Visa, MasterCard Proposed Debit EMV Network-Routing Options Fail to ‘Fully Satisfy’ Debit Industry Group (Feb. 14, 2013)
Feb. 14, 2013
Pressure is mounting for U.S. debit networks to find a suitable technology for routing chip-based debit transactions under the Durbin Amendment network non-exclusivity rules, but a unified plan is not yet within sight, industry executives say after a new round of meetings this week to digest last week’s developments. MasterCard Inc. and Visa Inc. in recent weeks each offered a unique “application identifier,” or AID, that would enable merchants to choose between two unaffiliated debit networks when processing debit transactions with EMV technology, in accordance with the Durbin Amendment. But “neither solution fully satisfies what debit networks want to achieve,” Paul Tomasofsky, president and executive director of the Secure Remote Payment Council (SRPc), tells Paybefore. The group formed last year to find common technology ground in complying with EMV under Durbin. Each of the card networks’ proposed AIDs could work, he says, “but each of them has different flaws and in both cases the card networks want to govern debit network routing themselves, and that doesn’t go down well with individual debit networks.”
More than a dozen U.S. debit networks participating in the SRPc, whose chip and PIN Working Group since November 2012 has included Visa and MasterCard, are “continuing to work on a more satisfactory solution,” but it is impossible to say how long that will take, says Terry Dooley, SRPc chairman and a senior vice president and chief information officer at Shazam Inc., a Johnston, Iowa-based regional debit network. “I’m somewhat optimistic that we will find an approach that gives all debit networks an equal voice in governing debit-routing for the long-term,” he says.
MasterCard on Jan. 18 proposed licensing its Maestro PIN-debit technology to U.S. debit networks, enabling them to route debit transactions that are authorized either online or offline, via contact or contactless cards and with some differences in cardholder verification methods. “We firmly believe in supporting both online and offline transactions” to provide the most robust and versatile path to processing debit transactions in all types of retail environments, Michael Weitzman, MasterCard’s group executive of global products and solutions, U.S. Market, said last week at the Smart Card Alliance’s Payments Summit in Salt Lake City.
Visa on Feb. 4 offered a generic AID that works only with contact EMV cards and in online environments only, because online authorization comprises the bulk of all U.S. retail debit card transactions, Stephanie Ericksen, Visa’s head of authentication product integration, said. Visa’s approach also has “no royalty fee,” she stressed, while MasterCard’s branded approach mentions a fee. “I think there are still some items on the wish list that are unresolved. But we think this is a good solution,” Ericksen said.
We’ll have more details on debit network routing issues and EMV in next week’s issue of Paybefore Update.
