What Is PINless Debit Card and How Does It Work?

PINless debit card payment solutions have now been available for a while, but many people and businesses still underestimate just how beneficial they can be. Not having to insert your PIN code every time a customer needs to use their debit card to make a transaction not only saves them time but can also save you money.

So, what is a PINless debit card, and how does processing a PINless debit card transactions work? We’ll explore it here.

KEY TAKEAWAYS

• PINless debit cards refer to debit cards that do not require the owner to input the PIN code in order to make the transaction.
• PINless debit cards were introduced in the late 1990s and gradually expanded where they can be used.
• Debit cards that do not require the PIN code are processed in a very similar way to credit cards, with the exception being that rather than “front-of-card” networks being used in the process, “back-of-card” regional networks take care of the transaction.
• Despite safety innovations, PINless debit cards still remain as susceptible to fraud as PIN debit cards.

WHAT IS A PINLESS DEBIT CARD?

A pinless debit card refers to a debit card that does not require a PIN to be used. Contrary to PIN debit cards, which are processed through the major card networks like Visa or Mastercard, PINless debit card processing takes place via regional “back of card” debit networks.

PINless debit cards are in no way limited in use – you can use them to pay for transactions both offline and online:

• With online payments (also called card-not-present), you input your bank card’s number and the CVV number.
• With offline payments (also called card-present), you insert the card into the terminal or make a contactless payment.

PINless debit cards can be used in a number of situations, including online shopping, in-store purchases, or when paying recurring bills such as electricity or water bills.

HOW DID PINLESS DEBIT CARDS START

PINless debit cards were first introduced around the late 1990s in order to penetrate the card-not-present space. It wasn’t until later that they expanded to also include internet payments, call centers and POS transactions.

In the beginning, people were (rightfully) concerned about the safety of PINless debit cards. As a result, there were a number of limited merchant categories that could offer such solutions – utilities, insurance, lenders, and government being some of those. With time, the network of eligible merchants expanded, bringing us to today’s world, where PINless debit cards are accepted at POS for transactions under $50.

HOW DO PINLESS DEBIT CARDS WORK

So, how does the process of processing a PINless debit card transaction look on the business side? It’s actually pretty straightforward and involves just a few steps:

1. The transaction is initiated. The customer initiates the transaction through tapping, inserting their card into the payment device or by adding card information during checkout in case of online transactions.
2. The token is generated. The card network that processes the transaction generates a token that replaces sensitive information from the card to ensure the highest level of protection for the customer.
3. The transaction data is sent. The payment data is then sent by the merchant to its payment processor.
4. The transaction is routed. The payment process chooses the best way to route the transaction, taking into account cost, speed and security.
5. The transaction is validated. The network selected by the payment processor needs to make sure that all the information they received is correct and that the customers has enough funds in their account to pay for the transaction.
6. The transaction is authorized and accepted. When the network confirms that everything is good to go, a response will be sent back, accepting the payment.
7. The transaction is completed. The funds are transferred from the customer’s account into the merchant’s account. The transaction is completed.

PINLESS VS SIGNATURE DEBIT CARDS

There is a misconception that PINless debit cards and signature debit cards can be used interchangeably. However, that is not the case, and signature debit cards are actually closer to traditional debit cards than PINless ones.

ARE PINLESS DEBIT CARDS SUSCEPTIBLE TO FRAUD?

Unfortunately, PINless debit cards are just as susceptible to fraud as PIN debit cards, if not more. Consider the fact that PIN debit cards do not have the PIN number written anywhere on them, so unless you know the PIN code, committing fraud is a bit challenging.

Now with a PINless debit card, all the information someone would need is written right there – as long as you have the card, you can easily input the data from it during online checkout, authorizing the transaction.

However, there are some ways to protect your card and your money – a very common one is double authentication, which, aside from adding the right information, also requires you to confirm the transaction on another device or through a code send to your phone.

Tokenization, which we have already mentioned above, helps as well, but more so in case of those who might try to steal your information online rather than from a physical card, as it encrypts sensitive information.

CONTACT PAYMENT SAVVY FOR PINLESS DEBIT CARD PAYMENT SOLUTIONS

Payment Savvy specializes in providing organizations with the ability to accept online debit and credit card payments. We even offer a debit-only payment solution. Please contact Payment Savvy today to see if your organization is eligible to accept PINless debit card payment solutions. Payment Savvy is here to answer all of your questions and review all options. We look forward to hearing from you and working with your company.

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