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Avoid Getting Short Changed with Chip Cards

Choice is good for you and cardholders

According to the 2017 Debit Issuer Study, commissioned by PULSE, 80 percent of U.S. debit cards had been converted to chip cards by the end of 2016. Similarly, the Strawhecker Group released a study in 2017 predicting that 52 percent of retailers are enabled to accept chip cards.

As financial institutions issue chip-enabled debit cards and merchants deploy point-of-sale terminals capable of reading these cards, both should look to preserve network choice to ensure they and their cardholders realize maximum benefit from EMV.

Application identifiers and routing choice

A chip-enabled debit card typically supports two application identifiers (AIDs) – a global AID and a common AID. The global AID is unique to the card brand, like Discover, Visa or MasterCard, and may limit routing only to the brand’s network. The common AID facilitates issuer compliance with Regulation II by enabling the transaction to route to all major U.S. debit networks and thus supports the merchant’s right to routing choice for domestic transactions.

A closer look at the common AID and global AID

The common AID preserves the merchant’s ability to route based on the lowest cost. With this option, merchants can select any payment network, global or domestic, that is enabled on the card including Discover, MasterCard, Visa, PULSE, STAR, NYCE and more. Conversely, if the global AID is used, the transaction may only be routed to one network’s brands.

Maximize the benefits of routing options and network competition

For U.S. merchants, you should ensure that your point-of-sale equipment, including EMV and NFC, selects the common debit AID. This helps ensure that the consumer has a consistent experience and maintain your routing choice.

For issuers, greater use of the common AID by merchants helps ensure your cardholders can perform PIN and signature verification at the point of sale, and that transactions can route to you through all of the networks in which you have chosen to participate.  This will allow you to build a roadmap to build a more profitable payment business.