Major U.S. debit networks have been discussing a solution to the Durbin Amendment/EMV issue, to avoid using the proprietary solutions by card brands like MasterCard and Visa. Technological limitations on the applications that reside on the chips of an EMV card, which enables it to be run as debit or credit, limit the path a transaction can take once an application chooses a network.
The Durbin Amendment states that merchants have at least two networks to route debit transactions through, which requires debit card issuers to program applications on chips for every chosen network. These upgrades would mean more expense for issuers, and less room for other information on the chips.
Earlier this year, the Secure Remote Payment Council (SRPc) created a coalition of U.S. debit and ATM networks to find a solution to the EMV standard. The group appeared to agree on the development of a common amplification identifier (AID), which would be placed, on the chip of an EMV card and tell the merchant’s processor which application to select during a transaction.
At the Jan. 18 meeting to endorse the AID, U.S. debit giant VISA was absent, and MasterCard promoted an AID solution associated with its own brand, Maestro. As a result, no solution was brought forward.
In the wake of the recent high-profile security breaches at major retailers like Target and Neiman Marcus, card networks are now feeling pressure to end the stalemate between debit networks, and find a quick solution to the Durbin Amendment conundrum. Public scrutiny of issuer and debit network security has pushed hesitant debit networks to sign with VISA and MasterCard AID alternatives that are ready for launch.
In the last week, the NYCE network signed with Visa. Fiserv Inc.’s Accel, Discover Financial Services’ Pulse, its Interlink PIN-debit network, and MasterCard’s Maestro networks have also signed agreements with Visa. And First Data’s Star Network said it would use MasterCard’s solution. Accel and Interlink have also signed deals with MasterCard.
These deals are a compromise to the earlier AID solution sponsored by SRPc. Card issuers will have a common AID in EMV cards without changing how EMV cards are configured.
Randy Vanderhoof, director of the EMV Migration Forum says, “In the last few months there has been a dramatic shift in attitudes about the benefits that EMV chip cards provide, especially in lessening the impacts that data breaches can have, and on preventing counterfeit card fraud.” He adds, “As a result, the U.S. migration is accelerating and there is a new sense of urgency in resolving differences and moving forward as quickly as possible.
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