When Royal Dutch Shell PLC introduced a debit card last year that used the automated clearing house network, it expected to sign up 25,000 customers in 2009; instead, it tripled that number.

Though ACH debit cards are not a new concept, few have had significant success. Shell said its card has taken off because it was introduced at just the right time.

To combat the recession, merchants are seeking ways to reduce transaction costs, and ACH debit offers significant savings; Shell says a $20 purchase settled over the ACH network costs about 60% less than traditional credit cards.

Moreover, consumers, having experienced firsthand the adverse effects that rising debt can have during a down economy, increasingly are turning to debit cards to control their spending. And it does not hurt that the card offers users other benefits, including discounts and rewards.

Shell's proprietary Saver Card is a long-term initiative to help drive customer demand and boost revenue. "It's an attractive option to those looking to avoid credit due to the national 'shift to thrift' in consumer purchasing behavior as well as to those who don't qualify for a Shell-branded credit card," a Shell representative explained.

There is no annual fee. To apply, consumers provide their banks' routing and checking account numbers, and Shell deducts the payments directly from their accounts. Cardholders enter a PIN to initiate a purchase, either at the pump or inside a store.

First Data Corp.'s TeleCheck unit verifies the transaction data and approves the purchase.

First Data, of Atlanta, a unit of Kohlberg Kravis Roberts & Co., also is Shell's processor for the Saver Card and for other Shell card programs; the fuel company also offers prepaid gift cards, personal and business credit cards and a Shell-branded MasterCard.

Offering ACH-based cards, especially one that features discounts, can lead to a better connection with consumers, said Beth Robertson, the director of payments research at the Pleasanton, Calif., consulting company Javelin Strategy and Research.

When the card was introduced in January 2009, Shell offered a 5-cent-per-gallon discount on gasoline or diesel purchased through June 1, and is considering repeating the promotion, it said.

Cardholders currently save 2 cents per gallon and may use their cards for purchases inside the gas stations' convenience stores, but they cannot be used to purchase lottery tickets.

Shell merchants do not need to purchase new payment terminals to accept the cards, because the transactions use existing settlement processes, Shell said.

Shell stores do not pay merchant-service fees to accept Saver Card transactions, but they do pay a fee to TeleCheck; the fees vary, depending on the level of risk for the transaction, according to Karen Kaukol, First Data's vice president of product management. She would not disclose the exact fees.

Shell saves money because ACH debit purchases cost merchants less than regular credit card purchases. Though Shell would not say how much the difference is, Michael Grossman, the chief executive of Tempo Payments Inc., a San Mateo, Calif., ACH payment card company, estimated that merchants pay about 0.5% to 0.75% of the sale for an ACH-based debit card transaction, though specific rates can vary.

By comparison, merchants typically pay 2% to 3% of the sale for credit card transactions, though these rates also vary significantly depending on the size and type of merchant, Grossman said.

First Data also handles returns on Shell's behalf, Kaukol said. Because TeleCheck is responsible for both verification and collections, merchants only need to submit returns after TeleCheck has exhausted all attempts to represent the transaction, she said.

At that point, First Data debits the merchant's account and begins contingency-based collections on the merchant's behalf. Because transactions are PIN-enabled ACH transactions, not PIN debit transactions, no electronic funds transfer networks are involved with the Saver Card.

Shell said that consumers with all Shell-branded payment cards visit Shell two to three times more often than people with other MasterCard or Visa cards, and tend to purchase up to twice as much gas.

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