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In every card transaction, the different stakeholders involved are consumers, merchants, acquirers, payment networks, and issuers.
All of them will have to work together to ensure that a transaction goes through.
Let us look at the transaction flow.
The steps involved are:
Every step in that flow depends on the previous one completing correctly. A failure at any point, a message format error, an authorization timeout, or a settlement discrepancy affects the entire chain. The acquirer host certification process validates that the acquirer's host system handles every step correctly before it goes into production and real cardholder transactions begin flowing through it.
To be part of this ecosystem, acquirers need to have their hosts validated and their terminals integrated by the payment networks. Likewise, issuers need to get their host systems validated.
Acquirer issuer host certification involves:
The scope of issuer host testing EMV goes beyond the basic authorization flow. An issuer host that correctly authorizes a standard purchase must also correctly handle declined transactions, partial authorizations, referral responses, and the full range of EMV-specific data elements that a chip transaction introduces. D55 host testing, the validation of the EMV data field that carries the chip transaction data, is one of the more technically demanding aspects of issuer host certification because it requires the host to correctly interpret and respond to the cryptographic and application data that the terminal passes through the acquirer host and the network.
NIV GCT host certification adds another layer of complexity. Network Interoperability Validation and Global Chip Testing are the certification programs that payment networks use to validate that an acquirer or issuer host can correctly handle the full range of chip transaction scenarios required by the network. Passing the NIV and GCT is a prerequisite for live transaction processing in many network environments, and the associated test plans are comprehensive.
They need access to the issuer host, payment network host, and merchant terminals.
Assuming they have the merchant terminals, they need access to the other two hosts, issuers, and networks.
Issuer hosts are fairly simple. You can buy payment network-qualified issuer host simulators and use them for transactional responses.
But what do you do about the network host?
Accessing the Mastercard Authorization Simulator (MAS) and Visa Test System (VTS) is complex. You must book a slot and wait to test your acquiring host systems with networks. If your host fails during the test, you must book the slot again and wait for your turn to test.
It is a massive drag on timelines.
The slot-based testing model that payment networks use for their authorization simulators was designed for an era when the volume of certification projects was manageable, and the pace of change in the ecosystem was slower. Neither of those conditions holds today. The number of acquirers and processors seeking certification has grown, new markets and new form factors have added to the certification volume, and the pace at which network specifications update has accelerated. The result is that the queue for network simulator slots is longer than it used to be, and the cost of a failed test, in terms of time waiting for the next available slot, is higher.
A host simulator payment network can resolve slot dependencies during the debug phase of the acquirer host certification process. Rather than booking network simulator slots to test an integration that is not yet fully debugged, an acquirer can use a simulator that replicates the network host behavior to identify and resolve issues before the formal certification test begins.
For the acquiring host, the simulator combination needed is a network simulator and an issuing simulator. The network simulator replicates the authorization and financial message responses that the payment network's production system would return. The issuing simulator replicates the issuer's authorization logic, returning the same range of approved, declined, and referral responses that real issuer hosts produce.
Together, they allow the acquirer's team to run the full transaction flow, from the terminal through the acquirer host, through the network, and back through the issuer, without any of the parties needing to be physically present or their systems needing to be available on a shared network. D55 host testing can be completed in a controlled environment where the EMV chip data field is validated against the exact responses the network expects, without consuming a network simulator slot.
For the issuer host certification, the challenges are very similar. To test an issuer host, you need a network simulator and an acquiring simulator. The network simulator replicates the routing and processing logic that sits between the issuer and the card network. The acquiring simulator generates the range of transaction messages that a real acquirer host would send. NIV GCT host certification for issuers requires that both the authorization responses and the chip data handling are validated against the network's published test scenarios, and a simulator environment that covers both gives the issuer's team the ability to work through every scenario before they book their formal certification slot.
The principle is the same regardless of which side of the transaction you are certifying. Debug in a simulator environment first. Resolve every issue before the formal certification test begins. Then book the network slot, run the test against the network's actual systems, and get the certification in the first iteration.
We are putting together a webinar on the topic: "The why, what, and how of simulators in validating acquirers, issuers, and networks."
This webinar was held on the 12th of April, 2023.
