Payments associations and organizations applauded Visa Inc.'s Feb. 4 move to address one of the most nagging EMV smart-card migration issues in the U.S., but they are not ready to say all their problems have been solved.
In the past week, several organizations have spoken up over the hassles of adhering to the Durbin amendment's requirement to route debit transactions over multiple networks using the EMV standard, which was designed for use with a single network.
Visa's announcement Monday seemed to address many of their concerns. However, the groups say they needed more time to study the numerous technical details involved.
Visa announced it would offer its technology for the creation of a generic common application identifier to help the industry resolve the issue quickly because an April 1 deadline looms for acquirers and processors to be ready to handle EMV payments.
Because EMV chip-cards operate on different standards than a magnetic-stripe card's ISO 7812, acquirers and issuers were largely frozen in their preparations as they waited for the card networks to weigh in. MasterCard earlier offered to open its Maestro network to accept all debit transactions, but the groups were concerned that MasterCard's proposal left too many questions unanswered about licensing the codes and governing the debit transactions.
MasterCard did not respond by deadline to inquiries about how Visa's proposal affects its own.
Jason Oxman, president and CEO of the Electronic Transactions Association, whose organization called for a common application identifier code (AID) last week, issued a statement praising Visa's effort to solve the problem.
"The decision by Visa to support a common U.S. debit solution is an important step in developing a solution to preserve merchant routing choice for U.S. debit EMV transactions," Oxman says.
While the ETA has to examine the details of this new proposal, the organization "applauds Visa for its cooperative spirit in listening to the EMV migration challenges identified by the acquiring industry," Oxman says.
"We commend Visa for following the guidance provided by ETA and other industry stakeholders, demonstrating how the industry can come to together to address important issues," he adds.
No matter what happens with Visa's and MasterCard's proposals, the two card networks will ultimately be joined at the hip in some fashion when it comes to EMV debit transactions, says Brian Riley, senior research director and analyst with Needham, Mass.-based CEB TowerGroup.
However, by providing a free, common identifier, Visa puts itself "at the center of the hub" on EMV technology, Riley says. The question now will be whether that is what the payments industry and rest of the world wants, he says.
"The Visa proposal does seem to have the Durbin amendment dual-routing addressed with a good fix," Riley says. "But the whole play on this for Visa is getting EMV issues straightened out [in time] to kick off the liability shifts."
The Secure Remote Payments Council and Merchants Advisory Group also pleaded last week for a solution to the application identifier obstacle.
Payments council president Paul Tomasofsky says the organization will be asking a lot of questions this week.
"We need more details about what this solution entails," Tomasofsky says. "I am not sure you can announce something in early February and expect an early April deadline [for EMV preparedness] to still be met."
The council's chip-and-PIN work group has defined the parameters for a common AID and needs to see if Visa's approach includes all of those parameters, Tomasofsky says.
"If it does, it's a positive step," Tomasofsky adds. "If it doesn't, then we need more details."
EMV represents a far more complicated card transaction process than what the U.S. has dealt with for 50 years with magnetic-stripe transactions, Tomasofsky says.
Even though Visa is offering a generic common AID as a free service with no royalty fees, the council still wants to know what implementation costs may be for acquirers, processors and merchants, as well as licensing agreements and property rights, Tomasofsky says.
Regardless, the Visa announcement "is clearly a step forward from where we were six months ago," he says.
Julie Conroy, senior analyst with Boston-based Aite Group, has been researching EMV migration for the past several months.
"This is an important step because issuers were moving far less aggressively with debit because of the lack of a common code able to accept all of the different applications," Conroy says.
Because there are 14 different specifications for EMV debit transaction routing in the U.S, it was "critical for the industry to establish a common identifier," Conroy says.
"The way Visa has structured this, it seems like they are pushing it from an enablement perspective," she adds.
Because Visa has been involved in all EMV discussions and planning groups, Conroy says, "I have to believe this announcement is not just coming out of a vacuum."
But Riley says there may be even larger fish to fry in EMV migration than a common AID.
"My concern about EMV is that it has operated the same way for a long time, and with a 2017 date for [full compliance at the POS and ATM] a liability shift, what if a little innovation occurs in the next couple of years?" Riley asks. "Will EMV allow for something scalable and adaptable at that time?"