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The Star EFT network, which has been working for several years on ways to enable cardholders to conduct PIN-debit transactions with online merchants, said on Thursday it will offer a service from CardinalCommerce Corp. that promises to allow issuers to choose how to authenticate users of PIN-debit cards in e-commerce.
Mentor, Ohio-based CardinalCommerce introduced its Universal PIN Debit Service 14 months ago in the midst of what has turned into a crowded market for technology that would allow consumers to use PIN debit securely online. Early on, it signed the Shazam EFT network, based in Johnston, Iowa, and has been marketing the system to other networks as well as processors.
Star, which has signed a letter of intent to use UPDS, says operations with the service will start after execution of a final contract.
A consumer favorite in physical stores, PIN debit has been problematic online because of the difficulty of ensuring the security of PIN entry on PCs and mobile devices. Startups like Acculynk Inc., Verient Inc., and Adaptive Payments Inc. have emerged to offer solutions. At the same time, some observers say PIN debit may suffer in the wake of the Durbin Amendment’s restrictions on interchange, which cut banks’ income from the product and may spur them to promote credit cards instead, on which interchange is still unregulated.
The UPDS service’s edge in the increasingly crowded field of online PIN debit, Cardinal says, is that it supports virtually any authentication technology, making it possible to pass transactions without requiring cardholders to enter PINs. UPDS is built on the existing Cardinal Centinel platform, which supports a raft of alternative-payment programs as well as online authentication technologies such as Visa Inc,’s Verified by Visa system. With this spade work already having been done, the company says, it can support a variety of tokens, one-time passwords, or other authentication devices.
Indeed, some experts have praised the service for its potential to overcome a reservation that many banks have about the use of PIN debit for online payments: that it encourages consumers to enter their PINs on PCs. Supporting other authentication systems that tie into the real PIN on the back end, they say, could overcome this problem.
Some 60,000 merchants are already integrated into Centinel. Star, a unit of Atlanta-based First Data Corp., says it does not have information on how many Star-accepting merchants are among that number.
Despite the deal with CardinalCommerce, Star’s vice president of product development, Julie Saville, tells Digital Transactions News in an e-mail message that Star will continue working on alternative solutions for e-commerce PIN-debit acceptance. UPDS, she says, “is simply one part of the Star e-commerce road map. Star will continually evaluate e-commerce payment methods that address our members’ risk vs. reward concerns.”
Saville says Star elected to use UPDS because of the “flexibility” it offers, allowing member issuers to specify the authentication methods they prefer for online transactions. She adds it is “too early to say” which methods members might opt for. “Star has looked at a number of software, hardware, and mobile authentication solutions,” she says. “What we can say, however, is that authentication options would be made available to Star member financial institutions based on demand.”
Star also adopted UPDS because of CardinalCommerce’s merchant links. “They have the technology and seem to make it relatively easy for those merchants to implement the solutions,” Saville says.
She remains bullish about the prospects for debit online, notwithstanding the Durbin jitters felt by many. “We believe there is a great untapped market for online debit,” she says. Debit continues to grow as a favored payment type in the United States.”
