Article

Is the ATM industry finally getting traction on an EMV spec?

As 10 networks agree to adopt a common AID, ATM implementation suddenly looks more doable.

March 21, 2013 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

The ATM industry in the U.S. may have come one big step closer this week to having a clear and consistent standard for EMV implementation.

On Tuesday, the 10 debit networks* comprising the Secure Remote Payment Council's chip-and-PIN workgroup agreed to adopt a common U.S. debit application identifier. The group will work with Discover Financial Services to license its D-Payment Application Specification as the foundation of a common U.S. debit chip payment solution.

The workgroup is now considering whether to further buttress the security of the D-PAS specification by incorporating one-time card number technology developed by First Data/STAR to mitigate skimming and data breach fraud.

Moving forward

The AID and D-PAS decisions, made in conjunction with the EMV Migration Forum, will enable the industry to move forward with a known application and process, simplifying changes for all stakeholders, according to the SRPc.

"For the ATM industry, it allows those 10 participating networks and others that may join in the future to basically have one common application on EMV chip cards," said Paul Tomasofsky, president of the Secure Remote Payment Council. "So from a routing standpoint it becomes fairly easy. It kind of mimics what's happening in the mag stripe world today from a routing standpoint."

Those 10 represent about half of the networks in the U.S., which Tomasofsky placed at around 18. Naturally, the networks in the workgroup would like to get all the others on board as well, in order to facilitate the simplest and most orderly transition possible to chip card-driven transactions.

Seeking unanimity

Terry Dooley, CIO of the Shazam EFT network and a member of the workgroup, expressed optimism about achieving unanimous adoption of the recommended AID and D-Pas specs because they make sense on a number of levels.

"It keeps the competitive environment we have today as new technologies begin to be implemented in the U.S.," he said. "It provides the merchants routing choice, it provides issuer portability and it provides a chip solution compatible with the global chip standard used throughout the world."

The workgroup spent months evaluating several proposals, including recent AID proposals by MasterCard and Visa. The group chose the Discover option based on several criteria:

• ability to maintain routing choice and network portability;
• availability of all cardholder verification options;
• inclusion of point-of-sale and ATM transactions;
• support of contact and contactless transactions;
• ability to make future enhancements to the solution;
• inclusion of both current and emerging debit channels;
• governance parity.

A governing consortium

"[T]here were other offers from other networks to use their AIDs and use their applications," Tomasofsky said. "Most of them did not fully do what this application does as far as all the options that are available. So there's technical reasons why this is a better solution right now as well."

This consideration in and of itself should serve to bring other networks aboard, he said. But the most important piece is the last criterion: governance. Discover's consent to contribute D-PAS into the consortium meant that a consortium was "basically free to do what they will want to with that application," Tomasofsky said. "So the fact that the consortium will be able to govern its own path, if you will, is a very big plus."

The debit consortium's next steps will be to finalize its governance structure and identify commercialization steps for deploying the common U.S. debit solution. And, of course, to bring along all the other U.S. networks to ensure that the solution is, indeed, common.

Dooley said that that effort was already underway. "The SRPc has, and will continue to, reach out to all PIN networks to join," he said. "I am very optimistic that all networks will participate as it just makes sense. It is the right thing to do for the U.S. market and all industry stakeholders. It simplifies the process and makes the transition easier."

More work ahead

Unless all debit networks adopt the solution, industry stakeholders might need to support a multi-application chip environment for debit in the U.S. Even so, chip cards will still need to have additional applications to ensure interoperability for card brands that have an international presence.

But for ATM operators in the U.S. the workgroup's choice of solutions could significantly ease implementation, Dooley said. And for networks, it could significantly affect future evolutionary developments in payments, said Tomasofsky.

Each member of the consortium will have rights and obligations to all other members, offering the best assurance of an equitable and opportunity-rich future for all. "They can future proof," Tomasofsky said. "Or at least help to make sure that other business issues don't get in the middle of what may be good for those networks going forward … So the fact that the consortium will be able to govern its own path, if you will, is a very big plus."

*AFFN, ATH, CO-OP Financial Services, Jeanie, NETS, NYCE, Presto!, PULSE, SHAZAM and STAR.

Read more about EMV.

photo: clearly ambiguous

About Suzanne Cluckey

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Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.