Pulse Takes Aim at the ACH with New Recurring PIN-less Service

Pulse EFT Association LP, which has become the latest electronic funds transfer network to introduce a commercial PIN-less debit service that allows cardholders to make recurring payments to certain billers, sees the service as a way to take payment market share from the automated clearing house network. “It's a great opportunity for issuers to take ACH transactions and move them to cards,” says Judith McGuire, vice president of retail services for the Houston-based network. Pulse launched the service earlier this month after testing it for almost a year, and has “several” billers using it, says McGuire, who won't name them but says they are “nationally recognizable brands.” The ACH currently accounts for most recurring bill payments, but some observers see advantages for billers in using PIN-less debit, which lets consumers make payments online with their PIN debit cards without entering their PINs. Though relatively inexpensive to billers, the ACH lacks the real-time visibility into demand-deposit accounts offered by PIN debit, these experts say. With real-time authorization, billers avoid customer-service issues related to closed accounts or those with insufficient funds. “With the ACH you wouldn't know for a few days if the payment isn't going through,” says Steve Mott, an electronic-payments consultant with BetterBuyDesign in Stamford, Conn. “With PIN-less, you'll know right away.” Issuers, meanwhile, have a chance to earn fee income on PIN-less transactions that isn't available on ACH payments. In Pulse's fee structure, issuers earn interchange of 12 cents up to 45 cents on recurring PIN-less transactions, while one-time PIN-less transactions, which the network has allowed for a number of years, carry interchange ranging from 12 cents to 55 cents. “It's a good value for everyone,” says Mott. In launching recurring payments, Pulse is joining a trend among EFT networks to extend one-time PIN-less service to the realm of bill payments consumers make on a routine basis, usually monthly. Indeed, the new service, which Pulse is calling Recurring PIN-less Bill Pay, follows a launch by First Data Corp.'s Star network of a commercial service for recurring PIN-less payments last year. As with one-time payments, both Star and Pulse allow recurring transactions in low-risk biller categories such as utilities, government agencies, educational institutions, and insurance companies. But Star also allows PIN-less transactions for certain other categories, including wireless bills, club memberships, property rental, and Internet Service Providers. It is piloting such payments for unsecured loans. Pulse is piloting the service for property rental and credit card payments. McGuire declines to reveal transaction projections for recurring payments, but says the network hopes giving consumers the ability to authorize a series of payments to a variety of billers will swell overall PIN-less payment volume over time.