Visa Modifies Debit Routing Practices

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Visa Modifies Debit Routing Practices


SAN FRANCISCO — Visa is making changes to its debit network routing rules as the financial services company comes under scrutiny on several regulatory fronts.

According to the San Francisco-based company, it has "modified and clarified existing debit network routing rules to help merchants and acquirers better understand implementation options related to the adoption of EMV chip technology in the U.S."

The modifications and clarifications follow new guidance recently issued by the Federal Reserve and address a Federal Trade Commission (FTC) inquiry.

As CSNews Online previously reported, in a Nov. 2 declaration, the Federal Reserve said no payment card network can directly or indirectly force retailers to deploy a technology or enforce a rule that inhibits merchant routing choice, and that any technical specifications that inhibit merchant routing choice do not comply with current regulation. This was followed by Visa's disclosure that the FTC is investigating the financial services company's rules related to routing. 

In response to these developments, merchant associations representing thousands of U.S. merchants sent a letter to Visa CEO Charles W. Scharf and CEO-Designate Al Kelly stating that the Fed declaration came in response to "willful steps taken by Visa to circumvent merchants' legal right" to choose the network over which a debit transaction will be routed.

With Visa chip cards, debit routing and processing are enabled by two payment application identifiers (AIDs) on the chip: the U.S. Common Debit AID or the Visa Debit AID. The Common Debit AID can support any of the more than one dozen domestic debit networks that issuers can choose to offer in addition to Visa Debit. This provides merchants with the ability to select the network over which a debit transaction is processed or routed, the company explained.

Visa is providing additional clarification that merchants can use the Common Debit AID exclusively to route U.S. debit transactions if they choose. Merchants are also not required to ask the cardholder to choose the AID or network for processing debit transactions. Merchants can continue to automatically ask, or prompt, a Visa cardholder to enter a PIN on in-person transactions, provided the cardholder can still use their card without a PIN if they prefer.

For more information and supporting materials for merchants and processors, click here.

EMV is an acronym for Europay, MasterCard and Visa, the three companies that originally created the security standard. Under EMV liability shift deadlines, c-store retailers needed to upgrade their point-of-sale devices to accept chip-and-PIN cards as of Oct. 1, 2015. A similar liability shift took place on Oct. 1 of this year for ATM machines and will take place Oct. 1, 2017 for automated forecourt devices.