Merchants, acquirers and issuers are preparing to handle EMV-chip debit cards that carry three application identifier codes from Visa, MasterCard and Discover as an earlier push to use one common code remains unresolved.
The prospect of a three-code system is good news to companies that want to see EMV-chip card technology spread because many view the wrangling over a single common code as a stumbling block that could stall progress.
The Durbin amendment mandates that U.S. merchants get a choice of at least two debit networks, but the EMV standard is typically used in countries with single debit networks, where there was no need for a common application identifier for debit routing.
Debates at the EMV Migration Forum and other venues for the past year have been based on the expectation for a single code for routing transactions. A sub-committee of the EMV Migration Forum's debit working group "made really nice progress in balancing the multiple solutions, and offering merchants a simple way to handle it," says Carolyn Balfany, MasterCard's senior vice president and group head of U.S. product delivery.
The sub-committee wasn't debating application layers, but studied possible scenarios that allow multiple debit options, Balfany says.
In February, MasterCard and Visa had offered use of their debit technologies to route EMV transactions, but the regional PIN debit networks made it clear a month later that neither card brand was offering what they needed to handle all debit transactions.
Ultimately, the regional networks in the Secure Remote Payment Council chose Discover's technology because it met more of their criteria and represented an independent option. In the weeks following, even more networks hopped on board with Discover's technology.
The Secure Remote Payment Council continues to push for a single code, rather than three applications, for EMV debit transactions, council president Paul Tomasofsky says.
The council is also forming an independent consortium that would govern the debit routing technology and process, which would be open to all networks, Tomasofsky adds.
"That's a key differentiator for us," Tomasofsky says. "In the other options, Visa or MasterCard would own it and govern it."
Any EMV debit cards issued in the U.S. that consumers would also use overseas would need another international brand application on it, he adds.
The debit routing debate illustrates the need to get industry stakeholders working together to get educated about a problem, says Stephanie Ericksen, Visa's head of authentication product integration.
"The idea is to get more engagement on the issuer and merchant sides," Ericksen says. "The key question for them is, what does it all mean for their businesses?"
Visa continues to research and analyze all of the issues related to EMV, while supporting "multi-access" as the most cost-effective way to route transactions, Ericksen says.
Visa technology allows issuers to place a single application on a card to facilitate transaction routing to multiple networks.
Early on, detractors felt Visa's technology fell short in its support of PIN transactions and contactless payments. But Visa has expanded its technology to handle PIN, contactless payments, mobile Near Field Communication and transactions with no CVM code.
Balfany says the sub-committee members trying to work through the common code problems are "not worrying about a single app vs. multiple apps," but instead considering how to handle each scenario. "They are embracing whatever comes and defining how the merchant can read it at the terminal," she adds.
Merchants have been involved in the most recent discussions and are "moving in unison" on resolving the issue, Balfany says. "It doesn't work if it is not a balanced solution for the issuer, acquirer and merchant."
Merchants have told Visa they want the issue resolved, and Visa is producing an acquirer implementation guide that it will update for release this summer, Ericksen says. "The guide will provide the information for terminal configuration for a common debit solution and routing over a multiple debit network," she adds.
Even though all of the card brand offers for debit routing technology are "still on the table" most stakeholders are acknowledging that a single common code is unlikely, says Randy Vanderhoof, executive director of the SmartCard Alliance.
As such, merchants and processors are preparing for more than one code and getting educated on how to select options on a card and how the terminal will make those choices, Vanderhoof says.