VISA announced today that it will accelerate its migration to EMV contact and contactless chip technology in the United States. The move continues VISA’s preparation for the coming wave of NFC enabled mobile transactions it first announced in May.
From the press release:
“Visa’s plan to encourage the U.S. adoption of dynamic chip authentication technology includes the following three initiatives:
- Expand the Technology Innovation Program to Merchants in the U.S. — Effective October 1, 2012, Visa will expand its Technology Innovation Program (TIP) to the U.S. TIP will eliminate the requirement for eligible merchants to annually validate their compliance with the PCI Data Security Standard for any year in which at least 75 percent of the merchant’s Visa transactions originate from chip-enabled terminals. To qualify, terminals must be enabled to support both contact and contactless chip acceptance, including mobile contactless payments based on NFC technology. Contact chip-only or contactless-only terminals will not qualify for the U.S. program. Qualifying merchants must continue to protect sensitive data in their care by ensuring their systems do not store track data, security codes or PINs, and that they continue to adhere to the PCI DSS standards as applicable.
- Build Processing Infrastructure for Chip Acceptance — Visa will require U.S. acquirer processors and sub-processor service providers to be able to support merchant acceptance of chip transactions no later than April 1, 2013. Chip acceptance will require service providers to be able to carry and process additional data that is included in chip transactions, including the cryptographic message that makes each transaction unique. Visa will provide additional guidance as part of its bi-annual Business Enhancements Release for acquirer processors to certify that their systems can support EMV contact and contactless chip transactions.
- Establish a Counterfeit Fraud Liability Shift — Visa intends to institute a U.S. liability shift for domestic and cross-border counterfeit card-present point-of-sale (POS) transactions, effective October 1, 2015. Fuel-selling merchants will have an additional two years, until October 1, 2017 before a liability shift takes effect for transactions generated from automated fuel dispensers. Currently, POS counterfeit fraud is largely absorbed by card issuers. With the liability shift, if a contact chip card is presented to a merchant that has not adopted, at minimum, contact chip terminals, liability for counterfeit fraud may shift to the merchant’s acquirer. The liability shift encourages chip adoption since any chip-on-chip transaction (chip card read by a chip terminal) provides the dynamic authentication data that helps to better protect all parties. The U.S. is the only country in the world that has not committed to either a domestic or cross-border liability shift associated with chip payments.”
“By encouraging investments in EMV contact and contactless chip technology, we will speed up the adoption of mobile payments as well as improve international interoperability and security,” said Jim McCarthy, global head of product, Visa Inc. “As NFC mobile payments and other chip-based emerging technologies are poised to take off in the coming years, we are taking steps today to create a commercial framework that will support growth opportunities and create value for all participants in the payment chain.”
“Dynamic authentication is the key to securing payments into the future,” said Ellen Richey, chief enterprise risk officer, Visa Inc. “Adding dynamic elements to transactions makes account data less attractive to steal and takes more merchant systems out of harm’s way, shrinking the battlefield against criminals. The migration to chip technology will be an important security layer and a critical step in a comprehensive strategy to use dynamic authentication across all markets and all channels.”
Today’s announcement supports an increasing interest in chip technologies from across the industry:
- “As the leading global foodservice retailer, McDonald’s already has a great deal of experience with chip technology, including in the U.S. where we have deployed contactless chip terminals to help us serve our customers even faster,” said Dave Weick, Chief Information Officer and SVP Shared Services, McDonald’s Corporation. “We’re pleased that Visa has provided a roadmap that will allow us to move towards the next generation of payment technology, while at the same time take advantage of the security benefits of EMV chip and dynamic authentication.”
- “Visa’s plan to encourage chip adoption and lay the groundwork for mobile payments is a positive development,” said Kevin Knight, executive vice president, Nordstrom, Inc. “We appreciate their efforts to promote improved technology so that our customers have more reliable and secure card use and payment for their purchases.”
- “There is no security silver bullet. But smartcards and smartphones using EMV adds a strong layer for payment transaction security as well as online banking, access to medical records and more,” said George Peabody, director, Emerging Technologies Advisory Service, Mercator Advisory Group, Inc. “The roll-out of EMV in the U.S. gets much needed dynamic data into the authentication mix. This is a welcome step toward lowering fraud at the point of sale and online. It’s time.”
From Ellen Richey:
“I’ve often been asked if the United States will ever adopt EMV chip technology as many other countries have. My response has been, it’s not a question of “whether” the United States will begin to use chip technology but “when” and “how.”
At Visa, we have believed for some time that markets need to move toward dynamic authentication in order to carry payments into the future. As chip technology has been adopted around the world, debate has raged over whether the required investments are justified for the U.S. as well.
Many reading the news may be wondering “why now?” For several years, Visa has been talking with clients and merchants on this subject – and now more than ever before, we’re hearing confirmation that chip is the right direction for the U.S. Over the last year, for example, we’ve seen financial institutions issuing chip cards to international travelers. And some large merchants have already begun installing chip terminals.
We believe our program offers the right level of direction and encouragement for merchant and issuer adoption of chip — at the right time. With a commercial framework in place, our goal is to enhance security and support the next generation of payments.”