Though some issues remained, it seemed the card brands and debit networks were closer than ever to resolving their longstanding debate over EMV debit card routing when a federal judge potentially changed everything.
Three days ago, Visa and MasterCard extended an olive branch to the regional debit networks, offering to share their common application identifier for EMV debit routing instead of forcing the industry into using multiple AIDs to accommodate the routing mandate set by the Durbin amendment.
Then yesterday, U.S. District Court Judge Richard Leon ruled the Federal Reserve Board overstepped its authority in capping debit fees at 21 cents per transaction under the Durbin amendment, part of the 2010 Frank Dodd Consumer Protection Act. Leon also questioned the industry's response to the amendment's routing rule.
Neither Visa nor MasterCard would comment about any potential changes to the routing mandate in light of the judge's ruling, saying any type of speculation prior to the Federal Reserve Board's reaction would be premature.
But others were willing to weigh in.
"I think the ruling will, if anything, strengthen the requirement for access to multiple debit networks at the point of sale and therefore the push for a common AID for debit EMV will still be a necessity," says Nick Holland, senior payments analyst for Javelin Strategy & Research.
There is no reason to believe that the current efforts for a common AID for debit transactions would screech to a halt, Holland says, but the ruling could have bigger implications.
"This may delay the optimistic 2015 shift to EMV while the industry gets to grips with the implications of the ruling," Holland says.
The card networks' timeline requires most merchants to accept EMV-chip card payments by October 2015 to avoid a shift in fraud liability. Fuel merchants have an extra two years.
"It could be a chain reaction, but this ruling's most likely effect is that it will question the paradigm routing has operated under," says industry analyst Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group, LLC.
"If that is the case, the AID process will have to cover how to handle any eventuality, or it could delay debit implementation for EMV," Ablowitz says.
In the meantime, members of the Secure Remote Payment Council, representing independent debit networks, insist that the industry's mission to establish a common AID for EMV transactions was already stalled.
Although Visa and MasterCard agreed to establish a single AID for Visa or MasterCard transactions, the SRPc demands an independent consortium to govern the technology, eliminating the need for the regional networks to enter licensing agreements with Visa or MasterCard. The SRPc had already chosen Discover's D-PAS technology for the common AID on its issued debit cards.
"Their announcement indicates the willingness of those two brands to use each other's intellectual property, but it doesn't address the issue of independent governance of the technology," says Terry Dooley, chairman of the SRPc and senior vice president and chief information officer for the Shazam debit network.
Visa and MasterCard essentially restated their original positions, that the common AID will still be governed by licensing agreements, Dooley says.
"We are still hammering it out, but it's like taking a hammer through concrete," Dooley says of the yearlong process.
The SRPc's chip-and-PIN working group will continue discussions, which were significant in getting the council to "move to the middle" previously in saying it would accept MasterCard and Visa apps on its debit cards.
"We moved it in that line, now we would like to see one [of the brands] move the other way toward the middle," he adds.
All with a potential change to the Durbin amendment now hanging over their heads.