Group Shines Spotlight on Online Debit Routing Choice and Security

The popularity of debit cards for card-not-present transactions, particularly online payments, is surging, and a new proposal from an industry trade group could expand that popularity while preventing fraud and facilitating merchants’ transaction-routing choices.

The proposal is contained in a white paper released Tuesday by the U.S. Payments Forum, an Englewood, Colo.-based organization focused on payment card security and new technologies. The white paper discusses how EMV 3-D Secure protocols could be enhanced to maintain security while at the same time promoting merchants’ routing choices in card-not-present debit purchases.

3-D Secure is a security standard for online transactions administered by EMVCo, a standards body owned by the global payment card networks. EMVCo’s original mission was to develop the EMV chip card standard for card-present transactions, but the organization’s work has since expanded into other realms such as online payments.

Merchants’ access to PIN-debit networks apart from the Visa Inc. and Mastercard Inc. systems, which is guaranteed under the so-called Durbin Amendment, had been a source of friction for years in the payment industry because EMV technical specifications had to be rejiggered to reach those networks. And with online payments, entering PINs for debit purchases initially was a challenge.

The  new white paper focuses on technical issues, not tussles between merchants and networks, and aims to get discussions going in the payment industry about enhancing routing choice while preventing online fraud. 

“The ability to ensure secure transactions is top of mind for everyone involved in the payments lifecycle. Our goal is to help stakeholders achieve this while maintaining a strong understanding of the routing process and the selection process between multiple interoperability domains,” Jason Bohrer, executive director of the U.S. Payments Forum, said in a statement.

Interoperability domains in the paper’s context are card networks. Also critical for 3-D Secure transactions in the paper’s discussions are so-called directory servers that facilitate routing choice. “The most significant thing about the proposal is that it allows merchants to preserve routing choice while taking into consideration which networks are eligible given each directory server’s business policies,” a U.S. Payments Forum spokesperson tells Digital Transactions News by email.

The paper comes against a background of surging debit card popularity for online transactions spurred in part by the COVID-19 pandemic. Card-not-present usage accounted for 34% of debit transactions and 46% of dollar volume in 2020 according to the latest debit card study from Discover Financial Services’ Pulse debit network. That’s up from 27% and 38%, respectively, in 2019.  All in all, card-not-present transactions per active card rose 23% compared to 2019, according to the study, which incorporates statistics from 48 issuers accounting for 40% of all debit transactions in the United States.