Why an Online PIN-Debit Provider Expects a Lift from Dodd-Frank

Most of the chatter about who will win or lose when the Federal Reserve Board releases its debit card interchange regulations and related rules mandated by the Dodd-Frank financial-reform law centers on card issuers, payment networks, and merchants. But technology vendors are likely to be affected too. One company that expects to win once the regulations take effect next year is Acculynk Inc., the provider of the PaySecure product for Internet PIN-based debit card transactions. PaySecure features a floating online PIN pad that enables a debit cardholder to enter her PIN for authentication when buying online.

“We’re going to get a very nice lift after that,” Ashish Bahl, Acculynk’s chairman and chief executive, tells Digital Transactions News.

The reason Atlanta-based Acculynk expects a lift is that debit card issuers are shopping for new, unaffiliated network alignments. Though the Fed has yet to release its draft regulations, debit executives widely expect the rules to reflect Dodd-Frank’s ban on debit cards carrying the marks only of affiliated networks, for example, Visa Inc.’s brand for signature debit and the Visa-owned Interlink network for point-of-sale PIN debit, or MasterCard for signature debit and MasterCard Inc.’s Maestro network for PIN debit. The majority of the nation’s top debit card issuers have such exclusive arrangements, most with Visa.

Now, even before the rules are out, debit card issuers are shopping for new EFT network partners unaffiliated with their signature-debit network, industry executives say. Acculynk is poised to benefit because it has deals with eight such networks in addition to MasterCard to distribute PaySecure: Fiserv Inc.’s Accel/Exchange, Alaska Option, Credit Union 24, Fifth Third Bancorp’s Jeanie, NetWorks, Fidelity National Information Services (FIS) Inc.’s NYCE, Discover Financial Services’ Pulse, and Shazam. Five are live: Accel/Exchange, Credit Union 24, NYCE, Pulse and Shazam. As networks recruit new POS debit issuers, Acculynk is poised to rise with the tide.

“We’ve had people that have never called us calling,” says Bahl. “It’s a nice position to be in.”

The live networks represent 6,000 bank and credit-union card issuers. On the merchant-acquiring side, U.S. Bancorp’s Elavon subsidiary and independent sales organization Merchant e-Solutions are offering PaySecure to their merchants. Bahl expects JetPay LLC, another ISO, to go live later this month, followed in March by First Data Corp. and in June by JPMorgan Chase & Co.’s Chase Paymentech. Bahl also says FIS’s ClearCommerce unit plans to offer PaySecure as does another large acquirer he can’t yet disclose.

Mike Kelly, general manager of Accel/Exchange, Acculynk’s first partner, says a bit over half of his network’s 2,700 issuers are enabled for PaySecure. “We like our progress so far,” he says. About 3,500 online merchant locations offer the service, he says. Regarding transactions, Kelly says, “it’s not a tremendous amount of volume” so far, but he expects them to pick up as Acculynk recruits more acquirers. “Once you get the big merchant acquirers on board, then you get some traction,” he says.

Bahl wouldn’t disclose transaction volumes, but says they have “skyrocketed” since January when only Accel/Exchange and some of Pulse’s issuers were live.

Coming enhancements to PaySecure include mobile-commerce applications in March for Apple Inc.’s iPhone and mobile devices running on Google Inc.’s Android operating system, according to Bahl. Those will be followed by a version for BlackBerry smart phones from Research in Motion Ltd. Acculynk also plans to enable its PIN-pad so that consumers can opt in to banks’ debit card overdraft services.