Article

PULSE offers online PIN-debit acceptance

PULSE, one of the nation's largest electronic funds transfer networks, yesterday began offering financial institutions the ability to process PIN debit purchases over the Internet.

July 14, 2010

PULSE, one of the nation's largest electronic funds transfer networks, yesterday began offering financial institutions the ability to process PIN debit purchases over the Internet, following a 10-month pilot which completely eliminated fraud and significantly reduced merchant chargebacks in card-not-present transactions.

PULSE, a Houston-based business which processes debit and ATM card transactions for 4,400 banks, credit unions and saving institutions, presented its PULSE Internet PIN Debit, which employs Acculynk Inc.'s PaySecure Internet PIN debit software. 

When a consumer is ready to complete a purchase on an online merchant's website using a card that participates in the PULSE Internet PIN Debit, a PIN pad appears on the computer monitor.  The cardholder enters her four-digit PIN with her mouse. The cardholder does not type in the digits from the computer's keypad because thieves can accurately determine from the keystrokes the PIN, Anne Rhodes, a PULSE spokesperson, tells ATMmarketplace.com. More than 1,000 online merchants are currently enabled with PaySecure, company officials said. PULSE links cardholders to more than 289,000 ATMs and point-of-sale terminals nationwide.

The financial institutions have until Oct. 25 to decide whether they will incorporate PULSE Internet PIN Debit into their payment-acceptance schemes. After the twenty-fifth, financial institutions will be automatically included, Rhodes said. 

She added, however, some banks, credit unions and savings issuers will not be able to partake because the PIN offset data, which verifies the PIN, is located on the magnetic stripe of the cards they issue, not on a computer as part of a hosted solution. Rhodes did not know how many of its customers' financial institutions would not offer PIN-debit purchases over the Internet for this reason.

PULSE announced in March 2009 that it would pilot Acculynk's PaySecure software. "The goal of the pilot is assess consumer acceptance of Internet–based PIN debit transactions," PULSE officials said in a statement. The test's results were impressive, Rhodes said. Not only did PIN debit purchases over the Internet completely eliminate fraud, the software reduced by 77 percent chargebacks compared with signature transactions, Rhodes said. In addition, 54 percent of cardholders who took part in the pilot completed online purchases using PIN debit.

"Our successful pilot confirms that debit cardholders are comfortable entering a PIN when shopping online," Judith McGuire, PULSE senior vice president of product management, said in a statement. "With PULSE Internet PIN debit, financial institutions can offer cardholders a secure, trusted preferred payment option for online purchases." Rhodes did not disclose the number of cardholders who took part in the pilot.

The utilization of PIN over the Internet is just beginning, and the road to persuade cardholders to use it will be difficult, Adil Moussa, analyst for Aite Group LLC, a Boston-based consultancy, wrote ATMmarketplace.com in an e-mail message.

"As more debit networks adopt the technology, there will be a long period to convince users to use it," Moussa said. "I don't see a massive adoption unless there is a sustained effort to reach the public at large. The only other way is to force shoppers to enter their PIN when the card is identified as a debit card, but merchants won't be eager to add an extra step for their shoppers because shopping cart abandonments increase as you add more steps in the check-out process."

PULSE is the second electronic funds transfer network to sign an agreement with Atlanta-based Acculynk in a month. In June, Jeanie Network, the nation's first online shared ATM network, announced it would begin offering this year PaySecure to financial institutions. Fifth Third Processing, which is based in Cincinnati, owns the Jeanie Network. Six other electronic funds transfer networks also offer PaySecure.

Discover Financial Services, a Riverwoods, Ill.-based credit and debit card issuer, owns PULSE.