Wal-Mart Exec: Debit-Routing Dilemma Makes October 2015 EMV Deadline ‘Unreasonable’ (Feb. 7, 2013)

Wal-Mart Stores Inc. is among merchants worried they will miss the October 2015 U.S. EMV liability-shift deadline, in part because the debit networks have not yet determined which technology path they will take to route chip-based debit transactions under the Durbin Amendment network non-exclusivity rules. With so many terminals to update and employees to train, among other factors, Wal-Mart has struggled to meet EMV compliance deadlines in other markets around the world and finds it is “unreasonable” to expect merchants to meet the 2015 EMV deadline “without having a [debit network routing] solution or knowing what to deploy,” said John Drechny, Wal-Mart’s senior director of electronic payments. Speaking at the Smart Card Alliance’s Payments Summit in Salt Lake City this week, Drechny added, “Hopefully we’ll come to a more reasonable timeline than trying to rush and get something done that we’re not proud of when it’s complete.”

The Durbin Amendment requires that merchants have at least two unaffiliated networks for routing debit transactions, and while existing magnetic stripe card technology enables such routing via banks’ BIN numbers, under EMV U.S. debit networks will require a “common application identifier,” or AID, to enable merchants to make such debit network routing decisions. The topic became a top priority for payments industry players in recent weeks as the Secure Remote Payment Council (SRPC), representing debit networks, on Jan. 31 issued a call for the U.S. payments industry to agree on a common technology approach to routing debit transactions so they could proceed with plans to test and certify cards and payment terminals to process EMV transactions as the liability-shift deadline nears.

MasterCard Worldwide on Jan. 18 announced plans to license its proprietary Maestro PIN-debit technology to U.S. debit networks, enabling them to route debit transactions that are authorized either online or offline and using both contact and contactless cards. “We firmly believe in supporting both online and offline transactions” to provide the most robust and versatile path for processing debit transactions in all types of retail environments, including those without a steady network connection, Michael Weitzman, MasterCard’s group executive of global products and solutions, U.S. market, told attendees during a Feb. 5 keynote session.

Visa Inc. on Feb. 4 proposed a different approach, offering a generic AID to debit networks with no licensing fees. Visa’s approach would enable authorization of online transactions only, for merchants with a steady network connection, which comprises the vast majority of U.S. card transactions, Stephanie Ericksen, Visa’s head of authentication product integration, tells Paybefore. Visa’s approach is “the simplest” for quickly and broadly enabling debit network routing, Ericksen said on Feb. 5.

Discover Financial Services is also “part of the discussion” on the network-routing dilemma and has offered to supply debit networks with yet another common AID, Troy Bernard, Discover’s global head of chip technology, told attendees at a Feb. 6 Payments Summit panel. He did not elaborate on the details of Discover’s proposed offering.

Debit networks must now digest the various proposed AID options and consider making decisions, Randy Vanderhoof, the Smart Card Alliance’s executive director, tells Paybefore. “It’s like a tennis match at this point. The debit networks asked the industry for a common solution; the networks responded and now the ball is in the debit networks’ court as they decide which, if any, of these approaches they will take,” Vanderhoof said, declining to speculate on how long it might take for debit networks to decide individually or as a group which technology path they will pursue.