Visa U.S.A. announced a service Tuesday that blurs the difference between two types of debit card.
Effective Oct. 1, banks issuing Visa check cards will have the option of providing on-line authorizations, with cardholders entering personal identification numbers at the point of sale.
The procedure would be similar to that for on-line debit cards like Visa Interlink, MasterCard International's Maestro, and those connected with regional automated teller machine networks.
Off-line debit payments-using Visa check or MasterMoney-have heretofore been authorized like credit cards and require cardholders' signatures.
Visa said it is responding to the proliferation of on-line terminals with PIN pads, currently 1.3 million nationwide and growing 70% a year.
Because of the greater assurance against fraud and other losses, merchants would not have to pay as much to accept PIN-based transactions, and Visa can extend certain protections not currently available on Visa check cards.
"Our purpose was to respond to the needs of the marketplace as the numbers of on-line terminals grew," said Tony McEwen, executive vice president for deposit and cash products, Visa U.S.A.
"This product will be superior to anything else in the market and will ensure the integrity and protection of Visa-branded on-line debit card transactions," he said.
Mr. McEwen said the on-line PIN service is a new product, not an enhancement that needs to be phased in on current cards. Individual financial institutions will decide whether to offer it and how to educate cardholders. Mr. McEwen said he expects it to be "transparent to consumers," who would be able to use the cards either with PINs or in the conventional way with signatures.
Off-line debit caused Visa and MasterCard public relations problems last year when consumer advocates complained that cardholders were legally vulnerable to substantial liability if they failed to report a lost or stolen card. The card associations and their members voluntarily adopted zero-liability guidelines.
Visa will now claim that with the PIN option the check card is even more "consumer-friendly" and has global acceptability that regional debit programs lack. And the new rules extend security and other benefits that current Visa check transactions lack, even if they are accompanied by a PIN.
MasterCard officials were occupied in meetings Tuesday and unavailable for comment, a spokesman said.
Not knowing the still-undisclosed interchange fee on Visa check payments with PINs, Stan Paur, chief executive officer of the Houston-based Pulse network, said it is hard to gauge its impact on competition. He also wondered how Visa check will differ from Visa's current PIN-based point of sale offering, Interlink.
But Mr. Paur said the competition between regional and national networks could, perversely, cause merchant costs to rise. The regional networks would have to set interchange fees high enough to keep card-issuing banks in their programs, and these costs might have to be passed on to merchants.
Another industry source, who asked not to be identified by name, said Visa's gambit could lead banks to reassess their need to "be involved in regional as well as national networks."