Effective July 1, a new change in Visa’s Operating Regulations went into effect without much fanfare.  This change in regulations will allow merchants to route debit transactions through a PIN network even without a PIN being used.  While PIN-less debit transactions have been around for a while, they have only been available for use by online merchants or trusted recurring billers such as utilities.

As an issuer, this is an important change to be aware of for a couple of reasons:

1. PIN-less debit transactions will pay significantly less interchange to the issuer.
2. Merchants will likely start offering these payment options more aggressively to lower their costs of transaction processing.
3. Issuers have options available to limit the number of transactions that are processed through PIN-less debit.

Right now, I don’t view PIN-less debit as much of a threat to issuers for a few reasons:

1. Issuers have to “opt-in” to allow their cardholders to use PIN-less debit at merchants.
2. More than half of debit issuers offer rewards on their cards which incents cardholders to sign for transactions.
3. Merchants have to disclose to the cardholder their intention of routing a transaction through a PIN network versus the card association.

Regardless of those hurdles for adoption, as an issuer, it’s important for you to be thinking now about how you secure your cardholders’ loyalty and transactions through signature debit.

I spoke at the TMG Client Conference recently about ways to increase your cardholders’ usage of signature debit. A couple of the ideas that I shared are to:

1. Offer debit rewards. The economics of doing so are nearly a can’t miss.
2. Focus more than ever on gaining market share and new accounts.
3. Continue to market your advantages, track the success of your marketing efforts and require a positive return from every marketing dollar.
4. Educate your cardholders about the advantages of signature debit and what traps to avoid at the checkout line.