The smaller debit networks are ready to join the larger networks in supporting Discover's technology to meet federal rules on routing EMV debit transactions, but they still await clarity from Visa and MasterCard.
The networks came to an agreement last week at a meeting of the EMV Migration Forum, says Randy Vanderhoof, acting director of the Forum and president of the Smart Card Alliance.
"All of the major players who need to be satisfied with the use of the Discover application also were represented and were in agreement," Vanderhoof says.
The independent Smart Card Alliance last year created the EMV Migration Forum, with a current membership of 133 payments organizations, to address the technical and legal issues surrounding the U.S. migration from mag-stripe to chip-based payment cards.
The Secure Remote Payments Council last week chose to recommend the Discover application identifier code for debit routing after also reviewing proposals from Visa and MasterCard.
Resolving the issue surrounding the common AID for debit routing was a critical step in meeting the card brands' deadlines for the EMV migration, particularly since processors must be equipped to handle chip-based transactions starting in April.
However, the networks still must form a consortium to govern the use of the code and establish terms, conditions and testing procedures, Vanderhoof says.
"The question of how long it will take was asked about five different ways at the forum last week, but the payments council really has no way to put a timeline on it at this point," he says.
Secure Remote Payment Council president Paul Tomasofsky says other networks are already completing paperwork to become part of the consortium.
"I can't comment on specific networks, but we have heard from other networks besides the 10 originally announced, and there is great interest," Tomasofsky says. "No deadlines have been established as of yet."
It also remains to be seen how Visa or MasterCard will view the use of Discover's technology as a common debit code for EMV. The ultimate goal of the debit networks was to establish a true single common AID.
"We continue to review last week's Secure Remote Payment Council announcement, as the newest solution offered to the market," MasterCard spokesman Seth Eisen says. "However, we don't have enough insights on key facets of the solution, such as the timeline for establishing the governance structure, testing, readiness and availability of the solution, among others, to comment at this time."
The MasterCard offer for a common AID – inclusive of contact, contactless and ATM transactions – is ready to be implemented today, Eisen adds.
Visa did not respond to inquiries about the payment council's choice of the Discover code.
Vanderhoof says it is possible that merchants and acquirers will start with three debit codes and "see what happens to possibly reduce it to one in the future."
Before the payment council's chip-and-PIN workgroup chose the Discover code, there were three options from the major card brands, plus 13 other debit networks that had not committed to a code, but also had not developed an application to work with.
"We've gone from 16 potential applications [on a card] to three unique applications, with Visa and MasterCard still not being part of the single code," Vanderhoof says. "That definitely reduces the complexity in the system, though it would be even simpler if we could reduce it to one or two."
American Express is not involved in the common code debate or process because its cards, including prepaid products such as Bluebird, do not fall under the same federal rules, Vanderhoof says.
The EMV Migration Forum's next discussions will center on options already available in the marketplace, such as chip-and-PIN or chip-and-signature for EMV transactions, online and offline PIN use, and cardholder verification options, Vanderhoof says.