Is PINless winless?

As retailers move to capitalize on PINless debit, CUs need to re-evaluate their fee and reward programs.

by: Joe Woods

Sponsored by CU24

Credit unions have seen a recent spike in PINless debit transactions as Walmart, Target, McDonalds and other large, national merchants have begun implementing PINless as part of their business strategies, reducing interchange that flows to issuing credit unions. (Also read, “Retailers Reduce CU Debit Income” on this blog.)

What are “PINless” transactions? When a consumer uses her debit card for a purchase that is less than $50, a merchant may decide to route that transaction over one of the PIN debit networks, without capturing the PIN. Merchants may not even offer the consumer the choice of PIN, but routinely capture the transaction and forward it as “PINless.”

PINless transactions aren’t new; however, they have been used infrequently, generally for transactions where both parties are known to each other with an established relationship, such as utility bill payments, rent payments, tuition and the like. The original intent was to provide a quick, low-risk transaction for cardholder and merchant. PINless was rarely used for routine POS debit activity.

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