MasterCard Inc. has agreed to offer its issuing banks an online PIN debit system developed by Acculynk Inc.
Banks have typically been more eager to promote signature debit, which generates more revenue than PIN transactions, but MasterCard said the agreement announced Wednesday indicates growing consumer interest in PIN payments.
MasterCard "has clearly recognized that over the last number of years, the U.S. market has embraced PIN debit at the point of sale," said Leland Englebardt, the group head of MasterCard's global automated teller machine network.
"MasterCard wants to support its issuing customers in whatever their choice may be about giving their cardholders the functionality that the issuer believes the cardholder needs and wants," Englebardt said.
Acculynk lets people make PIN debit purchases online by integrating its PaySecure software into merchants' checkout systems. After consumers enter their card numbers, the website presents a virtual number pad where they can enter their PINs by clicking the appropriate digits.
Ashish Bahl, Acculynk's chief executive, said the Dodd-Frank Act could boost interest in his company's PIN technology, especially a provision in the law that bars banks from having exclusive debit relationships.
The reform legislation "opens up our product to a lot of large issuers that potentially may have been tied up by Visa or anyone else," he said.
MasterCard's backing of PaySecure "is important to the perception of the product," said Patricia Hewitt, the director of the debit advisory service at Mercator Advisory Group.
"It's important for Acculynk to have the brand [recognition] of MasterCard."
MasterCard's strategy with PaySecure is sound and somewhat expected since there is no hard data surrounding Internet PIN debit transactions, Hewitt said. "Offer it and see what the adoption rate is," she said.
The MasterCard agreement is an important step forward for Acculynk.
The announcement comes just two weeks after Discover Financial Service's Pulse network decided to roll out PaySecure, following a yearlong test.
Last year, Fiserv Inc.'s Accel/Exchange became the first debit network to commercially offer PaySecure.
Five other debit networks are testing it now — Alaska Option, Credit Union 24, NYCE, Jeanie and Shazam — and Jeanie plans to roll out the Acculynk service later this year.
Englebardt said regulatory reform will likely affect issuers, though "in the current environment, there is a great deal that isn't known yet about what the future dynamics of debit cards and debit transacting will be."
Under the regulatory reform law, the Federal Reserve Board is expected to set debit interchange rates by April of next year, and banks will have several months to implement them.
"We will have to get through the next 12 months and see what the environment is before we have a clear picture about how the marketplace views" the PaySecure system, Englebardt said.
