EMV confusion continues with debit card payments

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Customers face multiple payment options when paying with chipped debit cards

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EMV confusion debit card payment prompts

As chip-equipped debit cards permeate the
market, consumers face new – and potentially confusing – prompts at the
register.  

Over the past couple of years, credit card
holders have grown familiar to the EMV chip credit card payment process: Dip your card,
wait, sign, wait for the beep, then retrieve your card.

EMV debit cards transactions start out the same: They are
inserted into payment terminals just like chip cards. But as the cards process,
some cardholders are asked to select to choose between U.S. Debit or U.S. Visa, or some variation of terms based on
the card network and terminal software. 

If you’ve used a chip-equipped debit card and been perplexed, here’s the lowdown on the multiplying debit prompt confusion.

The same old choice, asked in many new ways

These
prompts are not asking you what type of card it is. They are asking you how you want to process your debit card, and they are asking it of you in a new variety of ways.

When
presented with these payment options at a retailer’s register, you’re just
being asked whether you want to run the debit card as a debit or credit
transaction.

That choice has been offered by many retailers for years,
just with different phrases. But now, with chipped debit cards, users may
see a greater variety of messages preceding their transactions. Some merchants
display a traditional “credit or debit” prompt. Others immediately ask for a
PIN, but give cardholders the option to opt out of the PIN. Others have
terminals that prompt cardholders with processing options using various terms, based on the card’s network
application label.

Prompts vary by retailer

Why all the differences? While big retailers can tweak the payment processing messages customers see, others have to take what they get from their payment
processors.

“Smaller retailers get off-the-shelf
setups with no scripting personalization. The larger merchants have the
ability to customize their user interface,” Jania said. “When you get into
local retailers, such as dry cleaners and mom-and-pop shops, they have
virtually no ability to change the scripting of the messaging and the way the
point-of-sale works.”

“When you get into
local retailers, such as dry cleaners and mom-and-pop shops, they have
virtually no ability to change the scripting of the messaging and the way the
point-of-sale works.”

Large retailers (think Walmart, Home Depot
and Best Buy) buy thousands of point-of-sale terminals to supply retail stores and,
as a result, own all the scripting and messages at the point-of-sale. This processing
flexibility allows some to offer additional customer conveniences such as electronic
receipts instead of paper, or customer loyalty reward redemption options.

“So there is nothing nefarious going on,
it’s just based on the capabilities that each merchant has, specifically the
larger merchants,” Jania added.

Blame the ‘identifiers’

On chip cards, the prompts are made possible by the invention of Application Identifiers, or AIDs. These under-the-hood pieces of information are attached to EMV chips and let payment terminals know what kind of card was dipped and how it should or can be processed. All U.S. debit cards have two: The “Common Debit AID,” which was introduced during the EMV migration to encompass all debit networks, and then a card brand AID.

These two labels produce the messages some consumers are seeing, according to Visa. Cardholders are getting a glimpse into the payment process that was once more hidden.

“You’ve been able to run a credit or debit transaction with a debit card even way back in the mag stripe days,” said Jack Jania, senior vice president of strategic alliances for Gemalto. “However, when chip technology was invented, the way the point-of-sale terminal could recognize a debit card didn’t exist until the Common AID was agreed upon about two years ago. So at that point merchants started changing the consumer prompts at the point-of-sale terminals to reflect that industry update.”

Credit
card holders do not see this prompt

The prompts from EMV terminals are solely for debit card holders, and the reason is a 2010 federal law. 

The Durbin Amendment, passed as part of the
Dodd–Frank Wall Street reform law, created rules that, in addition to setting limits on debit fees, require debit card issuers to support at least
two competing networks when processing debit transactions. 

“On
most EMV chip cards, one option is to route the transaction to the global brand
on the card (i.e. Visa debit) or one of the regional debit networks, such as
NYCE, STAR or PULSE,” said Randy Vanderhoof, executive director of the Secure
Technology Alliance.

The two debit transaction options

While
you can click either the credit or debit option using your debit card, your
payment will still process as an EMV transaction.

“Both options are compliant with EMV and
Durbin rules, but it makes it confusing to consumers,” Vanderhoof said.

  • If you want to process your debit card as
    credit
    , select the U.S. network option, such as “Visa debit.” Keep in mind that
    credit-routed debit transactions may take a few business days to process.
  • If you want to make a true debit card payment,
    click the U.S. debit option and then enter your PIN. These transactions are
    real-time, and the total will be deducted from your checking account balance
    immediately.

Which is better? It depends. Some debit cards offer rewards or special offers, but only if you process them with a signature over the credit card network.

But under federal laws, debit cards offer slimmer fraud protection than credit cards do. If peace of mind is critical, it’s best to
stick with the PIN debit option. “Any transaction that has a PIN will be more
secure than a transaction that doesn’t,” Jania said.

Video: PIN vs. signature at checkout

Why
is this just being noticed now?

The U.S migration to EMV cards arrived first for credit cards. Banks began mass mailings of debit cards later. As of mid-2017, debit cards with chips finally gained the majority. It has taken time for
retailers to get on board with EMV chip debit card processing.

“It takes a while to upgrade point-of-sale
systems, it’s not something you can do in months,” Jania explained. “You are
just seeing the result of debit now being closer to fully supported by chip.”

Will
this experience go away?

This debit card payment prompts confusion will likely fade over time, but probably
not right away, so get used to varying retailer experiences.

“Since the bank card issuer and consumer
don’t get to decide what the merchant terminal prompts are, I suspect this will
be around for a while longer,” Vanderhoof said.

However, as the major card
networks abandon signature verifications
 of transactions, PIN-only prompts
will become even more prevalent. Eventually those will go away, too, changing
the payment terminal process you are used to once again.

“Moving forward, the trend will be toward a second-factor authentication method that isn’t signature-based,” Jania said.
“I think signatures going away will lead to PINs, and PINs will lead to new
biometrics. It’s just more convenient.”

See related: 8 FAQs about EMV credit cards, The big chip card switch: living with EMV, Zero-liability policies: debit cards versus credit cards




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