CheckFree Will Pilot PIN Debit for Walk-in Bill Payments

CheckFree Corp. will begin piloting PIN-based debit transactions in its extensive walk-in bill-payment network before the end of the year. The Atlanta-based processor is also investigating the possibility of adding a PIN-less debit feature to its online and telephone-based bill-payment network for so-called biller-direct transactions, though it has no definite plans for this feature yet. The walk-in network, which embraces some 10,000 locations across the country, is CheckFree's largest channel for biller-direct payments, in which consumers pay utilities, credit card issuers, mortgage companies, and other billers directly rather than through a third party. CheckFree says enough walk-in bill payers now have payroll and other stored-value cards to make it worthwhile to accept payments as PIN transactions, which are routed through the nation's electronic funds transfer networks. “These [walk-in bill payers] have historically been underbanked and have not had card capability, but now with payroll and stored-value cards, all those cards have PIN capabilities,” says Corey Stone, vice president of business development at CheckFree. Many of these locations are at courtesy counters and other such places in retail stores, and so are already equipped with PIN pads. Stone says that, while EFT-network interchange fees will make PIN debit more expensive for billers than the cash and check payments they accept currently through in-person payments, the benefits of online authorization and guaranteed funds may justify the higher cost. Currently, CheckFree's walk-in network accepts checks only for billers registered with the service. For all other billers, it accepts only cash. Walk-in payments can carry higher risk than other bill payments, since they are often last-minute transactions. “The great thing about EFT networks is that while they have interchange, it caps at a reasonable level, unlike credit cards, where there is no cap,” says Stone, referring to the upper limit EFT networks place on their fees, regardless of ticket size. Beyond the in-person network, the company is investigating the idea of adding a PIN-less form of debit payment to its Internet- and phone-based payment networks, Stone says. “We're looking at it very closely, down to the point of looking at what it would take [to do it] in our infrastructure,” he says. No timetable has been set for a pilot or any other form of introducing the feature he adds. PIN-less bill payments are already offered by other processors, and have become increasingly popular among billers in the categories of merchant where EFT network rules allow them to be accepted. Were CheckFree to begin processing them, the move would bring one of the world's largest bill-payment processors into the PIN-less processing business.