Here are some new scenarios that might be encountered by Advantage Checkcard holders for transaction authorization and posting:
- The merchant terminal may ask for a signature but route the transaction to a PIN debit network.
- When a cardholder is given the option to choose “credit,” the transaction may not be routed to Visa. And, a cardholder may be prompted for a signature instead of a PIN if they choose “debit.”
- Some merchants may not allow the cardholder to choose “credit” to opt out of PIN entry at the terminal.
- The merchant may not ask for either a PIN or signature. The major networks announced this week that a signature is now optional for all chip-enabled merchants. PIN networks have announced that PIN entry would be optional for all purchases. Overall, the number of “No Cardholder Verification Method (CVM)” transactions is expected to grow.
Cardholders with rewards or affinity cards (cards that earn benefits for schools, community projects, etc.) may see the opportunity to earn rewards and benefits dwindle.
At this time, there are only a few merchants using the signature-for-PIN debit option but authorization and routing changes will be made by more merchants as they look to reduce their costs and speed checkout times.
To mitigate a drop in interchange, continue to promote the use of Checkcards and choosing signature at the POS. Many cardholders enter their PIN at POS simply because that is the option initially offered to them by the terminal. And, many cardholders are under the impression that signature transactions are not safe. Remind your cardholders of the security provided to them for their transactions as well as the many things they can do to protect themselves from fraud; see below.
As payments processes make it easier to use a debit card and cardholders feel secure in using their debit cards, financial institutions will benefit from greater usage and increased interchange.