In January, MasterCard International decided to forego the usual network policy of requiring Maestro issuers to place the brand mark on the back of their debit cards when no competing PIN-debit mark also is present. Now, MasterCard's dominant rival, Visa USA, is adopting a similar rule for issuers of its Interlink PIN-based point-of-sale debit cards.
Have consumer expectations for their cards to work at any PIN pad made PIN debit such a commodity that the network marks are unnecessary? It depends on whom you ask. It also depends on the context in which the brand is being used, observers say.
In terms of the relationships networks have with issuers and merchants, brand still is important because of pricing differences and other factors, notes Paul Tomasofsky, president of Two Sparrow Consulting in Montvale, N.J. "But in terms of the brand name and consumers, I don't think there is a mutually valuable relationship there anymore at all," he says. "The brand has become commoditized to the consumer."
First Data Corp. has a different view. The Greenwood Village-based company says it will not allow issuers the option of leaving its Star PIN-debit mark off of their debit cards.
"The brand is important to consumers, " says Beth Lynn, Star senior vice president. "On the point-of-sale debit side, they are less likely to use the terminal if they believe the transaction will be rejected."
Star also seems ready to use some of the marketing tactics that have helped Visa's and MasterCard's signature-debit programs to grow. The Maitland, Fla.-based network is considering this year adding zero-liability protection for Star transactions. Visa and MasterCard adopted similar policies several years ago for their card programs.
Lynn notes, however, that most issuers already extend zero-liability protection to PIN-debit purchases. "Our members are interested in it because it promotes the Star brand as protection" against losses from fraud, she says.
Tomasofsky attributes the differences of opinion between Star and the card associations about the importance of PIN-debit branding to one issue: Star doesn't have anything else. "Visa and MasterCard are seen as the brands, and the others (Interlink and Maestro) are viewed as products," he says. "You don't see Interlink commercials on TV promoting the Olympics or Maestro 'Priceless Moments,'" referring to MasterCard's successful advertising theme.
Indeed, over the past few years both Visa and MasterCard have succeeded in repositioning themselves from being simply credit card brands to being payments brands that include debit, credit and prepaid cards, says Les Riedl, president of Speer & Associates, an Atlanta-based consultancy. "They have an entire range of products leveraged around their brands," he says.
Star's approach has been to convince financial institutions that they need an alternative to the card associations and to the signature-debit model, Riedl says. "Star is taking the position that there's value around the brand and that value continues to be enhanced," he says.
Among the ways Star is demonstrating its viability is by expanding acceptance of its brand. Tom Gandre, Star senior vice president, says within the next month or so Star plans to reveal more details about a pilot the network plans to conduct later this year. In the pilot, Web-based Star transactions will be accepted among "target top" merchant candidates, which Gandre would not name.
Among the other leading PIN-debit brands, NYCE and Pulse also do not allow member issuers to leave the network marks off of their debit cards. While NYCE officials were not available to comment, Cindy Ballard, Pulse executive vice president, says Pulse has no plans to give members the option. "We do require the Pulse brand on the card, but it could be placed on the back," she says.
Ballard acknowledges that PIN debit acceptance is becoming something consumers expect regardless of brand presence. "When I see a PIN pad, I know I can use my card," she says. Like most EFT networks, Pulse does not do any direct marketing to consumers, leaving such efforts up to its member financial institutions.
In addition to changing its own branding rules regarding Interlink, Visa also clarified its policies regarding competing marks on cards. The card association says it will allow the Interlink brand to sit next to the Pulse mark, even though Pulse now is owned by Discover Financial Services, issuer of the Discover card, a Visa competitor.
(c) 2005 Cards & Payments and SourceMedia, Inc. All Rights Reserved.
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