MAG Insights

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Innovate Now: Expanded Debit POS and E-Commerce Capabilities (MAG Quarterly- Volume Three, Issue Three)

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By David Munno, Vice President, Accel Business Development, Fiserv

September 3, 2015

U.S. debit payments networks are actively expanding payments and funds access capabilities. As a payments industry innovator, Fiserv has continued to expand the payments solutions and capabilities of Accel®, our debit payments network, in direct concert with the ever-evolving market to deliver secure and convenient payments to our acquiring and issuing participants.

The payments industry continues to see a convergence between PIN and signature debit, the adoption of EMV chip and introduction of tokenization, and growth of online e-commerce and mobile payments. With lines blurring between PIN and PINless, including signature-based point-of-sale networks, U.S. debit payments networks are actively expanding payments and funds access capabilities.

As a payments industry innovator, Fiserv has continued to expand the payments solutions and capabilities of Accel®, our debit payments network, in direct concert with the ever-evolving market to deliver secure and convenient payments to our acquiring and issuing participants. The wide range of convenient debit payment options offered by Fiserv today includes PIN POS, PINless bill payments, Internet PIN debit, POS No PIN transactions ($50 and less), and e-commerce transactions. A key element of successfully introducing and integrating these and other secure and dependable payment capabilities to the market requires open and clear communication with and coordination between all transaction touchpoints.

A recent illustrative example of this is the No PIN program introduced in 2013. This program was implemented to facilitate the submission of low-dollar ($50 or less) point-of-sale purchase transactions by qualified merchants through Accel to the card issuer without PIN data. Although these ”swipe and go” transactions – which help speed up retail checkout lanes and enhance the consumer purchase experience – are similar to activity consumers are accustomed to through the signature debit brands, changes were necessary within the point-of-sale acquiring environment to support these specific transactions. Card issuer account processing systems required modifications to identify this activity as transactions authorized without PIN (or signature) validation.

During the introduction of this activity, some merchants experienced consumer complaints associated with convenience fees applied by those cardholders’ financial institutions. 

As more debit networks have incorporated “swipe and go” transactions into their payment offerings, consumers are seeing more associated convenience fees from their financial institutions as merchants choose to route this transaction activity to other debit networks. 

In response to this industry situation, which was directly impacting consumers, merchants, financial institutions, account processing organizations and other service provider organizations, Fiserv undertook an initiative to help alleviate the influx of consumer concerns and complaints.

For the past several months, Fiserv worked directly with the impacted industry players to resolve this situation, including reaching out to account processing organizations and third-party electronic funds transfer (EFT) processors to ensure that “swipe and go” transactions are being properly identified and processed as PINless rather than PIN debit POS transactions.

A key aspect of the initiative was alerting financial institution issuing organizations of how this activity could potentially impact their consumer fee assessment policies and cardholder fee disclosure information. The idea was to help ensure continued compliance with their existing practices as the payments industry continues to evolve.    

Thanks to this decisive action, impacted merchants are seeing fewer or no consumer complaints. In addition, the overall payments market has benefited because the necessary changes have been addressed with payment processing organizations that support all major U.S. debit payments networks across the country.

Three of the major merchants Fiserv worked with indicated that the number of transaction denials had subsided considerably as a result of Fiserv efforts.

The effort is also expected to facilitate a successful introduction and smooth integration of the Fiserv expanded PINless offering, which supports signature-based transactions as well as expanded e-commerce transaction activity. 

The Fiserv focus on a hands-on approach through a comprehensive communication process and direct engagement with our issuers and their account processing organizations and EFT processing entities has helped better position these organizations to integrate this activity seamlessly into their existing processes and ensure that any system modifications and, where applicable, convenience fee application processes are appropriately addressed.

Payment option choice offers a win-win for the consumer and the merchant at the point of sale, and the expanded PINless offering provides merchant and acquirer processing organizations with another cost-effective option when it comes to POS debit transaction routing.