Fiserv Increases PINless Transaction Limit

07th May 2020
Contributor:
Callum Godwin
Callum Godwin

Fiserv has announced that the value limit on PINless debit transactions for its STAR and Accel networks will increase from $50 to $100, as a result of the COVID-19 pandemic. At a time where consumers are largely reluctant to pay via “contact” payment methods – such as cash and PIN-authenticated card – this news will be greatly welcomed by both consumers and the U.S. merchant community.

In recent weeks, retailers have already seen a significant surge in contactless transactions. However, while contactless may be positive for speed and reducing friction at the POS, it’s challenging for merchants to route contactless transactions to the lower cost local debit card networks. Ultimately, this results in a larger portion of transactions being sent via the generally more expensive global networks, Visa and Mastercard – keeping costs high at a time when many merchants are looking for opportunities to reduce excess costs.

For merchants, Fiserv’s announcement could be a step towards reducing these higher cost contactless transactions, while providing more consumers with a contact-free payment option.
PINless debit enables merchants to route debit card transactions via domestic U.S. debit networks – historically known as PIN debit networks – even if transactions are not PIN authenticated.

This impacts two payment channels that are proving essential during the pandemic: online debit card transactions; and contact-free face-to-face retail.

However, PINless is yet to truly take off. Despite its attractive characteristics, PINless has generally presented two key issues for merchants: firstly, many issuers have not enabled PINless Bank Identification Numbers (BINs) on their debit cards. As a result, PINless isn’t available for merchants on many transactions. Secondly, the $50 transaction limit has naturally limited the scope of PINless – until now.

Merchants will be hoping this latest development will be the catalyst we need for PINless debit growth, resulting in more competition in the debit card industry, superior customer experience and lower costs for merchants.

Callum Godwin, Chief Economist

Although there is likely to be a concern that fraud could be higher for larger value PINless debit transactions, data suggests fraud remains a much larger risk in Card Not Present channel – and online PINless debit should not carry any additional risk for merchants.

While issuers are required to support this cap rise, it will be optional for merchants and processors.

For more information, register for our upcoming webinar, exclusively for merchants: ‘The Contactless Catalyst: Managing Costs in a New Payments Landscape’. Alternatively, please contact me at cgodwin@cmspi.com.

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