Merchants should be eager to accept PIN debit transactions online to reduce transaction costs, thanks to lower interchange rates and decreased chargeback risk, executives from companies offering these products said. At least one independent sales organization said it believes Internet PIN debit already has helped it gain business it would have lost to competitors.
However, the determining factor for consumers might rest with their comfort in entering PIN codes in an environment other than at the point of sale or an automated teller machine.
Acculynk Inc.'s PaySecure service has sprinted to the front of the pack in the race to determine which product gains universal acceptance among consumers and merchants. Nine EFT networks support PaySecure — Accel/Exchange, Alaska Option, Credit Union 24, Maestro, NetWorks, NYCE, Pulse and Shazam. A thousand merchants accept PaySecure transactions.
Acculynk enables consumers to use PIN debit cards to make purchases online by integrating its PaySecure software into a merchant's online checkout system. Cardholders enter their four or six digit PINs into a virtual PIN pad that appears on-screen.
RATES VARY
Card-not-present signature debit rates set by Visa Inc. and MasterCard Inc. typically range from 1.64% to 2.2% of the sale, depending on the type of transaction, according to Acculynk. The final price to the merchant for PaySecure typically is 20% to 40% lower than what they would pay for card-not-present signature debit, Acculynk has said in the past.
The EFT networks set the PIN debit interchange rates, which determine how much the issuer receives from the merchant's bank for the transaction.
The acquiring bank then passes the expense along to the retailer as part of the discount rate, which also covers costs for processing and other services, including those provided by the supplier of the PIN debit payment service.
Adaptive Payments is the latest entry into the Internet PIN debit market with its E-Commerce Checkout service. The Fort Lauderdale, Fla., payment authentication company has developed technology that uses any phone to help verify Internet PIN debit transactions conducted at participating merchant websites.
Merchants integrate the E-commerce Checkout system into their checkout software. To complete an E-commerce Checkout transaction, consumers enter their phone number in a dedicated field on a retailer's checkout page. The shoppers then receive a phone call from an automated system to verify transaction details, and they enter a PIN using the phone keypad to complete the transaction.
A hardware-security module on Adaptive's back-end system encrypts the PIN, which Adaptive sends to a payment gateway to begin the processing cycle. Currently, only Shazam supports the system.
Adaptive has not announced merchant partners.
Another online PIN debit firm, HomeATM ePayment Solutions, has modified its business model several times over the past two years.
The Toronto company has no plans to abandon enabling PIN debit transactions at home with its card-swipe device and PIN pad.
It is now promoting an "anywhere commerce" model in which merchants such as flea market vendors may use HomeATM's device with a mobile phone, laptop and even Apple Inc.'s iPad to conduct transactions.
Merchants could use the device with an existing processor relationship or with HomeATM's processing options that include eFunds Corp., a subsidiary of Fidelity National Information Services Inc.
FIS' NYCE debit network has taken a slightly different approach to Internet PIN debit transactions.
