Credit unions and other debit card issuers moved significantlycloser to being able to issue smart chipembedded debit cards this week when a key industry councilannounced its members reached agreement on a key softwareapproach.

The announcement came from the Secure Remote Payment Council,which announced that the 10 debit network members of its Chip andPIN Workgroup have agreed to adopt a common software approach andwork with DiscoverFinancial Services to license it for use by all debit cardissuers.

The new approach will help solve the problem of how to havedebit cards that both have smart chips embedded in them and whichallow merchants to easily route debit transactions on any one ofthe 18 possible different competing debit processing networks.

Under regulations flowing from the Durbin Amendmentto the most recent financial reform laws, credit unions and otherdebit issuers are supposed to provide the ability for their debitcards to process debit transactions on at least two unaffiliatednetworks, but the current smart chip standard used in the rest ofthe world only allows for one.

The inability to provide that faculty on debit cards had held upthe issuing of smart chip-enabled debit cards and CO-OP FinancialServices, one of the key organizations working to resolve theproblem, this week advised credit unions to still hold off issuingsmart chip enabled debit cards a while longer.

“Adoption of this common U.S. debit AID (applicationidentification) and application is extremely important to creditunions because it preserves their routing and network choices inconnection with the emerging EMV standard,” said Stan Hollen, CEOof CO-OP Financial Services in Rancho Cucamonga, Calif.

“While this solution simplifies efforts for the industry,commercialization will take time,” Hollen said.

“Given that EMV is being driven by liability shifts, notregulatory or network mandates, we recommend that issuers waituntil 2014 before moving forward with their business case for EMVdeployment in order to ensure that the market is ready,” Hollensaid.