Saturday , July 2, 2022

Merchant Groups and PIN-Debit Networks Band Together for More Input Into Payment Security

Several national merchant trade groups and PIN-debit networks have founded an advocacy group meant to give them a bigger role in the development of electronic-payment security standards.

Founding members of the new Secure Payments Partnership include the Food Marketing Institute, National Retail Federation, National Association of Convenience Stores, National Grocers Association, First Data Corp.’s Star debit network, and Shazam, an Iowa-based debit network, merchant acquirer and card processor.

The SPP is seeking more input in the development of payment-related security standards, including those promulgated by EMVCo and the PCI Security Standards Council—two organizations controlled by the major general-purpose card networks. The group also intends to keep federal policymakers aware of payment security issues, according to its counsel, attorney Douglas Kantor, a partner at Steptoe & Johnson LLP in Washington, D.C.

“The problem is that these kinds of groups like PCI and EMVCo have advisory committees where merchants can state their views. That’s not an effective substitute for having an opportunity to make decisions and being part of the decision-making process,” Kantor tells Digital Transactions News. “Our view is everybody ought to have a part.”

As a representative of retailers, Kantor is a veteran of numerous tussles with the big card networks and banks over interchange and payment card acceptance rules. But the SPP is not concerned with those issues, according to Kantor.

“Security is the focus. We’re not talking about fees here,” he says, adding that the SPP will keep a close eye on new technologies that affect payment security, including cryptocurrencies and mobile payments.

The group’s first goals are to inform stakeholders about security-related issues that affect them, he says. Besides merchants, those stakeholders include community banks and credit unions, smaller processors, and even consumers, he says.

“We’re looking to talk to people,” and that includes the big networks, Kantor says. “We’ll see what they say.” He also says that “we’re certainly going to talk to policy makers in Washington.”

Spokespersons for Visa Inc. and Mastercard Inc. did not respond to Digital Transactions News’srequests for comment by late morning Thursday.

Kantor notes that the coming of EMV chip cards to the U.S. presented major problems for the PIN-debit networks. The Dodd-Frank Act’s Durbin Amendment requires that merchants have network choice for routing debit transactions, but EMV originally was designed by the big networks for European markets that often had only one debit option. Retrofitting EMV for the diversified U.S. debit market required considerable operational work and also generated conflicts between big merchants and the global networks over transaction routing.

“The way EMV was implemented here was one of the real motivators behind this group,” says Kantor. “It wasn’t done in an inclusive way.”

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