The major regional debit networks have unanimously chosen Discover’s technology for a common code, or application identifier, for routing EMV debit transactions in the U.S. — but the debate isn’t over yet.
The decision, which should address a federal mandate for providing merchants routing choices for debit transactions, has yet to be adopted by the smallest debit networks, says Randy Vanderhoof, acting director for the EMV Migration Forum, which was created last year to facilitate adoption of EMV chip-card technology.
In addition, Visa and MasterCard will still have a say on whether to use Discover’s code or to supply one for use on their networks.
The 10 networks represented in the Secure Remote Payment Council, which chose to work with Discover’s technology, are AFFN, ATH, CO-OP Financial Services, Jeanie, NETS, NYCE, Presto, Pulse, Shazam and Star.
The technological aspects of Discover’s payment application specification may not be a major concern, but merchants, issuers and acquirers will want to know the details of a consortium being established to deploy the new code, says Vanderhoof, who is also president of the Smart Card Alliance, which created the EMV Migration Forum.
“We think it [Discover] is the best approach, but haven’t heard what Visa or MasterCard thinks,” he says.
Neither Visa nor MasterCard responded by deadline to inquiries.
Issuers and acquirers must also tackle the liability shifts for EMV acceptance. Processors have to be prepared to accept EMV transactions by April 1, according to the timeline established by the card bramds.
The council’s decision to license Discover for the common code “is certainly an improvement” over the recent uncertainty about the EMV technology, says Julie Conroy, senior analyst with Aite Group.
“But there two notable exceptions with Visa and MasterCard,” Conroy says. “The first prize would be a truly open source and just one chip application for the entire industry.”
The issues surrounding the code debate resulted in “too many vested interests,” making it difficult for all players to embrace a true single application, Conroy says.
Jason Oxman, CEO of the Electronic Transactions Association, says “a code cannot truly be considered common until it is universally adopted by all networks.”
However, Oxman says the payment council’s announcement “signals great progress toward the goal of finding a single common debit AID for EMV in the U.S. market.”
Vanderhoof says three options — from Visa, MasterCard and Discover — is “manageable and better than having six or more applications” on a chip-based card.
But Oxman finds three options too many. “Without a useable common debit AID for the U.S. market, payment processors have no solution to implement for EMV migration that preserves merchant routing choice and is compliant with federal law,” he says.
The common code debate represented “a fly in the ointment” of EMV until this week, says Mansour Karimzedah, chief technology officer for SCIL-EMV Academy and co-chair of the debit network committee of the EMV Migration Forum.
“Once you break that resistance point, such as the debit code issue, it makes EMV migration a much easier process and you can move on to the next stepping stone,” Karimzedah says.
“This was a big obstacle to overcome,” Vanderhoof agreed. Þ