Contactless credit cards and EMV chip transactions may become far more common in the United States after a year-long initiative announced this month by global payments technology planners at Visa Inc. Company spokesperson Jim McCarthy released a statement to reporters, outlining steps his company planned to speed adoption of EMV chip technology already in widespread use across Europe. The company's three-point plan makes credit card acceptance much less expensive for merchants who adopt new point-of-sale technology, but raises risk for merchants who fail to embrace EMV:
- After October 2012, merchants who process more than 75 percent of transactions through qualifying EMV readers can eliminate a costly annual technology inspection.
- Merchant processing services will face mandatory EMV acceptance guidelines by mid-2013.
- After 2015, most merchants will assume liability risks for fraudulent credit card transactions, potentially reducing interchange fees among acquiring banks.
New way to check ID
According to Visa Inc. spokesperson Ellen Richey, the new generation of EMV chip technology may allow American merchants to bypass personal identification numbers in favor of "dynamic authentication." Each EMV credit card contains a chip bearing a unique key that has proven extremely difficult to forge. Switching to either contact or contactless chip transactions makes retail locations less vulnerable to "skimming" attacks and other security breaches.
American merchants, reluctant to spend money on new payment terminals, may have little choice but to embrace the new platform. Visa officials highlighted stories of merchants like McDonald's, which increased sales and sped up service times in locations that adopted contactless credit card readers. Visa's statement included remarks from payment industry analyst George Peabody, who noted that Visa's EMV technology roadmap dovetails with online and mobile security platforms.
Chase became the first mainstream American credit card issuer to support the global EMV standard, offering a European-style chip with its JP Morgan Palladium Card in the spring of 2011. Wells Fargo and U.S. Bank followed suit with EMV cards geared toward frequent travelers, suggesting that other customers may be able to request chip-enabled cards by the end of the year.
Correction (August 30, 2011): This article was previously entitled "Visa launches 'chip and PIN' incentives to US merchants," which erroneously implied that Visa was promoting the use of PIN transactions. In fact, Visa is simply promoting EMV chip transactions, whether the merchant requires a signature or a PIN.