Debit Regulation, EMV, and Finding Common Ground
Published August 9, 2013 3:11 PM
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Updated October 20, 2016 10:45 AM
1 Min Read
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EMV chips improve security over magnetic-stripe cards, but they have not been easy to implement. Years ago, a Forrester analyst said "the U.S. is going to adopt EMV in about the same way the U.S. adopted the metric system somewhere between kicking and screaming and not at all." What have been the biggest hurdles? (Image: ThinkStock)
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Merchants, issuers and card networks have clashed over whether the benefits of EMV are worth the expense, but one of the most longstanding issues has been how to make the technology work under the Durbin rule's mandate that debit cards have at least two routing options . (Image: ThinkStock)
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In January 2013, Electronic Transactions Association pushed for a common application identifier for debit transactions , citing the card brands April 1 deadline for processors to be prepared to handle EMV transactions. That date came and went without a resolution. (Image: ThinkStock)
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By February, Visa and MasterCard separately offered their technology for debit routing, but the independent debit networks turned them down . (Image: Bloomberg News)
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After declining Visa and MasterCard, the Secure Remote Payment Council, representing the independent networks, announced it would use Discovers technology . (Image: Bloomberg News)
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On July 1, the EMV Migration Forum recommended a single common application identifier , or AID, triggering a fresh flurry of activity on this issue. Visa, MasterCard and Discover quickly got to work , discussing licensing agreements that would potentially address the Forums recommendations. (Image: ThinkStock)
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On July 24, the debit networks made a major concession , saying they would accept Visa and MasterCard technology on their cards alongside Discover's. However, the Secure Remote Payment Council still insisted on an independent consortium to govern the technology. (Image: ThinkStock)
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Less than a week later, Visa and MasterCard struck a deal to share common application identifier technology, though the networks did not agree to independent governance. (Image: ThinkStock)
The same week, a federal judge struck down the Federal Reserve Board's implementation of the Durbin amendment. Though most attention was on the fee caps, the ruling also took aim at debit-card routing , and thus presented further complications to the deployment of EMV cards in the U.S. (Image: ThinkStock)
