduces the cost of processing for a platform. As a result, you can increase the margin generated on sub-merchants.
No favoritism (we only favor our customers): We analyze various factors for each payment, such as the scheme and the issuer, and then choose the best network based on success rates and processing fees. Unlike competitors, we don’t own any networks, ensuring focus on performance and cost reduction rather than driving traffic to specific networks.
Operations at scale: We operate at scale. Instead of using a fixed decision model, we continuously adjust in real time as banks and payment networks update their systems. This ensures higher efficiency, fewer failures, and lower costs over time.
We’re always innovating with our customers in mind. If you’re currently using our platform, you just have to flip a switch to get all the benefits of this new product. If you’re a prospective customer, it’s already integrated into our single platform solution.
With the enhanced debit card routing rules in place and our Intelligent Payment Routing product live, now's the time to increase your profit on debit cards.
Fresh insights, straight to your inbox
By submitting your information you confirm that you have read Adyen's Privacy Policy and agree to the use of your data in all Adyen communications.