SAN FRANCISCO - Yesterday, Visa Inc. announced plans to accelerate the migration to EMV contact and contactless chip technology in the United States. The adoption of dual-interface chip technology will help prepare the U.S. payment infrastructure for the arrival of NFC-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.
"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 for Visa Inc., in a press 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 is 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.
"Dynamic authentication is the key to securing payments into the future," said Ellen Richey, chief enterprise risk officer for 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."
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.
"NACS welcomes the migration from the current, unsecured payment system but is anxious to learn what financial incentives will be offered to convenience and fuel retailers to defray the huge cost of upgrading 800,000 dispensers and 300,000 points of sale," said PCATS Executive Director Gray Taylor. "If Visa is coming to the market with reduced interchange, indemnification on fraudulent use of their products and relief for the retailer€™s huge annual expense for PCI compliance, then we think there is a value proposition here. Without any one of these elements, it will be hard to justify the upgrade," he said, adding, "It is frustrating that Visa is still obsessed with dynamic account values, while doing nothing about authenticating the card user. EMV without user authentication only addresses part of the data security challenge."