Tuesday, March 19, 2013
According to Visa Inc., the policy "assigns liability for counterfeit fraud to the party that has not made the investment in EMV" by October 2015. This includes issuers that do not send EMV cards to their customers, acquirers and processors that do not support EMV acceptance, and merchants who are not using EMV-compatible POS equipment.
However, introduction of EMV in the United States is at a standstill as the industry tries to determine how to comply with federal regulations requiring at least two routing options for every debit transaction. To manage routing choices a chip must have a debit application identifier (AID) and application. There are at least three competing debit AID solutions for routing EMV debit transactions:
The 10 debit networks endorsing the D-Payment application are members of the SRPc Chip and PIN Workgroup. They include the Armed Forces Financial Network, ATH Network, Co-Op Financial Services, Jeanie Network, NetWorks, NYCE Payments Network LLC, Presto! Network, PULSE Network, Shazam Network and STAR Network.
The Workgroup networks are inviting other debit networks to join in a consortium to govern and commercialize a common U.S. EMV debit solution. The Workgroup is also considering enhancing the security of the debit AID by including one-time card number technology developed by First Data Inc. and STAR to reduce skimming and data breach fraud.
Diane Offereins, President of Payment Services at Discover, said her company is confident D-PAS is the right path for U.S. debit networks. "We are honored to have been chosen by the SRPc Chip and PIN Workgroup and feel that the strength of Discover's D-PAS technology, coupled with our universal and choice-centric EMV approach, will enable the market to move forward."
The Workgroup joined with the EMV Migration Forum to create requirements for a proposed U.S. debit AID solution. The two organizations said adoption of a common debit AID allows financial institutions to stay competitive while maintaining the flexibility to choose the debit networks they support, allows merchants and acquirers to route transactions as they like, and allows processors to support issuers and acquirers as they move to EMV without the redundant development needed to support multiple chip and PIN solutions.
Stan Hollen, President and Chief Executive Officer of Co-Op Financial Services, said a common U.S. debit AID is important to credit unions because it allows them to continue to make routing and network choices using EMV. However, Hollen believes caution is necessary when determining when businesses should adopt EMV standards.
"While this solution simplifies the efforts for the industry, commercialization will take time," he said. "Given that EMV is being driven by liability shifts, not regulatory or network mandates, we recommend that issuers wait until 2014 before moving forward with their business case for EMV deployment in order to ensure that the market is ready."
Delays caused by unforeseen problems – for example, the federal requirement for multiple routing options for debit transactions – have caused some payment experts to express skepticism about whether the industry can meet the benchmarks set by the major card brands in their road maps to EMV adoption in the United States.
Hollen said Co-Op will provide its clients with multiple tools to help develop their own EMV road maps. "This will include tactical advice on upgrading ATMs issuing debit cards with the common AID, what to do about credit, how to calculate the economics of switching to EMV and related fraud trends," he said.
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