When most of the payments industry was working to find a way to accommodate the Durbin amendment's routing rules for EMV debit cards, First Data acquisition target Acculynk had its attention focused elsewhere.
The company already had an e-commerce method in place for dual authorization transactions at that time, and Acculynk CEO Ashish Bahl, who initially got involved in the various alliances and conflicts governing debit routing and real-time payments, figured out fairly quickly that the best strategy was to simply play a different game.
"I made the executive decision that this was not a good use of our time, as we were trying to get so much done in a short period of time," Bahl said. "We had a consultant monitor it for us and if anything noteworthy came up, we would be in a position to participate. We had a patent portfolio to bring to the table that would be more than the average participant."
That sort of focus, from about 2011 through 2014, allowed Acculynk to set up several clients — from independent debit networks to financial institutions, merchants and airlines — with the PaySecure online PIN debit service. And First Data took notice, last week announcing a deal to acquire Acculynk and its key technologies of PaySecure routing, Payzur P-to-P payments and electronic payments for municipalities.
First Data has been active with Acculynk for several years, including having executive Mark Herrington join the Acculynk board in 2012.
To be sure, First Data and Acculynk have had much more in common the past decade than both being based in the payments hub of Atlanta.
"The biggest pain point with our merchants has been the cost of payment acceptance, and now we have a unique and secure way to provide low-cost routing for them," said Chris Foskett, executive vice president and head of corporate and business development at First Data.
Initially, First Data will integrate Acculynk products into the services for enterprise clients, targeting the large corporations, banking and government clients.
"Maybe down the road, Acculynk technology could become a feature within Clover Online or Clover [point of sale] products, but for now it will become the integrated offering across our acquiring solutions," Foskett said.
Currently, Acculynk can accept Visa and Mastercard transactions in the U.S. and route them over the PIN rails on a PINless basis, saving the likes of Square and Uber a lot of money on switching fees.
But with First Data's global presence, Acculynk would be able to additionally connect to foreign debit networks in markets such as Australia and India.
"In many of these foreign markets, like Latin America or Asia-Pacific, credit card acceptance rates are very low," Bahl said. "But the government mandates have put debit cards in the hands of all of the bankable consumers, so that is part of our broader strategy and seems to be working well."
It's a strategy that has shifted since Acculynk first entered the payments technology arena in 2008 with its dual-factor authentication of presenting a "floating" PIN pad online during the transaction process. That technology, called PaySecure, especially looked like a slam dunk for Acculynk when talk of the EMV shift began to unfold.
As the Durbin amendment's fee caps and routing mandates took a lot of steam and economics away from PIN debit transactions, Acculynk continued to stress the advantages of PIN-less online transactions.
"We went to the same debit networks and convinced them to do single message PIN-less and dual message PIN-less acceptance and push payments," Bahl said.
Acculynk had worked on PIN-less online transaction technology for years, so it was a strategy that paid off, giving the company what it felt was a wise option to complement what was becoming a crowded e-commerce security arena with products like 3-D Secure, one-time passwords or PINs, and the floating PIN pad.
With PIN-less online transactions, the consumer essentially enters a PIN and, through a provider's technology, the keyboard converts that PIN to different numbers. While authorizing the user, it creates a sequence of numbers that are worthless if a fraudster were to steal data as it moved along a network or was in storage.
"Having Acculynk positions us to be ahead of the competition to offer technology around debit routing," Foskett said. "No one has a similar offering in the market today."