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May 23rd 2018

The Pros and Cons of PINless Debit

PINless debit acceptance has previously only been available to a small number of very large merchants including Amazon and Uber, but this is changing fast. PINless debit transactions, processed through an EFT (Electronic Funds Transfer) network without the need for a PIN entry, give merchants the option to route transactions away from Visa/Mastercard, and towards alternative networks competing for business.


Please note: The information in this article may be out of date. Please visit the Resources section for our latest publications related to PINless Debit Routing.

PINless debit acceptance has previously been available to only a few very large merchants like Amazon and Uber, but this is changing fast.

PINless debit transactions – processed through an EFT (Electronic Funds Transfer) network without the need for a PIN entry – give merchants the option to route transactions away from Visa/Mastercard and towards alternative networks competing for business.

The benefit? Significant savings due to increased competition.

Merchants currently pay an average of $0.92 per transaction in interchange and network fees for online debit card transactions that are exempt from the Durbin amendment, a 2011 clause that allows merchants to route their transactions to domestic debit networks.

There are staggering potential benefits of over $2 billion savings available to card-not-present (CNP) merchants who implement an efficient and optimized solution.

Below, we’ll look at the current challenges and potential benefits of PINless debit acceptance.

PINless Debit and The Durbin Amendment

PINless debit (aka debit routing) refers to debit transactions that are processed through a debit network and do not require a PIN entry. The problem with these transactions is that PINless debit card processing incurs fees for the merchant which can vary depending on the debit card network.

In 2011, the Durbin amendment was introduced by the U.S. government as a way to help merchants find relief from expensive network interchange rates. This clause enables merchants to choose the least cost network to route their transactions through, resulting in lower costs for merchants.

In fact, through domestic debit networks, costs could be 30% less with competition on interchange and low-fixed-cost network fees. We estimate significant six- or seven-figure savings are available for online U.S. merchants, so now is the time to carefully consider the payoffs and pitfalls of your debit arrangements.

Pitfalls and Challenges of PINless Debit Routing

Ever-evolving choices

The PINless industry is fast-paced, and many networks are adding new or improved capabilities each month. Entering into long-term arrangements may not be beneficial, as you may incur high costs and risk missing out on industry developments regarding debit routing.

The best way to avoid this is by ensuring any arrangements you put in place are future-proof, and that your suppliers keep you updated with any innovations or improved solutions. That way, you can keep optimizing your debit routing system and avoid unnecessary costs.

Inaccurate analysis

To get an accurate picture of your debit solution arrangements, you’ll need to conduct an analysis. However, various factors affect this analysis.

Things like average transaction value, transaction volumes, and card profile splits may vary month-to-month in some industries. The market is changing fast and merchants need to ensure any analysis done now doesn’t become irrelevant 12, 6, or even 3 months.

We recommend completing an invoice audit to ensure you aren’t currently being overcharged and can keep track of your debit solution arrangements.

Fraudulent purchases

Cost is not the only consideration for market-leading merchants when implementing new debit arrangements. Changing fraud patterns and no 3DS fraud protection means that merchants, now more than ever, must be aware of fraudsters.

Since the U.S. implementation of EMV in October 2011 lowered face-to-face fraud, many fraudsters have turned their attention online – something merchants who process PINless transactions must remain aware of.

Have you created a fraud strategy yet? Check out these four challenges of merchant fraud and how to address them in your toolkit.

Opportunities and Payoffs of PINless Debit Routing


The savings available to online U.S. merchants who implement PINless arrangements effectively are substantial.

A typical eCommerce merchant can expect to see 20-30% of savings on interchange and assessment fees when they optimize their PINless debit routing. These savings are on top of any additional network incentives or rebates put in place during negotiations.

Business sense

Optimizing and managing a customer’s shopping experience is an important element of any merchant’s online strategy.

From the consumer’s point of view, a CNP PINless debit transaction is a seamless and quick process. The consumer enters their 16-digit primary account number (PAN) and a combination of AVS and/or CVV (Address Verification System or Card Verification Value) can be used to verify the transaction.

When merchants enable PINless payments on their online store, customers can easily shop online and check out. When customers have a positive experience on your store, they’ll be likely to come back and shop again.

Early adoption

Staying up to date with innovations and industry developments could mean substantial benefits for many merchants. Early adopter benefits are still up for grabs, and using new technology and taking part in pilot programs will ensure merchants remain market-leading.

You may even benefit from grandfathered rates and help shape the future of PINless debit acceptance for the benefit of all merchants.

Revisiting Your PINless Debit Strategy

Historically, merchants have been forced to route eCommerce transactions via the Visa and Mastercard global networks. With a major monopoly on PINless debit card processing, these PINless debit networks were able to charge whatever they wanted, leaving merchants stuck with high costs and little choice in the matter.

Now, with the increasing prevalence of PINless debit acceptance, merchants can dynamically route online transactions to the network best suited to their unique requirements. Merchants who carefully consider potential pitfalls and payoffs have an incredible opportunity to achieve real bottom-line savings.

So, where exactly are your savings? Get in touch with our team today and ask! We’d love to help you find out where you can optimize your debit arrangements and save your business some money.