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When Acculynk Inc. announced in November it would pilot an Internet PIN-debit product with four EFT networks, the company predicated its business case on a conversion rate of 25% of the total volume of Internet transactions now conducted with signature-debit cards. But the results of a survey conducted by Javelin Strategy & Research last month indicate the conversion rate may be much higher.
In the survey, 80% of participants said they would use Acculynk's PaySecure Internet PIN-debit product if a trusted merchant presents it as a checkout option. Javelin surveyed 500 signature-debit card users who had made online purchases in the previous year.
Participants used PaySecure for a mock online purchase and then answered questions about their experience using the product. Atlanta-based Acculynk and the Pulse EFT network, which is piloting PaySecure, commissioned the study.
"What this survey is basically saying is, in that group of folks targeted, that the conversion rate is closer to 80%," Ashish Bahl, Acculynk CEO, tells ATM&Debit News.
PaySecure enables consumers to use a computer mouse to enter their PINs on a virtual PIN pad that appears on the screen during checkout.
Sixty-five percent of participants said they would feel safer buying on the Internet using PaySecure, while 48% would buy more often on the Internet if they could pay using the product. "That 65% is a very strong number from our vantage point versus what a lot of people could have thought" in the aftermath of recent security breaches involving Heartland Payment Systems Inc. and RBS Worldpay, Bahl says.
Industry analysts, however, have questioned the security of Acculynk's product. In February, Avivah Litan, vice president of Stamford, Conn.-based Gartner Inc., tells ATM&Debit News she is against any software or Web-based PIN-entry products (ADN, 2/12). "I would highly recommend [to any consumer] not entering their PIN anywhere on the Internet unless [the system] was hardware-based," she says.
Hardware-based systems, however, have struggled to secure the interest of consumers wary of plugging in yet another peripheral device into their computers, and the sponsoring organizations have yet to find someone willing to pay to mass-distribute the devices. Moreover, EFT networks historically have questioned the security of software-based systems.
But the networks involved with the pilots have little concern about the Acculynk product's security, Bahl claims. "For all the credible third parties that understand exactly what we do in detail, they are absolutely fine with our security, and that's their fiduciary responsibility," he says.
The bigger issue might be the balance of security versus usability for any Internet PIN-debit product, according to Bruce Cundiff, director of payments research and consulting at Pleasanton, Calif.-based Javelin. "You can have the most secure solution in the world, but if you don't have any transactions and it's not easy for a customer to use, then it's worthless," he says.
At the moment, PaySecure has usability in its favor. According to the Acculynk survey, 93% of participants found PaySecure easy to use, and 86% liked that the product does not require additional passwords, log-ins or one-time-use numbers to complete a transaction.
Pulse, which announced last month it would pilot PaySecure, also was encouraged by the survey results. The Houston-based network said merchants' interest in the product would be the easiest to determine because PIN transactions carry lower interchange rates and lower fraud risk than do signature-debit card-not-present transactions. But Pulse was unsure how consumers would respond.
"We're trying to understand the consumer response. Do they understand it? Are they comfortable with it?" Judith McGuire, Pulse senior vice president of product management, told ATM&Debit News.
In an e-mail message, McGuire wrote that Pulse believes "Internet-based PIN debit has tremendous potential value for consumers, as well as for merchants and debit card issuers."
Cundiff says consumers especially will benefit from another "pay-now" method at a time when they are shying away from credit cards. "There is a substantial subset of consumers that's making the behavior change from credit cards to other methods of payment," he says.
Acculynk says the survey is the first of several research steps the company will conduct regarding the product, according to Danielle Dulcos, director of marketing.
"We're thinking of doing a larger survey of 1,000 consumers and spreading out the demographics," she says. Accel/Exchange and NYCE are the other two EFT networks piloting PaySecure. Bahl says a fourth network will be announced soon. ATM
