Concerns About Need for Open Chip Card Standard Prompted Letter, X9 Says

An effort by a U.S. standards body to gauge interest in a meeting to discuss an open-standard alternative to EMV for chip cards stems primarily from the organization’s concern that EMV’s specifications are not commonly owned by the payments industry, the body’s top executive says.

“EMV is a proprietary standard, that’s part of the issue,” Cindy Fuller, executive director of Accredited Standards Committee X9 Inc., tells Digital Transactions News. Governments around the world, she says, “are looking for open, non-proprietary standards.”

The Annapolis, Md.-based X9 Committee last week started circulating a letter to its membership asking for expressions of interest in holding a meeting to determine whether the industry should develop an open alternative to EMV, which is owned by Visa Inc. and MasterCard Inc. (EMV stands for Europay, MasterCard, Visa, but Europay was absorbed by MasterCard in 2002). The letter doesn’t specify any places or dates for the meeting but asks for responses by Feb. 11. It also says the Federal Reserve would host the two-day meeting.

Some “stakeholders have raised concerns,” the letter says, about EMV’s age, its proprietariness, and the ability of eventual U.S. implementations to interoperate with deployments overseas. Any open chip card standard that might result from the X9 effort, the letter adds, would be an alternative to the two-decades-old EMV standard, not a replacement.

While not identifying the “stakeholders,” Fuller says, “The discussion started because [EMV] is not an open, global, voluntary standard.” EMV has been in use in various places around the world for some time, including parts of Europe and Asia as well as Canada and Mexico, but Fuller says the ability of issuers, merchants, or processors to have a say in how the standard works is what is critical. “The issue is, how much input does the industry have?” she says. “Is it possible to sit at a table and raise your hand and have impact?”

The X9 committee develops standards for U.S. financial services ranging from payments to securities. It members include payments networks, processors, payments technology vendors, providers of security solutions, merchants, and banks. Once finalized, the committee’s standards are adopted by the American National Standards Institute (ANSI).

Fuller says the proposed meeting will take place only if X9 receives what she calls “balanced” interest from a “significant” number of members, meaning a good many positive votes from roughly equal numbers of vendors, bankers, and merchants. She did not specify any numerical thresholds. While the committee lists 117 member organizations on its Web site, Fuller says membership actually exceeds 200.

The X9 letter comes as EMV has picked up momentum in the United States over the past couple of year. Beginning with Visa, the biggest U.S. card networks have issued so-called road maps for EMV adoption, including deadlines for acquirer, issuer, and merchant readiness. The first deadline, calling for acquirers to be able to process EMV transactions, is April 1.

Indeed, some executives involved in shepherding U.S. EMV adoption express surprise at X9’s effort. Before the letter appeared, “I hadn’t heard any discussion from payments-industry stakeholders that this [meeting] is something that needs to happen and we need to call on X9,” says Randy Vanderhoof, executive director of the Smart Card Alliance, a trade group based in Princeton Junction, N.J.

A sub-group of the SCA, the 100-member EMV Migration Forum, has been at work since July on ironing out EMV implementation issues. While not a standards body, the Forum has 19 members in common with the X9 committee, according to the membership lists posted on the respective organizations’ Web sites.

Still, Vanderhoof doesn’t dismiss the possible utility of the sort of discussion that might take place in the X9 meeting, if held, especially with the Fed as the host. “It would be welcome to have an open dialog about this, and [the Fed] may be the right organization to do that,” he says. But caution will be necessary, particularly with EMV already in the process of being implemented, he warns. “If it’s not broken, don’t fix it,” he says.