Visa Inc. plans to accelerate the U.S. migration to EMV contact and contactless chip technology, the card brand announced Aug. 9.
The adoption of dual-interface chip technology will help prepare the U.S. payment infrastructure for the arrival of Near Field Communication-based mobile payments by building the necessary infrastructure to accept and process chip transactions that support either a signature or PIN at the point of sale, Visa said in a news release.
"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," Jim McCarthy, Visa global head of product, said in the release. "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."
Not only will chip technology accelerate mobile innovations, it is also expected to secure payments into the future through the use of dynamic authentication. Chip technology greatly 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 specific elements, Visa said.
"Dynamic authentication is the key to securing payments into the future," Ellen Richey, Visa chief enterprise risk officer, said in the release. "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."
Globally, Visa said it would 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, it expects the use of static verification methods such as signature and PIN to be reduced or eliminated entirely as new and dynamic forms of cardholder verification are implemented.
As part of the EMV migration, effective Oct. 1, 2012 Visa said it will expand its Technology Innovation Program to the U.S., eliminating the requirement for eligible merchants to annually validate their compliance with the Payment Card Industry Data Security Standard for any year in which at least 75% of the merchant's Visa transactions originate from chip-enabled terminals.
Visa says it also will require U.S. acquirer processors and subprocessor service providers to be able to support merchant acceptance of chip transactions no later than April 1, 2013.
It also intends to shift U.S. liability for domestic and cross-border counterfeit card-present point-of-sale transactions, effective Oct. 1, 2015. Fuel-selling merchants will have an additional two years, until Oct. 1, 2017, before a liability shift takes effect for transactions generated from automated fuel dispensers. 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.
