Blog May 4th 2023

CMSPI’s Monthly PINless Enablement Tracker

In the lead up the July 1, 2023 enforcement date of the Regulation II clarification, CMSPI will be monitoring the market’s movement toward compliance, offering unrivaled visibility into market-leading metrics on one of the biggest opportunities for merchants in 2023.

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Christian Johnson

Senior Manager, Global Advocacy Manager

Updates Since the Clarification:

The October announcement was a significant inflexion point for issuers enabling PINless. Here are some of the fast facts from May:

  1. All Issuers: PINless eligible transactions as a share of CMSPI’s transaction database jumped ten percentage points from September to November 2022, the largest ever increase in PINless enablement in the last year, largely driven by a jump in regulated issuer enablement following the clarification announcement.
  2. Regulated Debit Issuers: The largest debit issuers (those with over $10bn in assets) saw the most sizable climbs in enablement, climbing from 39% in October 2022 to near 60% by May.
  3. Unregulated Debit Issuers: For issuers with fewer than $10 billion assets, PINless enablement has steadily held around 80%. Even with already high levels of compliance, unregulated issuers still saw a slight uptick in PINless enablement.

Figure 1. PINless Enablement by Regulated and Unregulated Issuer

April 2022 – April 2023

May 2023 Updates

Between April-May 2023, CMSPI’s Debit Optimization Tool observed some of the most significant movements in PINless. By both regulated and unregulated issuers, there were record numbers of BINs enabled, but the volumes associated with these BINs appear, on average, lower than the BINs enabled immediately following the clarification. The movement towards enablement continues to advance at an unpredictable pace: in some months, PINless enablement heats up, demonstrating 5-10 percentage point increases, while other months can be more lukewarm.

Regulated Issuer Updates:

  • Transactions: 46 basis points of incremental transactions enabled

Figure 2. Incremental Transaction Enablement for Regulated Issuers

Unregulated Issuer Updates:

  • Transactions: 3 basis points of incremental transactions enabled

Figure 3. Incremental Transaction Enablement for Unregulated Issuers

Why Does PINless matter?

For CNP merchants, the PINless mandate introduces competition to high cost CNP debit

For businesses with large CNP debit volumes, there could be significant seven- to eight-figure annual savings available as access to competing networks for all channels, including CNP and digital payments, will be undeterred.

CMSPI estimates CNP merchants across the U.S. have $3bn in savings available, but only for those who are truly optimal. What that means in practice is regularly tracking network availability, mapping network availability to PINless enablement, and accounting for different PINless network functionality when developing a routing strategy.

For CP merchants, customer experience and routing choice are no longer tradeoffs

The Challenges in Optimizing PINless Routing

The difficulty for most merchants looking to make the most of their routing strategy will be the concurrent tracking of BIN-level trends in network availability and PINless enablement.

  • Network availability is a moving target: An optimal debit routing strategy requires near-real-time insights into the networks available on a given BIN, allowing merchants to maximize incremental competition across their card base. Every month, issuers may adjust the networks available on a given BIN without reissuing cards or informing merchants of the shift in issuance. This means that a once optimal routing strategy may in fact increase costs if merchants miss a significant shift in their priority network’s availability. Likewise, the incremental competition available on a given BIN may change month on month, causing suboptimal merchants to miss additional negotiation opportunities. The urgency to track network availability by BIN is rising, as CMSPI estimates that up to 2.5% of debit transactions in 2022 occurred on cards that had a different pairing of networks from the month prior.
  • PINless enablement trends are not linear: Lacking clear patterns by network, issuer, and BIN, PINless enablement has been rising at a halting pace, with some months demonstrating rapid increases while in other months there’s been little movement. For example, while regulated issuer PINless enablement in January 2023 only rose about 70bps, that figure for March 2023 was over 5x the January enablement figure, numbering 382bps in incremental enablement. This volatility in PINless enablement can significantly change the savings available month on month, and many merchants may be benchmarking their PINless opportunity on outdated information. For some merchants, CMSPI’s observed a dramatic increase in their potential savings as from one month to the next, PINless enablement across their card base rose dramatically. For these merchants, that increase in enablement was so large that their previous network engagement strategy would’ve actually saved a fraction of what a PINless optimal routing strategy would save, demonstrating the point that outdated benchmarks may seriously hamper optimal cost strategies.

What to Take Away

As PINless availability ramps up, the savings available will concurrently rise. Merchants of all types, whether heavily reliant CP or CNP channels, will be able to take advantage of these savings opportunities, but only with the right data and routine monitoring of network availability and PINless enablement. The $3bn annual savings pie is only becoming more achievable. The trick for many merchants will be maximizing their share of that pool of annual savings.

Contact our team to learn more about the PINless opportunity.

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