David Edwards, an account executive, discusses how enabling online PIN debit transactions can reduce fraud for merchants and issuers. PIN debit results in a fraud rate of 0.1% compared to 8% for signature debit online. Both merchants and issuers benefit from fewer chargebacks and less resources spent on fraud with PIN debit. The article encourages readers to have David discuss how their organization can encourage more customers to use online PIN debit.

1. David’s Newsletter
David Edwards
Account Executive OCTOBER 2011
PIN is Win-Win for Online
Merchants & Debit Issuers
Now that debit interchange has online shoppers to enter a PIN. and a greater reputation for protection
been capped for non-exempt issuers, among cardholders.
will Internet retailers be as eager to According to SHAZAM’s
add PIN transaction technology to chargeback data, online merchants Merchants, too, stand to gain.
their online stores? At SHAZAM, report an average of eight percent While it is true that online retailers
we believe they will. of their online signature debit are often reimbursed for fraudulent
transactions as fraud. With PIN debit, transactions, they must devote a
The majority of card fraud today on the other hand, a mere one-tenth significant amount of resources to
happens in card-not-present (CNP) of one percent of all transactions are the effort. In addition, they suffer
situations, and among those fraudulent classified as fraud. reputational damage each time they
CNP transactions, a majority are must correct an illegitimate purchase.
happening on the Internet. Online Debit card issuers will benefit from
retailers and debit card issuers alike a shift to PIN purchases online in In this win-win, PIN is definitely
stand to experience a dramatic the forms of fewer chargebacks, less the hero. For more information,
decrease in fraud by encouraging energy devoted to fraud settlement, call me today.
Internet PIN Gives Cardholders Debit Card Fraud is Rising –
More Options, FIs Less Fraud Protect Cardholders & Your FI
Many debit cardholders now have the ability to According to Javelin Strategy & Research, debit fraud
make online purchases with their PINs. The capability in 2010 represented 36 percent of all card fraud, an increase
comes from emerging technologies, such as Acculynk’s from 27 percent the year before. Fortunately, there is an
PaySecure. extensive list of ways financial institutions can minimize
fraud risk. Consider enacting the following:
How PaySecure Works
A virtual PIN pad appears on a cardholder’s screen • Proactive and ongoing risk assessment, detection,
and scrambles the numbers each time one is entered. and response
For added security, the issuing financial institution’s
brand appears at checkout. • Real-time fraud scoring based on the proven success
of neural network models
As debit card-issuing financial institutions look to
optimize their debit portfolios, increasing revenues and • Expert case management with investigations by
decreasing costs will be key. Enabling cardholders to use seasoned fraud analysts
PIN debit online achieves both by giving cardholders
even more merchant options and by reducing costly To learn more about how your financial institution
fraud and chargeback activity. can maximize your fraud prevention efforts,
call me today.
To understand how your financial institution
can encourage more of your debit cardholders to use
PINs when shopping online, call me today.
Follow our blog at shazam.net/blog and on Twitter at twitter.com/shazamnetwork
816-431-0220 • 800-557-9450 • Cell: 816-604-9758 • Fax: 816-431-0221 • dedward@shazam.net