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Starting Monday, Fiserv Inc. says it will support Internet PIN-debit transactions on its Accel/Exchange network, reports American Banker, an ATM&Debit News sister publication.
The Brookfield, Wis.-based financial-technology company says it would be the first to offer commercially the PaySecure format developed by Acculynk Inc., which uses an on-screen keypad display to enable customers to enter their PINs.
Executives predict the service will be popular with merchants and issuers because it is less vulnerable to fraud and likely will have fewer charge-backs, and it will carry a lower interchange rate than card-not-present credit card or signature-debit rates. "Merchants like it because it is more secure, and it is cheaper than the alternatives," says Rahul Gupta, president of Fiserv's card services unit.
Michael Kelly, Accel/Exchange general manager, says it designed the service to promote the use of debit cards issued by the 2,500 financial companies that use the network. "We are [a financial institution]-centric network. How do we deliver value out?" Kelly says. "We want to play defense for our banks and credit unions. We want to prevent disintermediation" by nonbank competitors, a group led by the PayPal unit of eBay Inc., Kelly says. "This is a model that lets the consumer use the card they prefer."
The first challenge is to bring merchants and acquirers on board, Kelly says, noting "it's a classic chicken-and-egg situation in our industry." The processor began testing the technology in March and will launch next week with four online merchants, including the airline AirTran Holdings Inc.
"The queue is large," Kelly says. "It's a rough business out there for them with fraud and charge-backs."
The Fiserv service works within the merchant's Web site, putting a floating PIN pad on the checkout screen instead of transferring the customer to a separate site to provide transaction details, Gupta says. "The drop-off rates are tremendous when that happens," Kelly says. Because there is no card stripe to read in an online transaction, online PIN debit will be limited to hosted authorization, which makes up about 39% of Accel/Exchange's customers, Kelly says. "We'll put a plan together for the rest of the issuers," he says. "This model fits our strategic initiatives as a very mature business while getting us to this space that is burgeoning."
Acculynk said in July it also was testing PaySecure with by Metavante Technologies Inc.'s NYCE and Discover Financial Services' Pulse debit networks and with several merchants. ATM
