PIN-Less Debit: How credit unions can win in a losing model

CUs may need to alter the structure of their debit programs to account for lower interchange income.

by: Dean Nolan

As the payments industry continues to expand and grow, the introduction of new payment methods will alter the status quo.

Some of these, such as Bitcoin, will offer a completely new payment ecosystem. Others, such as mobile payments, will focus on improving the existing ecosystem by providing new and improved member experiences.

And then there will be yet others, such as PIN-less debit, which will create winners and losers in the current model.

While this latter approach is unhealthy for the payments industry and consumers alike, it’s happening, and it’s something that industry players need to manage.

By nature, as a zero sum game, PIN-less debit creates both winners and losers. There seems to be two winners in this game—merchants who receive reduced interchange rates, and electronic funds transfer (EFT) networks that gain a new competitive weapon in their long-standing battle with Visa and MasterCard.

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