Discover Financial Service's Pulse debit network said Wednesday it has agreed to carry PIN debit transactions initiated online with Acculynk Inc.'s PaySecure system.
Pulse is one of seven debit networks either testing or using PaySecure. Accel/Exchange, Alaska Option Services Corp.'s Alaska Option network, Credit Union 24, NYCE Payments Network LLC, Fifth Third Processing's Jeanie network and the Shazam network are the others.
Last year, Fiserv Inc.'s Accel/Exchange became the first debit network to roll out PaySecure support commercially. Pulse has been testing the system since last year.
Acculynk lets consumers use PIN-debit cards to make purchases online by integrating its PaySecure software into merchants' online-checkout systems. After a consumer enters an eligible debit card number, the website displays a picture of a PIN-pad; users enter their PINs by clicking on the appropriate digits.
The pilot testing helped Pulse validate some key assumptions about PaySecure, said Judith McGuire, Pulse's senior vice president of product management. Consumers showed they would use the payment option when given the chance and were comfortable with it, she said.
"We also wanted to understand what the value was [to banks] in terms of fraud and chargeback expense," she said, and Pulse anticipates that fraud will shrink at banks whose customers use PaySecure as a payment option.
The 4,400 financial companies that use the Pulse network will all be able to handle PaySecure debit transactions when Pulse goes live in October. They can opt out, but McGuire does not expect many to do so.
Acculynk has said that PaySecure can increase e-commerce volume because the security features make people more comfortable with shopping online.
James Van Dyke, the president and founder of Javelin Strategy and Research in Pleasanton, Calif., said the PIN-debit option should become more attractive as consumers seek ways to be more directly involved in protecting sensitive information.
"When we look at consumer capability, clearly the top driver to more online payments volume is more security that involves the consumer," he said. The bigger debit networks for too long have relied on back-end and embedded security features that omit the consumer, he added.
"The consumer gets the last laugh because they gravitate toward systems that involve them," Van Dyke said.
Javelin and Acculynk have the numbers to back this argument.
In a study last year involving 500 signature-debit card users, 65% of participants said they would feel safer buying on the Internet using PaySecure, and 48% said they would buy on the Internet if they could pay using the product.
Van Dyke said he expects PaySecure and other payment options that involve the consumer more to continue to gain traction.
Acculynk has also positioned PaySecure with a merchant incentive — a lower interchange rate.
Card-not-present signature debit rates set by Visa Inc. and MasterCard Inc. typically range from 1.64% to 2.2%, depending on the type of transaction, according to Acculynk.
The final price to the merchant for PaySecure is typically 20% to 40% lower than they would pay for card-not-present signature debit, Acculynk has said.
The debit networks set the interchange fee that the issuer gets in that final price. Though the networks decline to disclose what the fee is, it is high enough to make PaySecure attractive to issuers, Acculynk said.
From 60 million to 90 million debit cards will be able to use PaySecure by yearend, according to Acculynk's chief executive, Ashish Bahl.
Acculynk is exploring partnerships with networks abroad and expects international expansion next year, he said. It is trying to keep its system top-of-mind for banks and merchants.
This year Acculynk formed an advisory council in an effort to help the payments industry better understand its Internet PIN debit product.
The council, which included Acculynk's partner debit networks, set an initial goal of establishing the processes, procedures, rules and best practices for Internet PIN debit using PaySecure.
About 1,000 merchants, including carriers such as AirTran Airways and Spirit Airlines, accept PaySecure.
The Atlanta company is adding merchants and is actively trying to move the other electronic funds transfer networks from testing to full rollout, Bahl said.
"We've been able to stand out among the fringe participants in this space," he added.
