National Payment Card

What is ACH Decoupled Debit?

Based on low-cost settlement through the ACH network, a new debit card product has emerged that many payment industry observers are heralding as the beginning of a revolution / next generation product in the retail card market. The industry has referred to this product as “ACH Decoupled Debit”. The term arose from the fact that the debit card will be issued from a third party that does not hold the cardholder’s savings or checking account and thus “decouples” the card from the traditional bank / depository institution. In this emerging payment space, National Payment Card is referred to as an “Intermediate Service Provider”. Decoupled Debit is an electronic funds transfer that creates the ACH-based debit product which levels the playing field giving National Payment Card, which functions as the “Intermediate Service Provider”, access to the debit card account which in the past had been the exclusive domain of the consumer’s financial institution (FI).

Merchants are seeking /demanding a relief from the current business model and monopolistic pricing tendencies of credit card, debit card and payment processors. National Payment Card is capitalizing on this opportunity for a new payment mechanism and has developed the infrastructure and deployed this distributed technology that bypasses the two major card brands and their interchange schedules.

Joe Randazza, CEO of National Payment Card, charters the birth of the decoupled card idea with the settlement of the suit in 2004 between Wal-Mart and Visa / MasterCard that saw the card brands abandon their long standing “honor all cards rule”.

Under the rule, if a merchant accepted a Visa or MasterCard, it had to accept the entire line including debit cards. A lesser-known aspect of the rule was that it effectively prevented merchants from accepting other forms of card payments. Abandoning “honor all cards” meant that merchants could begin to accept products from third party vendors that transformed their existing loyalty cards into a lower cost payment settlement system by cutting out the higher cost interchange fees which enables them to self-fund rewards to consumers for their purchases thus creating a higher margin traffic building program.