ecent studies indicate that more and more consumers are choosing to use debit cards. In 2001, debit represented 26% of in-store payments; in 2005 that figure was 33% and rising. Additionally, nearly half of all debit cardholders (48%) now choose PIN debit at the POS, according to Dove Consulting and the American Bankers Association.

Consumers are partial to PIN debit transactions because they are fast and convenient. Merchants like them because they are low cost. Merchants also prefer PIN debit transactions because they generally have a guaranteed authorization. Every transaction is electronically authorized with a PIN. In most cases, once the financial institution authorizes it, the financial institution has guaranteed it.

As found in a recent PULSE survey of financial institutions, PIN debit card purchases are approximately 15 times more secure than signature debit transactions, both in terms of losses per transaction and losses per sales volume. Financial institutions also cited losses associated with POS PIN debit fraud of $.001 per transaction. Losses related to signature debit were reported to be $.016 per transaction.

Looking at these figures it's no wonder PIN debit has grown 34% in the last year alone. And in 2006, issuers expect their institutions' PIN debit to grow 22%.

A Pioneer in ATM and Debit

One company responsible for a majority of the debit momentum is PULSE EFT Association Inc., one of the nation's leading EFT networks. PULSE works with ISOs, merchants, processors and financial institutions to deliver debit payment options to more than 90 million debit cardholders in the nation.

PULSE links these cardholders to more than 3.2 million POS terminals and a quarter of a million ATMs nationwide. To put that number into perspective, there are approximately 370,000 ATMs in the nation, so PULSE has access to more than two thirds of them.

Additionally, more than 4,100 banks, credit unions and savings institutions participate in the PULSE network. Also, 100% of the nation's largest retailers that accept PIN debit accept PULSE cards.

"PULSE began in 1981 as a pioneer in the evolution and development of ATM/debit solutions," said Judith McGuire, PULSE Vice President, Retail Services. "PULSE is recognized and respected by financial institutions, processors, merchants and ISOs alike as the high-quality, competitively priced ATM/debit network that brings significant value to all participants."

Today the company employs 160 professionals in its Houston headquarters, as well as in offices throughout the United States.

In addition to PIN and signature debit services, PULSE offers stored value solutions, a surcharge-free ATM alliance PINless Bill Pay as well as ATM transaction switching and settlement. The organization also provides value-added services such as marketing support materials and education opportunities.

From ATMs to Discovering the Future

In 1973, approximately 2,000 ATMs were operating in the United States. Eight years later, in 1981, seven Texas banks united to create PULSE as a nonprofit electronic funds transfer network to process ATM transactions. Within a year it had become the nation's largest EFT network with 439 member institutions, 695 ATMs and 4.2 million debit cardholders.

It then branched into PIN debit in 1986. "It really took off in 1990," McGuire said. After 10 years, the PULSE network included 5,300 ATMs and 3,920 PULSE PAY terminals. After 20 years, PULSE linked an estimated 65 million cardholders with more than 79,000 ATMs and 300,000 POS merchant locations. The company continued to grow at a rapid pace, and in January of this year it merged with Discover Financial Services Inc. (since renamed Discover Financial Services LLC). PULSE became a business unit of Discover Financial Services but retained its brand, pricing and operating platform, as well as its management team and staff.

Marching in Time With ISOs and MLSs

PULSE does not have a direct ISO or merchant level salesperson (MLS) sales force. Instead it relies on ISOs and acquirers to promote the PULSE PAY PIN debit product.

"One of the many value propositions for PULSE is that PULSE is the network that gives ISOs the means and support for selling competitively priced PIN debit, the payment choice preferred by consumers," McGuire said. But, ISOs and MLSs representing PULSE don't only offer their merchants PULSE PIN debit. PULSE also works to help them sell PIN debit more successfully, thus increasing MLSs' revenue.

"PULSE assists MLSs in selling this fast-growing payment type to merchants, which builds retention and positions MLSs as payment consultants," McGuire said. "PULSE continually evaluates the ways in which the network can enhance the relationship with the MLS sales channel."

To that end it provides value-added services such as research, education and training to support the efforts of ISOs. "PULSE works with ISOs to provide the support and training they need to approach merchants knowledgeably and confidently when selling the PIN debit option," McGuire said. It uses the training tools, such as Webinars and conferences that work best for the ISOs.

The company has a history of partnerships with ISOs and MLSs, and its goal is to work even more closely with this sales channel. "All major POS acquirers are already processing with PULSE today," McGuire said. "It's not that we don't have processors connected. We want ISOs to know that PULSE wants to build a strong relationship with the ISO community to help support them with PIN debit."

As is standard with most EFT networks, PULSE requires registration and sponsorship for ISOs selling PULSE, and there are fees associated with registration. PULSE, however, is offering ISOs an incredible savings. "To help support ISOs and make sure they are registered properly with PULSE through sponsors, we are waiving the one-time registration fee through January 31, 2006," McGuire said.

McGuire said it did this "to help support ISOs and make sure they are registered properly with PULSE through sponsors."

From Grocery, to Big Box and Beyond

PIN debit was initially very strong in grocery stores and general retail. Today, it is pervasive and seen in use at department stores, big box retailers, you name it.

There are nearly 4 million POS terminals in the United States today, and studies indicate that PIN debit is consumers' preferred payment option. With 11 billion ATM transactions and 16.2 billion POS transactions in the United States last year alone, this is a huge market for ISOs.

"PULSE provides significant support for ISOs in helping merchants meet increasing consumer demand," McGuire said. "Merchants are training consumers to use PIN debit because it is a guaranteed payment for the merchant, the fees are lower than other methods and they know that consumers like using their PIN card."

Part of being successful as an ISO or MLS is spotting trends, meeting needs and capitalizing on opportunity. PIN debit and networks such as PULSE provide ISOs and MLSs with the tools to do just that. "The benefit to the ISO agent selling PIN debit is the merchants want it," she said.