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The Economics Behind Account Updater

When PULSE announced our new Account Updater service in September, our participants had a lot of questions:

  • Is this really necessary?
  • What are you going to do with the information?
  • I already provide this to my card-brand network – why does PULSE need it too?

Issuer participation in Account Updater is optional now, but it will be required with our 19.1 Release in April 2019. Keep reading to get greater clarity around the benefits you may see when you participate in the service.

Why Account Updater?

Understanding technology advances and industry trends – and helping our participants prepare for them – is an important part of our job as a network. An Account Updater service can be an essential stepping stone in our path towards helping you maximize interchange income by ensuring an alternative routing option on your ever-increasing volume of card-not-present transactions.

But that’s jumping ahead in the story. Before we get to interchange, let’s hit the highlights on the Account Updater service.

Account Updater services have been around for a while. They enable merchants that store card-on-file credentials to obtain updated credentials when primary account numbers (PANs) or expiration dates change or accounts are closed. That’s critical in this era of data breaches, malware attacks and phishing scams.

By keeping card credentials current, merchants may achieve higher authorization rates and fewer payment failures. And, your cardholders may be better serviced. This really matters with recurring payments, where out-of-date card data can result in multiple declined transactions.

Forty-four percent of consumers say a retailer’s ability to retain payment-card data improves their checkout experience, and one-third have used stored payment data at a retailer in the past 90 days.1 

“Account updater services and card controls will continue to increase in importance
as more cards migrate into card-on-file environments.”

                                                                                                – Jordan McKey, 451 Research

In the past few years, Account Updater services have taken on a more strategic role. The card-brand networks use Account Updater data to maintain numerous internal systems – particularly Stop Pay, tokenized card-on-file and pay-button account management. These sophisticated payment features are becoming increasingly important as shopping – and fraud – migrate from brick-and-mortar stores to online and mobile environments, and consumers want to pay for goods and services in an instant, with little to no effort.

Why Does PULSE Need Account Updater?

Payment networks are increasingly using payment tokens as a security measure for some use cases related to mobile and e-commerce payments. To keep pace with this industry shift, we’re working toward tokenizing PULSE-participating PANs. This effort to create side-by-side tokens on PULSE participating debit cards is targeted for completion in 2019.

Issuer-submitted account updates will help us to accurately map debit payment tokens to the correct PANs before sending the transactions to issuers for authorization. Without issuer-provided account updates, outdated PANs and expiration dates would be used in transactions, causing cardholder transaction denials. What’s not to love about a tool that can increase security while potentially reducing friction for your cardholders?

How Will You Benefit?

Once side-by-side tokens are enabled, merchants will be able to select the network to which they want to route the transaction by using the corresponding token. Currently, tokenized transactions can only be routed to the network on the front of a debit card.

We have long championed preservation of routing choice on all debit transactions. By providing a routing alternative on tokenized transactions, we may create competition where it doesn’t currently exist. This could enable you to earn highly competitive interchange through PULSE on transactions that can only route to card-brand networks today, while paying low network fees.

What Are Your Next Steps?

Effective with the 19.1 Release, issuer participation in Account Updater will be required for all PULSE and Discover® Debit issuers. Participation will be facilitated by third-party issuer processors, except where issuers are directly connected to PULSE.

Beginning in April, issuers must submit – or have their processor submit – applicable card account data to PULSE, and update the data when changes occur. To meet this requirement by April 12, 2019, your processor will need to open a project with PULSE.

What Else Do You Need to Know?

It may seem like PULSE is asking more of our participants these days, in terms of participation in new products and services. The digitization of commerce has made card payments more complex. And services like Account Updater help us prepare our network – and you, our clients – for what’s next in payments.

  1. The Digital Transformation of Payments, 451 Research, October 2018.