Applauding Visa's Plans to Accelerate EMV Adoption in the US
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10 August 2011Zilvinas Bareisis
Yesterday Visa announced its plans to accelerate EMV adoption in the US. A confluence of factors, such as some of the US merchants and issuers making independent moves towards EMV, as well as accelerating developments around mobile payments, helped Visa decide that the time to act is now. It is the first time that a major cards network has thrown its weight behind the EMV debate in the US, and I think it is a very important development. For those of us in Europe already used to EMV, the announcement had a number of familiar tactics and incentives to ignite the industry-wide migration, such as:
- Expanding the Technology Innovation Program (TIP) to Merchants in the U.S. effective October 1, 2012. TIP eliminates 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;
- Establishing a Counterfeit Fraud Liability Shift for domestic and cross-border counterfeit card-present point-of-sale (POS) transactions, effective October 1, 2015 with fuel-selling merchants given an additional two years to comply.
- Visa is not forcing the US to migrate to Chip and PIN, a standard currently used in Europe. Instead, the migration to chip is intended to lay the foundation for dynamic customer authentication. While PIN is undoubtedly more secure than signature, both tools suffer from being static authentication methods, which, if compromised, will lead to security breaches. Dynamic authentication means that new data is generated for every transaction, making it less valuable to steal card data and thus boosting security. Visa re-iterated its intent to support signature and PIN authentication methods globally, but also stated its expectations that their use will diminish over time and be replaced by dynamic authentication technologies.
- Visa insists on the rollout of terminals able to support both contact and contactless chip acceptance, including NFC-based mobile payments. In fact, unlike in Europe, only such terminals will qualify for the TIP incentive. By doing so, Visa creates the conditions to solve the "chicken part" of the "chicken and egg" connundrum of NFC mobile payments.
- asserting industry leadership;
- thinking strategically and proposing a pragmatic and forward-looking solution;
- proposing specific and realistic dates (SEPA rule-makers, take note!)
- creating incentives for the migration to happen.