New TowerGroup Research Examines Obstacles to Success of Alternate Payment
Mechanism

NEEDHAM, Mass., Sept. 11 /PRNewswire/ — In the mid-1990s, the electronic funds transfer (EFT) networks debuted PINless debit, or PINless bill payment, as a new, low-risk way for billers to collect payments from consumers. New research from TowerGroup estimates that PINless debit bill payment volume in 2007 will be at least 40 percent higher than in 2006. However, various obstacles to its adoption will cause PINless debit to remain a small percentage of overall bill payments (0.45 percent).

PINless debit allows consumers to pay bills through a remote channel by entering their debit card number without the personal identification number (PIN). Since its introduction, transaction volume has grown steadily as billers and their customers explore this alternative. However, adoption of PINless debit continues to face many challenges, including: inconsistency in industries eligible for participation; functionality; and card eligibility.

PINless debit offers benefits to billers that “split the difference” between credit cards and ACH debits. PINless debit, like credit cards, provides guaranteed funds. ACH does not. However, PINless debit does not have the higher fee structure associated with credit cards. PINless debit can be used to pay bills for which credit cards as a payment method are simply precluded, such as credit card invoices themselves. It is also an
additional method to increase overall adoption of electronic payments, a common goal for billers and suppliers in the bill payment value chain.

The new research report, titled “PINless Debit: Finally Taking Off or Headed for a Crash Landing,” by Jennifer Roth, a senior analyst in the Global Payments practice at TowerGroup, identifies the challenges related to PINless debit bill payment, the methods for overcoming these obstacles, and the durability of PINless debit as an alternate payment method.

At TowerGroup, Roth’s research focuses on electronic bill and invoice presentment and payment, including the Internet environment and otherchannels in which it can be delivered. She also examines consumer funds transfer, remittance processing, and the domestic electronic funds transfer networks supporting payment processing infrastructures.

About TowerGroup: TowerGroup is the leading research and advisory services firm focused exclusively on the financial services industry. A respected source for trusted information and advice, TowerGroup brings many of the world’s leading financial institutions, technology companies, and professional services firms a deeper understanding of the business and technology issues impacting their organizations. Headquartered near Boston in Needham, Massachusetts, and with offices in North America and Europe, TowerGroup serves a global client base.

Atlanta, GA (PRWEB) August 15, 2008 — Ingenico, the world’s leader in secure transactions and payment solutions, announced today that they have received Class A certification for their payment transaction terminals running the new EuroPay MasterCard Visa (EMV) application created for Chase Paymentech Solutions. The Ingenico i3070, i5310 and i7780 terminals, running the EMV application, will allow Chase Paymentech merchants to accept chip-enabled credit cards. These credit cards contain a small microchip that securely stores encrypted data using sophisticated security programs. Cardholders must enter a PIN at the time of purchase to complete a transaction. This “chip and pin” combination provides a much higher level of protection against unauthorized or fraudulent use of a credit card.

“Chase Paymentech’s certification of the Ingenico terminals is another example of Chase Paymentech’s ongoing commitment to provide advanced technological solutions to its merchants and partners in Canada,” said Paul Browne, VP, Operations for Chase Paymentech Solutions. “As the Canadian payment card industry moves towards chip technology, the EMV standard will provide an even more secure payment environment; assist in reducing card fraud and increase security of card transactions.”

“The requirement for PIN entry on credit card purchases is changing the way restaurants manage card acceptance,” said Lisa Shipley, Sr. VP, Sales & Marketing, Ingenico North America. “Restaurants are now beginning to use Ingenico’s portable and secure payment terminals, allowing the server to bring the transaction directly to the customer. Our product offerings provide a number of solutions that fit many needs, and the software and certification from Chase Paymentech ensure that each transaction is not only convenient, but safe and secure.”

Ingenico’s i5310, i3070 and i7780 are chip-enabled products using the new EMV application. The terminals prompt users of chip-enabled cards for a PIN number on credit card transactions. The i7780, featuring Ingenico’s Pay@Table solution, is a portable and secure payment terminal that allows the server to bring the payment terminal to the table. The i5310 adds the convenience of a built-in, secure PIN pad. The i3070 allows the merchant to locate the terminal out of reach of the consumer for aesthetic or environmental reasons while providing an easy-to-use key pad that can be handed directly to the customer.

About Ingenico

Throughout the world businesses rely on Ingenico for secure and expedient electronic transaction acceptance. Ingenico products leverage proven technology, established standards and unparalleled ergonomics to provide optimal reliability, versatility and usability. This comprehensive range of products is complemented by a global array of services and partnerships, enabling businesses in a number of vertical sectors to accept transactions anywhere their business takes them. For more information about Ingenico, a leading supplier of electronic acceptance technology, please visit www.ingenico-us.com.

About Chase Paymentech

In Canada, Chase Paymentech Solutions is headquartered in Toronto, Ontario and is an affiliate of Chase Paymentech Solutions, LLC. As a leading payment processor and a single source for debit and all major credit cards, the company offers a full suite of advanced payment solutions, including point-of-sale and wireless terminals, electronic gift card programs and secure e-commerce capabilities. Chase Paymentech Solutions, LLC, headquartered in Dallas, Texas, is the world’s largest merchant acquirer for businesses accepting payments via point-of-sale, hospitality, Internet, catalogue and recurring billing. The privately-held company is an end-to-end processor for merchants of all sizes and industries. In 2007, the privately held company processed approximately 19.7 billion payment transactions, with more than $719 billion in annual bankcard and debit volume.

Chase Paymentech’s customer base reflects the most respected global brands, including 70 percent of leading ecommerce business and almost 600,000 merchants in over 1 million locations worldwide.

Where does all the money go for your credit card processing costs?

We’ve answered this before. Most of it goes to the banks. In a few moments, you’ll read about their blatant promotions to make more money at your expense.

If you process a transaction at the best interchange qualification, they make a little money. If you process a transaction that downgrades to a higher interchange qualification, they make more money. In fact, the worse you qualify, the more money they make.

This is a key reason why banks may not be the best choice for your credit card processing. With their inherent conflict of interest, do you trust your bank to help you hit the best interchange? You can influence your interchange qualification. It’s complicated. It’s more than what customers can do, it’s up to professionals like us to not only spot problem areas, but to take the corrective actions to fix the underlying causes- either behind the scenes, through programming changes or by contacting you and providing tips for staff.

Today I received a direct mail piece from a bank. The promotion rewards me for SIGNATURE BASED gold debit mastercard purchases. Pin based debit transactions are ineligible. That’s right. The bank is strongly encouraging consumers not to enter their pin number. They make lots of money that way.

How can you combat this kind of promotion and encourage pin based debit?
1. Do you have a pin pad? Consumer oriented businesses processing $1M annually, will almost always benefit. Call us for a free analysis.
2. Are you processing $1,000,000+ per MONTH (all card type transactions), please call me regarding new technology that will dramatically lower your debit processing costs.