IMGCAP(1)]
Nevada Motorists can use pinless debit to renew their driver's licenses at kiosks
First Data Corp.'s Star Network deployed this summer throughout the state. Star
introduced PINless online debit payment for the Nevada Department of
Motor Vehicles in July 2006.
Motorists also can use PIN debit to pay for transactions at 300 of the
department's offices because the Star Network installed PIN pads there.
The combination of the kiosks, PIN pads and PINless debit for online
payments is saving money for the department because the state's interchange payments on debit card transactions are lower than interchange payments on credit card transactions, Dennis Colling, the department's chief of administration, tells ATM&Debit News.
Colling was unable to say how much the state will save because the
Star Network recently installed the kiosks, and no one knows how much consumers will use them. He could say, however, that credit card transactions cost the department $4 in processing fees compared with $1 for debit card acceptance,.
Last year, the department received 1 million credit card payments, which accounted for 36% of its transactions. Cash represented 31%; checks were
20%; and PINless debit cards were less than 15%, Colling says. Consumers made 6,000 to 7,000 PINless debit transactions each month before installation of the PIN pads.
The pads increased debit transactions to 40,000 every month, a department
spokesperson says. The department does not promote debit over other payment forms, but it comes close. Motorists are asked if they would like to pay for services with their debit cards, Colling says.
Results of a First Data study show nearly 87% of survey respondents used debit
cards in the last month. "More people are paying with debit," says Melissa Santora,
director of new product development at Star Network and manager of Star Bill
Payment Service.
Colling agrees with Santora. "Debit is a very popular way to pay, and we expect to
see it increase," he says.
MasterCard Worldwide and Visa Inc., which control much of the global debit
card market, have resisted PINless debit, Jennifer Roth, TowerGroup Inc. senior analyst, global payments, wrote in the July 2007 research paper, "PINless Debit: Finally Taking Off or Headed for a Crash."
Visa issuers Bank of America and Wells Fargo Bank, which account for 40% of card payments made to the department, refuse to allow consumers to use their cards in PINless debit transactions.
"It makes me mad," Colling says about BofA and Wells Fargo. Visa and MasterCard have signed agreements with bank issuers prohibiting use of their debit cards in PINless debit transactions, Roth says.
This summer, Star installed 26 kiosks that accept PINless debit transactions, 19
in the department's larger offices and the balance in retail locations.
Electronic funds transfer networks first offered PINless debit or PINless bill payment in the mid-1990s as a low-risk way for billers to collect payments, Roth wrote. PINless debit involves a debit cardholder paying recurring bills through a biller's Web site, touch-tone phone, integrated voice response or a customer-service representative.
Debit cardholders pay their bills over one of the electronic funds transfer networks-- Pulse, Star, NYCE Payments Network, or ACCEL/Exchange. The cardholder does not type in his debit card's fourdigit PIN.
The biller is a company in the financial, utility, insurance or telecommunications
industries that issues monthly recurring bills for services rendered.
The Nevada Department of Motor Vehicles does not issue monthly billing
statements, but in 2006 Star added to its network government billers that do not bill
monthly. The department "came to us and said it wanted to expand the payment channel by accepting card-not-present transactions," Santora says.
Consumers who pay with PINless debit, either at a kiosk or online, first must register with the department to establish a relationship with the biller, Santora says. Star processes PINless debit and PIN debit transactions, she says. Besides renewing a driver's license, motorists can use PINless debit to obtain
their driving records, verify their automobile insurance and register their motor vehicles, Colling says. Many motorists visit the department's offices to obtain their driving records, he says. Drivers can use the kiosks to obtain those documents and no longer have to take up a clerk's time, Colling says.
