Today’s article in DigitalTransactions.net (Visa Modifies Its Controversial EMV Debit Card Transaction-Routing Policies) is another eye opener about the power Visa wields in transaction processing. But Visa’s size and cash should not be used by Visa to impose wrong policies or decisions on the population at large, which includes both merchants and consumers. Card Brands are effectively a part of every person’s life in the U.S. and others who use and accept branded cards on a daily purchases. As such, there has to be a fair and balanced approach to doing business; That approach should be mutually beneficial not one-sided.

Merchants and consumers both should have a certain choice on the use and acceptance of plastic cards. Consumers should not be forced to use their PIN number if they so desire, and merchants usually want what’s best for their customers and the fastest method. Confusion at the point of sale irritates consumers and slows down the checkout lanes. We’ve worked for decades to speed up transactions, a convenience for everyone involved. However, we have gone backward now about two decades by slowing down each chip transaction. Adding a PIN number is not a poor practice, per se, but it can and does slow down the process.

The article reads: “We’re glad to see that once again they recognize that they’ve violated the laws of the U.S.,” Mallory Duncan, senior vice president and general counsel for the Washington, D.C.-based trade group, tells Digital Transactions News. “It’s a shame, however, that it took two federal agencies to help make that clear. Now the real question is whether or not Visa will do the right thing and clear up the mess they’ve created.

The problem is merchants do not have any influence over what prompts appear on their device or POS system. It is the processors who develop the applications that translate into the prompts. Many times, the applications force prompts that confuse merchants. Also, Visa and MasterCard issue protocols that make no sense at all. For example, a chip card transaction prompts two options on the screen: Visa (or MasterCard) DEBIT and U.S. DEBIT. Every person would think these are both for PIN debit transaction. But that is far from reality. The former is designated for signature-based transactions and the latter for PIN-based debit. This is a HUGE blunder by whoever wrote the EMV protocol in EMVCO (www.emvco.com) that terminal manufacturers have to abide by in order for their device’s software to be EMV compliant. The programmers in the processing companies, i,e. TSYS, First Data, Global Payments, Elavon, etc., have no choice but to make sure those prompts appear, even though they make absolutely no sense whatsoever. This is one of THE most important blunders by Card Brands, the EMVCO members and owners, in EMV transition. Why on Earth no one in these global and abundantly resourceful multi-billion-dollar companies noticed this most confusing instruction? And why has none of the most powerful processors and terminal manufacturers call EMVCO to lodge a concern? The answer is because: 1. EMVCO members are not easily accessible and make themselves nearly impossible to reach, 2. Many of these executives do not have the required experience and have not installed even one merchant account, let alone understand the nuances of transaction processing on the streets, and 3. The EMVCO and its member organizations suffer from a gargantuan bureaucracy, so almost nothing gets done, notwithstanding their claims to the contrary.

I hope Visa will always do the right thing. But having dealt with Visa firsthand, I know that is not the case. Sadly, regulators and merchants too should watch Visa and other card brands all the time. Why? Because despite processing over $12 trillion (Yes. That is a “T”!) dollars in transaction processing by Visa and MasterCard cards alone in the U.S. in 2016, this industry is vastly unregulated. Lack of regulation has hurt agents, merchants, and consumers. If Brand Associations do not want the government’s involvement, they should behave well at all times. The million-dollar question is: “Is that possible?”

 

Visa and Routing to Debit Networks

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