2 PAYMENT METHOD PROFILES: CARD
Network Badging Shifts In the United States, issuers are responsible for selecting and enabling networks for routing availability on each debit card. There are over half a dozen debit networks available for issuers to enable for routing on their cards, each with a unique interchange and network fee pricing structure. As a result, the network pairings on a given card may change as networks adjust their interchange pricing, develop new capabilities, or deepen their relationships with the networks. CMSPI data suggests that in 2024, 8% of transactions occurred on cards where the network pairings were changed in the last year. Merchants are rarely notified of these changes and, as a result, may be worse off if they don’t regularly review and audit their routing arrangements for network shifts. In some cases, these shifts can create huge changes in network availability. For example, in 2024, CMSPI identified one network badging change wherein a major issuer dropped one network from a subset of debit cards. As a result, CMSPI estimates suggest that 2.5% of all debit transactions were impacted by this single issuer’s shift in badging. Supply Chain Capabilities Merchant access to and utilization of debit network routing capabilities will depend on the capabilities of merchant partners to support certain transactions. • Single- or Dual-Message Transactions: For transactions in which the final amount is not known at the time of authorization, such as transactions involving a tip, dual-message capabilities must be utilized. In some instances, only one network may be enabled by the issuer for dual-message transactions, resulting in limited routing capabilities for that given transaction. One example comes from the U.S., where card-present transactions can be authenticated via signature. These transactions have been observed to have limited enablement of multiple unaffiliated networks for routing, resulting in challenges for merchants looking to utilize card-present routing solutions without prompting the customer for PIN entry. • Acquirer Certifications: Even in the case an issuer has enabled multiple unaffiliated networks for an individual transaction, an acquirer may not have certified acceptance of that network for all channels or capabilities. As a result, while a card may be enabled for routing over a given network, if an acquirer hasn’t certified that capability for acceptance, merchant access to routing will be limited. • Mobile Wallets: In the United States and Australia, mobile wallets have been observed to exhibit fewer routing options than a typical card transaction. In 2022, the RBA set a further expectation that the industry make available LCR for mobile wallet transactions by the end of 2024. In 2022, the Federal Reserve clarified that network co-badging must be enabled ‘regardless of the form of such debit card’, extending the routing requirement to debit cards stored on an ‘e-wallet.’ 179 Consumer Choice Even when network badging is mandated, the merchant may not have control over the routing order for a given transaction in the case the consumer has selected their preferred payment network to route the transaction via. In 2016, the Federal Reserve clarified that requirements to allow the cardholder to make the choice of EMV chip application on a debit card, effectively dictating the type of network the transaction could be routed via, would violate the routing guarantee provided to merchants. 180 In Australia, consumers are offered a choice of network routing for mobile wallet debit transactions, effectively limiting merchant routing choice.
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