PIN: we need to talk about our relationship

16 years on from PIN day (Valentines Day 2006) how is our relationship with PIN holding up?

Last year Dave Birch postulated that PIN was in decline and indeed no longer necessary as our mobile phones make use of various biometrics to authenticate us and our transactions, but as we often remind ourselves in Chyp, we’re not normal.  UK Finance statistics tells us that whilst the use of Apple Pay & Google Pay at the Point of Sale is on the rise, the humble plastic card is still the preferred way to pay.

So that’s good news for our beloved PIN right?  Well sadly no, the days of inserting our cards in the readers and entering our PIN are fast becoming a distant memory.  As of October last year, 69% of all debit card transactions were contactless, a number which continues to increase, indeed Barclaycard’s latest data puts the figure at almost 90%

Just as Valentines Day 2006 marked the start of our love of PIN, October 15^th 2021 may be the date that makes us question if we’re dating the right model.  Largely unnoticed, on October 15^th last year the UK contactless limit was raised from £45 to £100!  So now we need to spend over £100 before we have to insert our cards and enter our PINs, so farewell to PIN @ POS, it’s been a fun 16 years but times they are a changing.  If only it were that simple.  Our once beloved PIN has a guardian, who’s tyring to keep the relationship going.  PSD2 tells us that 1 in every 5 transactions (or £300 of spend), we must prove to the card that it’s still us using it and not some nasty pickpocket.  Before 15^th October we didn’t really notice this, we bought or groceries, filled up with fuel, bought a train ticket etc, basically we’d spend more than £45 before we reached the point where PSD2 stepped in and reminded us we had a PIN to take care of.  People never knew there was a limit, PSD2 didn’t need to remind people about taking care of PIN, we did it ourselves, we kept using our PINs.  But how often do we spend over £100? (South Western rail users are exempt from this question!) Not enough, now we just Tap and Go, as Barclaycard point out, 90% of transactions are contactless.  

We’re so accustomed to contactless – tap, beep, go – we don’t wait for receipts, convenience wins.  Time for the law of unintended consequences to raise its head.  PSD2 is still there in the background trying to look after PIN, wanting us to use it but we’re already out the door, or the taxi.  In January, Taxi Point contained an article warning taxi drivers about the rise in declined transactions, the article shows a receipt for £16.60 declined, what £16.60 why would that be declined? It’s not just the taxi drivers who are seeing the declines.  There has been a rise in the popularity and use of self-service kiosks, when was the last time you bought your sandwich at M&S and didn’t self-serve?  For low value transactions, self-service kiosks are quick convenient, and with contactless payments, simple.  However just like the taxi, we don’t wait for a receipt, just tap our cards and go, after all my bank isn’t going to decline a transaction for my sandwich surely?  It turns out it is declining these transactions. PSD2 demands we use our PIN, but by the time the message gets back to the kiosk we’re halfway to the door, we’re not trying to dodge paying for our taxi or our lunch, we just don’t expect a contactless transaction to be declined.  The £100 limit means we’re no longer using our PINs enough and PSD2 is stepping in more and more, the transaction isn’t really being declined, it’s a step up security feature intended to ensure you’re the person who should be using the card, sadly we’ve been too well trained to expect contactless payments to work, they’ve never failed before.

So why are we having the problems, in Australia the contactless limit has been just as high for much longer.  The Aussies it turns out are in love with another PIN.  The UK’s Offline PIN has a sister, the Online PIN, and the Online PIN doesn’t need you to insert your card, Online PIN works with Contactless Payments.  Aussies have always known that now and again you tap your card and use your Online PIN, so no payment problems.

After 16 years of Offline PIN, it’s time we thought about switching to some Online PIN dating.