Visa is making its common application identifier available for Discover's Pulse debit network, marking the latest in a string of agreements that pave the way for EMV debit card acceptance in the U.S.
"The debit networks all came to the table with a new sense of urgency to move forward on debit for EMV" after the recent high-profile data breaches, says Kimberly Lawrence, senior vice president of global corporate initiatives for Visa.
The breaches at Target and other retailers rekindled conversations about EMV-chip cards, which improve security over the magnetic-stripe cards used throughout the U.S. These conversations helped fuel the necessary collaboration, Lawrence says. "We have good clarity on debit all the way around at this point and things will be ramping up quickly," she adds.
The Durbin Amendment requires merchants to have a choice of routing options for debit card payments. To enable this, the debit networks need access to a common application identifier (AID) for each card brand.
The arrangement with Visa allows merchants and acquirers to develop systems to support debit routing options through Pulse, including PIN, signature and PIN-less transactions.
Visa issuers will now have one application with two application identifiers. One identifier is for Visa transactions, while the other is the common AID for Interlink, Maestro, Pulse, Star and Accel debit network transactions. As other networks adopt Visa's technology, they would be added to the common AID routing capabilities.
Visa and Fiserv announced a similar licensing agreement on March 17.
Nearly a year ago, independent debit networks declared their intention to sign licensing agreements with Discover to use its common AID. Since that time, MasterCard and Visa worked to ease concerns of independent networks about licensing, seeking to provide the technology free of charge and as part of an open network.
Pulse is a founding network in the Debit Network Alliance, a company formed late last year to push for development of common AID solutions that maintain an open and competitive debit network marketplace.
"Our agreement with Visa is an example," says Bryan Manka, product manager, emerging products for Pulse.
The Pulse network remains committed to supporting Discover's common AID, which will be deployed for Discover, Diners Club and Discover debit issuers, Manka says.
In order to participate in MasterCard's common AID, Pulse would have to sign a similar licensing agreement, Manka adds. The agreement with Visa minimizes the number of AIDs required for issuers that use both Visa and Pulse.
Visa's common AID now accepts transactions for most of the major networks. Mercator Advisory Group estimates that Visa's Interlink network has the most market share at 28%, with MasterCard's Maestro at 20% and Pulse at 18%.
Those seeking a resolution to the EMV debit routing challenge suffered a setback last summer when Judge Richard Leon ruled that the Federal Reserve needed to re-examine its implementation of the Durbin amendment's routing mandate. However, a federal appeals court ruled today that the Fed's approach was valid.
"This is the first time we have seen good news come out on EMV [at the federal level] fall in line at the same time as our announcements," Lawrence says. "The last time we made one of these deals [an agreement with MasterCard], the next day Judge Leon made his ruling."