Acculynk Inc. is changing the pitch around its e-commerce debit payment system as it anticipates the effects of interchange regulation.
Acculynk enables consumers to use PIN debit cards to make purchases online by integrating its PaySecure software into a merchant's online checkout system. After a consumer enters a card number into a designated field, the system will determine if the card is eligible to be used with a PIN. The consumer has the option to complete the purchase as a signature debit transaction or as PIN debit.
A virtual PIN pad that appears on the screen scrambles the numbers as a safety precaution each time the consumer enters a digit. The issuing bank's brand also appears at checkout, providing additional peace of mind for the consumer.
Acculynk has adjusted its business model in light of the potential impact the Durbin amendment in the Dodd-Frank Act might cause, Ashish Bahl, Acculynk's chief executive, said. Acculynk's business model was very clear before Durbin, Bahl said. For example, if 30% of a merchant's online business was based on card-not-present signature debit, PaySecure was an opportunity to convert some or all those transactions to a cheaper interchange. Under Durbin, the interchange rate for all forms of debit would drop to a maximum of 12 cents per transaction from an average of 44 cents.
Acculynk's pitch to merchants now is PaySecure's ability to help them maintain debit spending instead of handling those payments at more expensive credit card interchange rates, Bahl said.
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 merchants for PaySecure typically is 20% to 40% lower than what they would pay for card-not-present signature debit, Acculynk has said.
The electronic funds transfer 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.
Though EFT networks have declined to disclose the rates applied to online transactions such as PaySecure's, they price it high enough to make it attractive to issuers, Acculynk said. Networks that support PaySecure include Accel/Exchange, Alaska Option, Credit Union 24, Jeanie, MasterCard's Maestro, NetWorks Inc., NYCE, Pulse and Shazam.
Networks either require their member issuers to support PaySecure, or they give them the ability to opt in. Acculynk has declined to reveal the exact number of issuers that support its system. Roughly 60 million debit cards are eligible for PaySecure transactions, and Acculynk said it wants to boost that to 100 million by the end of the year by adding more EFT network participation and issuers.
JetPay LLC, a merchant services provider in Dallas, announced Tuesday that PaySecure is now active and available to its merchants as part of a payment transaction processing suite. JetPay and Acculynk initially announced a partnership in September.
Independent sales organizations "should be looking at [PaySecure], especially as more consumers are concerned about online security" when it comes to e-commerce transactions, said Adil Moussa, an analyst at Aite Group LLC.
"This is a no-brainer for ISOs to add if they are dealing with a large number of e-commerce merchants," Moussa said.
PaySecure's safety had been a concern when it was launched in 2008, but Acculynk insists the product is as secure as it can be at this point.
JetPay, one of the few merchant acquirers offering PaySecure, said it quickly saw it had an advantage in the marketplace shortly after announcing its Acculynk agreement. Potential new clients are intrigued with Internet PIN debit's potential because it helps merchants tap into consumers who have no other way to pay online than using their debit cards, JetPay's chairman, Trent Voigt, said in November. Prospective clients see the opportunity and then want to understand it better as they evaluate potential partnerships, he said.
