Fiserv Inc. said that starting Nov. 9 it will support Internet PIN debit transactions on its Accel/Exchange network.
The Brookfield, Wis., financial technology company said Monday that it would be the first to offer commercially the PaySecure format developed by Acculynk Inc., which uses an on-screen keypad display to enable customers to enter their PINs.
Executives predicted that the service would be popular with merchants and issuers, because it would be less vulnerable to fraud and would likely have fewer chargebacks, and would carry a lower interchange rate than card-not-present credit card or signature debit rates.
"Merchants like it because it is more secure and it is cheaper than the alternatives," said Rahul Gupta, the president of Fiserv's card services unit.
Michael Kelly, the general manager of Accel/Exchange, said the service was designed to promote the use of debit cards issued by the 2,500 financial companies that use the network.
"We are an FI-centric network. How do we deliver value out?" Kelly said.
"We want to play defense for our banks and credit unions. We want to prevent disintermediation" by nonbank competitors, a group led by the PayPal unit of eBay Inc., Kelly said. "This is a model that lets the consumer use the card they prefer."
The first challenge is to bring merchants and acquirers on board, Kelly said. "It's a classic chicken-and-egg situation in our industry."
The processor began testing the technology in March and will launch next week with four online merchant users, including the airline AirTran Holdings Inc.
"The queue is large," Kelly said. "It's a rough business out there for them with fraud and chargebacks."
The Fiserv service works within the merchant's Web site, putting a floating PIN pad on the checkout screen rather than transferring the customer to a separate site to provide transaction details, Gupta said. "The drop-off rates are tremendous when that happens," Kelly said.
Because there is no card stripe to read in an online transaction to get the PIN number, online PIN debit will be limited to hosted authorization, which make up about 39% of Accel/Exchange's customers, Kelly said. "We'll put a plan together for the rest of the issuers," he said. "This model fits our strategic initiatives as a very mature business while getting us to this space that is burgeoning."
Acculynk said in July that it was testing PaySecure with the debit networks operated by Metavante Technologies Inc.'s NYCE unit, Discover Financial Services' Pulse unit and with a handful of merchants.
