Debit Transactions in an EMV World: A Practical Guide


Understanding Debit Transactions Can Reveal Opportunities

Mercator Advisory Group research details processing flow of debit transactions and the impact of market changes on payment transaction routing

Published on: July 30, 2015
Author: Sarah Grotta
Alternate Point of Contact: Amy Dunckelmann

Understanding the course that a debit transaction travels through the payments value chain has never been more important. Recent processing changes, new technologies, and incentives have had a material impact on the way transactions are routed and have created winners and losers in the process.
Mercator Advisory Group’s research report, Debit Transactions in an EMV World: A Practical Guide, follows each of nine debit transaction types at a business level from the point a consumer makes a payment selection to the authorization response. For each debit transaction type, the report identifies the network type, form factor, CVM, message type, and environment influencing the path of the transaction, and presents a process flow diagram that outlines the major milestones in the process, noting the key participants and briefly describing the process occurring as the transaction winds its way from the customer’s payment choice to the authorization response. Analysis of recent events that have materially impacted the transaction type is presented in the text following each flowchart and includes commentary on potential changes that may influence the transaction type’s future.

“We have witnessed an incredible amount of change in debit transactions over the prior two years that has materially impacted banks, processors, merchants and networks financially and operationally. With the advent of the EMV migration, tokenization, and commercialization of mobile payments, managing change becomes critical. Understanding the existing payments infrastructure and how it works at a fundamental level will be critical to those with payment-related businesses to protect and grow,” comments Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group, and author of this report.

This report has 22 pages and 10 exhibits.

Companies mentioned in the report include: Accel, AFFN, American Express, Apple, Capital One, Credit Union 24, Discover, EMVCo, JCB, Jeanie, Kroger, MasterCard, MCX, NYCE, Presto!, PULSE, Shazam, Target, UnionPay, Visa, Walmart, and ZipLine

Highlights of the report include:

  • A detailed review of 9 debit transaction types and the way they are processed through the payments systems

  • Analysis of the impact of Dodd-Frank Regulation II on PIN debit transactions

  • Review of Visa’s PIN Authentication Visa Debit (PAVD) product and associated merchant incentives

  • Commentary regarding how MasterCard and Visa’s dominant role in tokenization vault services may affect mobile payments 



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