Visa Inc. is getting behind the adoption of contact and contactless EMV in the U.S. as a way to prepare the payments infrastructure for near field communication. The company will start offering incentives to merchants in 2012 to make the switch to contact and contactless point-of-sales terminals.
Chip technology aims to accelerate mobile payments but also secure payments into the future through the use of dynamic authentication. Chip technology reduces a criminal’s ability to use stolen payment card data by introducing dynamic values for each transaction. Even if payment card data were compromised, a counterfeit card would be unusable at the point of sale without the presence of the card’s unique elements. By reducing static authentication, we diminish the value of stolen cardholder data, benefiting all stakeholders.
The announcement is similar to other Visa initiatives to encourage EMV in other countries.
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 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% 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, card issuers largely absorb POS counterfeit fraud. 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.
Globally, Visa will continue to support a range of cardholder verification methods including signature, PIN and no-signature for low-value, low-risk transactions. In the longer term, we expect that the use of static verification methods such as signature and PIN will be reduced or eliminated entirely as new and dynamic forms of cardholder verification are implemented.