Pulse Debit Service Works Without PINs

Pulse EFT Association LP announced Tuesday that it is offering a recurring-payment option that lets billers accept debit transactions without requiring consumers to provide a PIN.

Pulse, a unit of Discover Financial Services LLC, said the PIN-less debit format carries lower interchange rates than credit or signature debit transactions.

It is available only to certain types of billers that have an established relationship with the customers, such as utility companies, government agencies, and schools. Pulse is testing the service with property lessors and credit card companies.

Judith McGuire, Pulse's vice president of retail services, said that being able to pre-authorize recurring debit payments would benefit billers and consumers. "Consumers want to pull out that debit card more and more and make payments."

Pulse introduced the service this month. Consumers can use it to make debit payments online or by phone. Several other debit networks offer it to compete with automated clearing house transactions.

Adil Moussa, an analyst at the research and advisory firm Aite Group LLC of Boston, said the appeal of PIN-less debit is about convenience more than economics. "If I'm a utility, I honestly would prefer an ACH, because it's much less expensive than a debit," Mr. Moussa said. "For the consumer, it would take as much time to set this up as an ACH. I'm not compelled to use it unless there are rewards associated with my debit card."