Visa, MasterCard Offer Common Debit Solution

Aug. 1, 2013

This week, Visa and MasterCard said they have partnered to offer a common debit solution in the U.S. Debit networks in the U.S. have been working for nearly two years toward a solution that would address inconsistencies between the debit network routing requirements of the Durbin Amendment and limitations of the chips in chip & PIN cards and the rules of EMVco—the organization that administers EMV standards. With migration to the EMV standard underway in the U.S., several groups had been working on the problem, with some consensus among debit networks, but no buy-in from Visa and MasterCard .

On Tuesday, Visa and MasterCard, which each had offered separate solutions earlier this year, said they have made proprietary EMV technologies available that would enable a debit chip transaction originating from a single-chip application to be routed by the merchant to Visa, MasterCard or any other U.S. PIN debit network that elects to participate in the solution.

While yesterday’s decision by a federal judge overturning the Durbin Amendment eventually may render the need for such a solution moot, a working group formed by the Secure Remote Payment Council (SRPc) that includes most U.S. debit and ATM networks has been seeking the creation of a common application identifier (AID) that would solve the issue. Visa and MasterCard have been part of those discussions, but neither has committed to the common AID, apparently hoping proprietary technology would give them a competitive advantage in routing debit transactions.

Members of the working group are interested in Tuesday’s announcement from Visa and MasterCard, but further evaluation would be necessary to determine if signing on with the solution is fair, according to Paul Tomasofsky, president of the Secure Remote Payment Council.

“The announcement is an interesting one on the surface but of course more information is needed to determine how other networks would fit into the picture,” Tomasofsky said. “Before that, it would be helpful to understand how Visa and MasterCard will work together from an operational viewpoint. The SRPc Chip-and-PIN working group members have always advocated a solution that allows all participating networks equal access to technology, a voice in governance, appropriate business terms and the ability to compete and innovate on future enhancements. In short, our solution calls for a multilateral solution and not a bilateral one.”