The Merchant Advisory Group is calling for a shift in deadlines for EMV acceptance in the U.S. — one extra month for every month the payments industry fails to find a common code for handling EMV debit transactions.
In adding up those months since the networks first announced deadlines in late 2011, MAG seeks more than a year extension of the April 1, 2013 card network deadline for acquirers and processors to be prepared to accept EMV data, or eventually be liable for any fraud occurring if they are not.
In a Jan. 31 update to its U.S. payments roadmap, the group points to the lack of a common application identifier, or AID, for EMV debit transactions that would allow merchants to follow Durbin amendment regulations to allow a choice of networks to route transactions. In addition, merchants express concern about the networks not addressing a likely fraud shift to e-commerce after the introduction of EMV at the point of sale, MAG says.
Separately, the Secure Remote Payment Council issued a statement supporting a common AID and a common governing model for debit network routing.
The common code was not a critical issue when EMV was introduced in other countries because, unlike the U.S., they do not have numerous debit network options or a federal regulation mandating network choice.
The flurry of activity centering on EMV deadlines and unresolved debit network issues comes on the heels of the Electronic Transactions Association last week calling for a common code, and MasterCard announcing it would open its Maestro network with a common AID for debit transactions.
The ETA, Secure Remote Payment Council and MAG say the MasterCard proclamation leaves many issues unresolved.
"MasterCard's offer to use its AID for this purpose is a step in the right direction, but still presents major obstacles including intellectual property rights, licensing control, lack of long-term business terms and, most importantly, restriction on the innovation of other PIN debit networks," the Secure Remote Payment Council letter states.
"We're basically trying to educate all of the parties involved about this issue," council president Paul Tomasofsky says. "The common AID is still the best solution, but it goes hand-in-hand with governance, which has to be equal."
The card brands have to take into account what is good for their organizations, whereas the issue of EMV debit transaction routing needs a solution that is good for the entire industry, Tomasofsky says.
The industry has to follow payments standards and federal regulations for EMV transactions with the "ubiquity and openness" that occurs with magnetic-stripe transactions, Tomasofsky says.
"I know the Federal Reserve has its eyes on this situation, and that may be where it has to be resolved," he adds.
Mark Horwedel, CEO of the Merchant Advisory Group, agrees that the networking problem belongs with a regulatory body.
Most importantly, Horwedel says, the clock is running on acquirers and issuers to meet card network deadlines and "know what code to write" when setting up EMV debit transactions.
"The acquiring community doesn't know what programming to institute, but they know they have to comply with the Durbin amendment," Horwedel says. "As it stands now, they would be out of compliance because there is no solution on which code to write."
In the past, issuers never had to worry about changing devices when moving between networks, but the EMV deadlines and the lack of a common code would force issuers to "lose that device portability," Horwedel says.
However, merchants continue to be troubled by the fact that EMV technology is "the intellectual property of a subset of payments stakeholders," whereas the coding and standards in payments represent a consensus process, Horwedel says.