Friday, February 24, 2023
While the capability has existed for nearly a generation, PINless debit really took off during the pandemic for situations where PIN verification isn't practical, like ecommerce and contactless payments.
In a new white paper, the U.S. Payments Forum said its analysis suggests PINless debit is especially popular among retailers that handle smaller transaction amounts, as well quick service restaurants. Verticals like hospitality and petroleum, on the other hand, have been slow to adopt PINless debit due to their reliance on dual-messaging technology (preauthorization followed by transaction).
PINless debit adoption can be tricky, and a lot of card issuers have been slow to support PINless debit, leading regulators to force them off the collective dime. Last year, the Federal Reserve ruled that the merchant routing requirement set forth in the Durbin Amendment to the Dodd-Frank Act means debit card issuers have to support PINless debit, which requires EMV chips specifically programmed for that capability.
Also, the Federal Trade Commission filed a complaint against Mastercard in 2022 alleging the card company makes it inordinately difficult for merchants to route payments through less-expensive regional debit networks that offer PINless debit processing. And on December 23, the commission issued an order requesting that Mastercard stop blocking rival debit payment systems’ access to crucial customer data in order for them to complete transactions.
"The push for PINless debit payments is moving full steam ahead," said Sophia Gonzales, research analyst in the debit advisory service at Mercator Advisory Group. Gonzales predicted the Fed's ruling, set to take effect on July 1, will lead to "an influx of transactions" across regional debit networks.
The forum's white paper, titled PINless Debit Processing, aims to simplify the PINless debit implementation process across the payments landscape. It achieves this, for example, by identifying transaction flows for PINless EMV debit card processing, different message types, and product and technology considerations.
The tome draws on lessons learned and shared through the forum, a cross-industry body of payment system stakeholders, noted Terry Mahoney of W. Capra Consulting, who helped lead the initiative. "It can be useful for road mapping a company's debit strategy," Mahoney said.
The white paper lists important considerations when implementing PINless debit. These include:
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