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CoverStory
The Durbin effect cap. U.S. District Court Judge Richard J. Leon also took issue with the debit
network routing provisions the Fed imposed through its rulemaking (contained
One of the biggest obstacles to in Regulation II). The Fed is now appealing the court ruling.
widespread implementation of EMV
terminals has been an unintended Despite the legal complications, experts in the field believe it is critical to
consequence of the Durbin get ISOs and merchants on board with EMV. "We need to be focused on the
Amendment. Aside from capping education side of this," Amiryants said. This means not just getting merchants
allowable interchange on debit card on board but getting them to understand why it's so important. "ISOs have got
payments, the Durbin Amendment to educate merchants about this. Merchants will pay you back with respect and
also directs the Fed to require loyalty," she said.
that debit card issuers provide
for merchant choice of clearing
networks. That's not an easy task
because every debit card network has
proprietary network technologies
and application identifiers (AIDs).
And the debit card networks haven't
been keen to share AIDs with each
other and the major card brands.
That's beginning to change,
however. A group representing the
leading debit card networks and
using the moniker DNA (for Debit
Network Alliance), was recently
formed to address this challenge. Its
recommendation: the DNA will own
and govern a universal standard
and license it to AmEx, Discover
Financial Services, MasterCard and
Visa. That was followed in short
order by an announcement from
Visa and First Data that they would
be collaborating on an AID that
meets the challenges of both EMV
migration and Durbin. (First Data
owns the STAR debit network; STAR
is also a member of the DNA.)
Visa said the new common solution
will support issuer choice and
flexibility, as well as merchant
routing choices, without costly
reprogramming. McCarthy believes
the arrangement between First Data
and Visa will speed marketplace
migration to EMV. "This is really
a major step forward," he said.
"We think it's a good model [of
cooperation] for issues like this that
are purely technical."
Of course, the Fed's implementation
of the Durbin Amendment remains
clouded in legal arguments. A 2013
federal court ruling faulted the
Fed's rulemaking under the Durbin
Amendment and ordered the Fed
back to the drawing board to come
up with a lower debit interchange
45
The Durbin effect cap. U.S. District Court Judge Richard J. Leon also took issue with the debit
network routing provisions the Fed imposed through its rulemaking (contained
One of the biggest obstacles to in Regulation II). The Fed is now appealing the court ruling.
widespread implementation of EMV
terminals has been an unintended Despite the legal complications, experts in the field believe it is critical to
consequence of the Durbin get ISOs and merchants on board with EMV. "We need to be focused on the
Amendment. Aside from capping education side of this," Amiryants said. This means not just getting merchants
allowable interchange on debit card on board but getting them to understand why it's so important. "ISOs have got
payments, the Durbin Amendment to educate merchants about this. Merchants will pay you back with respect and
also directs the Fed to require loyalty," she said.
that debit card issuers provide
for merchant choice of clearing
networks. That's not an easy task
because every debit card network has
proprietary network technologies
and application identifiers (AIDs).
And the debit card networks haven't
been keen to share AIDs with each
other and the major card brands.
That's beginning to change,
however. A group representing the
leading debit card networks and
using the moniker DNA (for Debit
Network Alliance), was recently
formed to address this challenge. Its
recommendation: the DNA will own
and govern a universal standard
and license it to AmEx, Discover
Financial Services, MasterCard and
Visa. That was followed in short
order by an announcement from
Visa and First Data that they would
be collaborating on an AID that
meets the challenges of both EMV
migration and Durbin. (First Data
owns the STAR debit network; STAR
is also a member of the DNA.)
Visa said the new common solution
will support issuer choice and
flexibility, as well as merchant
routing choices, without costly
reprogramming. McCarthy believes
the arrangement between First Data
and Visa will speed marketplace
migration to EMV. "This is really
a major step forward," he said.
"We think it's a good model [of
cooperation] for issues like this that
are purely technical."
Of course, the Fed's implementation
of the Durbin Amendment remains
clouded in legal arguments. A 2013
federal court ruling faulted the
Fed's rulemaking under the Durbin
Amendment and ordered the Fed
back to the drawing board to come
up with a lower debit interchange
45
