Heartland’s Elefant Says Network Endorsements Helped In Choosing Acculynk

Heartland Payment Systems Inc.’s Steve Elefant readily admits software-based payment-acceptance products are less secure than those requiring hardware. But that did not prevent the payments processor from supporting Acculynk Inc.’s PaySecure checkout software, which enables merchants to accept PIN-debit cards online.

Heartland on March 1 announced an agreement with Acculynk to offer PaySecure to its online merchants. The payment option will be available to Heartland’s existing and prospective merchants by early July (see story).

Elefant, Heartland’s chief information officer, views Acculynk’s technology as state-of-the-art. But the endorsements of various electronic funds transfer network also played a role in Heartland agreeing to support PaySecure.

“The debit networks are the ultimate arbitrator, and obviously a number of them have signed on to accept Acculynk,” Elefant tells PaymentsSource.

Nine EFT networks support PaySecure, including Accel/Exchange, Alaska Option, Credit Union 24, Jeanie, MasterCard Worldwide’s Maestro, NetWorks Inc., NYCE, Pulse and Shazam. The two largest networks that support PIN-debit purchases, First Data Corp.’s Star and Visa Inc.’s Interlink, have yet to sign on with Acculynk.

Acculynk has said it is working on a potential deal with a 10th, undisclosed network.

Heartland views PaySecure as a method for “e-commerce merchants to connect online payments with lower costs through the debit networks that [support Acculynk] and greater charge-back protection because of the PIN entry,” Elefant says.

Heartland deals with some 50,000 e-merchants and 250,000 overall.

PaySecure enables consumers possessing an eligible debit card to enter their PIN on a virtual, scrambling PIN pad on a computer’s screen to complete a transaction during the online checkout process.

Acculynk touts to merchants the lower interchange rates PaySecure offers.

Card-not-present signature-debit rates set by Visa Inc. and MasterCard Worldwide typically range from 1.64% to 2.2% of the sale, depending on the type of transaction, according to Acculynk. The final price to the merchant for PaySecure typically is 20% to 40% lower that what they would pay for card-not-present signature debit, Acculynk has said.

The EFT networks set the PIN-debit interchange rates, which determine how much the issuer receives from the merchant’s bank for the transaction. The acquiring bank then passes the expense along to the retailer as part of the discount rate, which also covers costs for processing and other services, including those provided by the supplier of the PIN-debit payment service.

Different categories of Heartland merchants have expressed interest in PaySecure, Elefant says. “There is a general interest among merchants on how to secure payments and how to do that in the PIN-debit world,” he adds.

Heartland could be excused for being especially picky about its partners given the processor’s need to keep its operations and transactions secure. The company in January 2009 reported that hackers a few months earlier had breached its processing network, capturing credit and debit card numbers and expiration dates (see story).

The Secure Remote Payment Council, which Elefant participates in, has vetted Acculynk’s product. That helped Heartland in its decision to support PaySecure, he says. The organization, which formed in 2009, promotes a set of best practices for payments companies involved in Internet PIN-debit and mobile-payment transactions.

Acculynk’s deal with Heartland comes just two weeks after it announced its most significant partnership with First Data, which provides processing services to more than 300,000 e-commerce merchants (see story).

The Heartland deal is similar to Acculynk’s partnership with Dallas-based merchant services provider JetPay LLC, Ashish Bahl, Acculynk CEO, tells PaymentsSource. JetPay also is processor.

Processor agreements “certainly are an important part of this puzzle for anyone that’s going to be in the business,” Paul Turgeon, president of Payments & Processing Consultants Inc., tells PaymentsSource. “They are certainly gaining momentum in that regard.”

Turgeon believes Acculynk stands to gain more support from issuers pending the outcome of the Federal Reserve Board’s proposed 12-cent cap on debit card interchange because PaySecure is based on PIN-debit transactions, which generally are more secure than signature-debit purchases. Issuers likely would become more concerned about fraud as a lower interchange rate cuts into margins, he says.

“No disrespect to the brand companies, but I believes the brand companies and issuers are not honest about the amount of fraud that occurs in e-commerce and mobile-commerce transactions,” Turgeon says. “The transactions have historically been rich enough that they really haven’t had to care much.”

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