NEEDHAM, Mass. - During the mid-1990s, EFT networks debuted PIN-less debit, or PINless bill payment, as a low-risk way for billers to collect payments. And now, some 10 to 12 years later, research suggests that PIN-less debit bill-payment volume in 2007 will be at least 40 percent higher than in 2006. But obstacles remain.
According to Massachusetts consultancy TowerGroup, PIN-less debit only accounts for a small percentage of overall bill payments at .45 percent.
In its new research report, "PINless Debit: Finally Taking Off or Headed for a Crash Landing," Jennifer Roth, a senior analyst at TowerGroup, identifies the challenges related to PIN-less debit bill payment, the methods for overcoming the obstacles, and the durability of PINless debit as an alternate payment method.
PIN-less debit allows consumers to pay bills through a remote channel by entering their debit card numbers without entering PINs. Since its introduction, transaction volume has grown steadily, but adoption of PIN-less debit continues to face many challenges, including inconsistency in industries eligible for participation functionality and card eligibility, TowerGroup says.
PIN-less debit does, however, offer benefits to billers that "split the difference" between credit cards and ACH debits, Like credit cards, PIN-less debit, provides guaranteed funds. ACH does not. But PIN-less debit does not have the higher fee structure associated with credit cards. It also is an additional method to increase overall adoption of electronic payments, a common goal for billers and suppliers in the bill payment value chain.
