The
Protocol Committee, which was established to implement the decisions of the
Payment Card Committee[1],
has through an accelerated process completed the protocol adjustments[2]
necessary for modular implementation, and any party along the transaction chain
may now obtain merchant acquiring services in line with its needs and pay only
for those services.  This is especially
important for small businesses, some of which have until now not honored
payment cards due to the cost of setting up and operating a point of sale.

 

Until
now, every point of sale made it possible to carry out all types of payment
card transactions, even if the business had no need for some or even most of
them.  These points of sale cost the
business a few hundred shekels, and some of the cost was due to the fact that
they enable all types of transactions. 
Moreover, the need to support all types of transactions created an entry
barrier for other parties along the payment card transaction chain.

 

Now,
the “Ashrait” protocol supports modular implementation.  It enables parties operating along the chain
to choose and implement components, according to their needs, whether at a
point of sale or on a remote server (on the premises of the issuer, the
acquirer or the processor), and to pay only for those components.  This measure was completed just prior to the
transition to the EMV standard, and all parties operating along the chain have
the opportunity to take advantage of the change in order lower costs and adapt
the products and services currently offered to their needs.  Businesses will be able to implement the
change in new points of sale or on terminals that they upgrade.  The existing terminals will continue to
support all settlement transactions.

 

The
following are examples of new possibilities due to the change:

 


Businesses and acquirers will be able to support only immediate debit
transactions

o  
With no need to support installment transactions, customer clubs, card
not present transactions, credit transactions, and so forth.

 


Manufacturers will be able to develop terminals in dedicated formats for
business and for specific activity segments

o  
Terminals that support only fuel transactions, with no payment functions
that are not relevant for such transactions.

o  
Terminals that support only card not present transactions or only card
present transactions.

o  
Dedicated terminals for the hotels segment, such as terminals that
support foreign currency transactions and risk management appropriate for the
types of transactions in the segment.

 


Processors will be able to partially or fully support types of cards, brands
and value added services

o  
New processors will be able to support some of the brands or some of the
types of cards issued, and offer new value added services to businesses,
acquirers and issuers.

 


Issuers will be able to choose the method of customer verification at
the point of sale

o  
Verification through a PIN, an ID number, entering identifying data,
customer’s address, and more.

 

Director
of the Accounting, Payment and Settlement Systems Department Irit Mendelson
said,
“This measure completes
the removal of a significant barrier that existed in the market, and advances
the entire market toward informed competition that will benefit all parties
along the transaction chain, particularly businesses.  The Bank of Israel will continue monitoring
developments in the market, and will take additional steps as necessary to
advance competition in the settlement market.”


[1] The
Protocol Committee is comprised of representatives of the acquirers, issuers,
processors and switches that operate throughout the payment card transaction
chain in Israel, as well as additional interested parties in the protocol (such
as Payment Gateway service providers, manufacturers, distributors, and
international organizations).

[2] On
May 9, 2017, the Bank of Israel published a document entitled “Required
and Optional Components of the Protocol”, which outlines the protocol
implementation policy in the payment card market. ​ 

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