Consumers will soon be able to pay at retail sites by entering their debit card number and the personal identification number they use at ATMs and at checkout counters. ShoppersChoice.com is among the first web merchants trying the system from Acculynk.
Consumers who prefer paying with debit cards than credit cards have been able to pay with debit online as long as their debit cards carry a Visa or MasterCard logo, as most do. But they haven’t been able to enter a personal identification number, routing the transactions through the networks that handle ATM transactions. That’s about to change.
Two of the ATM and PIN-debit networks have agreed to test the PaySecure system from Acculynk, and two more are expected to announce their participation soon. That represents about half of the high-volume PIN-debit networks, which means a substantial number of cardholders will be able to use payment method at participating merchants, says Mike Strada, manager of debit product at Chase Paymentech Solutions LLC, which says it processes half of all online purchases in the U.S.
Chase Paymentech plans to participate, piloting PaySecure with three or four merchants. “What we’re looking for is proof of concept,” Strada says. “Will it work, and, more importantly, will consumers use it?”
Among the first merchants to try out PaySecure will be ShoppersChoice.com, a luxury cooking and outdoor merchandise retailer that is planning to go live with the payment method Monday. Corey Tisdale, chief operating officer, says PIN debit may appeal to consumers that are trying to avoid running up credit card bills, or who may not have any credit left. PaySecure also offers him an interchange rate that is 20-30% lower than that of so-called “signature debit” card transactions in which the consumer does not enter a PIN.
PIN debit is a lower-cost alternative for merchants in face-to-face environments, which makes it popular with retailers, but less so with the banks that issue debit cards because they receive less income from PIN debit. One issue with the PIN debit trials is how many consumers will be able to use it. Strada notes it’s unlikely that Interlink, one of the largest PIN-debit networks, will participate because it’s owned by Visa. And Visa’s banks prefer to encourage consumers to use signature debit, which results in the retailers paying higher fees to the banks.
One roadblock that has kept PIN debit from the Internet until now has been the security of the PIN. Just tapping the PIN into a computer keyboard leaves it open to theft by hackers, opening up the threat of criminals using the PIN with a stolen card to withdraw money at ATMs or to use the cards to make purchases in stores.
Acculynk’s system pops up a PIN pad on the screen and consumers use the mouse to indicate the numbers, not the keyboard that is vulnerable to keystroke-sniffing programs. What’s more, the PIN pad grid changes with each use, so the nine digits are not in the same order. Acculynk only captures the coordinates that the consumer clicks, not the actual number, and then uses that information to reconstruct the consumer’s PIN in its own data center. The PIN is then encrypted using the technology required by ATM networks and sent to the networks for authorization.
One selling point of the system is that merchants are guaranteed funds once the transaction is authorized, Strada says. Another is that chargebacks should be significantly reduced compared to credit or signature debit cards because the PIN entry serves as positive authentication that it is the cardholder making the transaction, he says.
The PIN-debit networks that have announced participation in the PaySecure tests are Accel/Exchange, a subsidiary of Fiserv, and NYCE.