Visa Inc. says its EMV chip technology will be available to create a common code for debit transactions to allow merchants to choose networks as mandated by federal law — a move that could address a key obstacle in the U.S.
In addition, Visa on Feb. 4 announced its EMV liability shift deadlines for the ATM industry.
The debate over the need for a common application identifier, or AID, for debit transactions heated up in the past week as the industry nears the first card brand-mandated EMV preparation deadline for acquirers and processors, which hits April 1.
The common code is needed to allow merchants to choose a debit network when initiating a chip-based EMV card transaction, as required by the Durbin amendment of the Dodd-Frank Act.
The federal mandate is problematic because EMV debit codes were initially established in other countries for a single network.
"There has been a lot of discussion at EMV migration forums about the need for a common debit solution, and Visa has been working on this for some time," says Stephanie Ericksen, Visa's head of authentication product integration.
Visa will make some of its EMV chip technology available for the creation of a generic, common debit AID for transactions on all U.S. debit networks, Ericksen says.
The most expedient and cost-effective approach to establishing a common code is to facilitate the process and make a common AID available immediately, Ericksen adds.
"There was talk [in the industry] about designing one from scratch, but that would take so long with creating, governing, certifying and testing it," Ericksen says.
Visa will not require a royalty fee or per-card fee on use of the common code, Ericksen says. "It will allow terminals to route EMV debit transactions in the same manner they do mag-stripe today," she says.
The code will be a licensed, unbranded and generic system called the U.S. Debit AID and will operate only for contact EMV chip cards and online PIN transactions, Ericksen says.
"The mobile pay industry is still evolving," so coding for those transactions may happen at a later date, Ericksen says.
In the past week, the Electronic Transactions Association, the Merchant Advisory Group and the Secure Remote Payment Council all issued statements calling for a common AID, with the merchants' group going as far as suggesting an extension to the card brands' EMV preparedness deadline in April because of the lack of a code.
MasterCard Inc. also weighed in, announcing it would make its Maestro network code available for other debit networks. But the payments groups say the MasterCard proposal left too many questions unanswered about licensing, intellectual property rights and innovation restrictions on other PIN debit networks.
"I know we have a different proposal than MasterCard, but we will have further conversations with our clients and in the industry to see how we move forward with this," Ericksen says.
"We have taken our time to talk to stakeholders and others, and we believe this is a sensible approach to the common AID question," she adds.
Ericksen says Visa acquirers "are in good shape" for meeting the April 1 deadline for accepting EMV data, and that any uncertainty over the debit transactions should be eased with the common AID announcement.
Visa's liability shift timetable to encourage acquirers to upgrade ATMs in Asia Pacific and the U.S. includes an April 1, 2015 deadline for U.S. third-party acquirer processors and sub-processors to be able to support EMV chip data.
Liability will shift to whichever party — acquirer or issuer — has not adopted EMV chip technology on Oct. 1, 2015 in some areas of Asia Pacific, and by Oct. 1, 2017 for the U.S., China, India, Japan and Thailand.
With the point-of-sale liability shift in October, 2015, Ericksen says all of Visa's EMV timetables now point to having all point-of-sale terminals and all ATMs accepting chip-based cards by 2017.