Visa accelerates chip migration to drive m-payment adoption


Visa revealed plans to ramp up U.S. adoption of dynamic chip authentication technologies in an effort to boost acceptance of Near Field Communications-based mobile payments. The financial services giant contends that encouraging investments in EMV (Europay, MasterCard and Visa) contact and contactless chip technology will accelerate m-payment rollouts and improve global interoperability and security by introducing dynamic values for each transaction, reducing static authentication and, in turn, slashing cardholder data theft.

Visa plans a three-pronged approach to encouraging chip authentication adoption. Beginning Oct. 1, 2012, the company will expand its Technology Innovation Program to the U.S., eliminating the requirement for merchants to annually validate their compliance with the PCI Data Security Standard during any year in which chip-enabled terminals generate at least 75 percent of the retailer's Visa transactions. Qualifying terminals must support both contact and contactless chip acceptance, including NFC-based payments. Qualifying merchants must guarantee their systems do not store track data, security codes or PINs, and they must adhere to related standards.

Visa also will require U.S. acquirer processors and sub-processor service providers to institute support for merchant acceptance of chip transactions no later than April 1, 2013. Visa states that chip acceptance will enable service providers to carry and process additional data like cryptographic messages included in chip transactions.

In addition, Visa will institute a U.S. liability shift for domestic and cross-border counterfeit card present point-of-sale transactions. At present, POS counterfeit fraud is largely absorbed by card issuers--liability for counterfeit fraud may now shift to the merchant's acquirer if a contact chip card is presented to a merchant that has failed to adopt corresponding terminal technology. Visa explains that the liability shift encourages chip adoption, with any chip-on-chip transaction delivering the dynamic authentication data necessary to better protect all parties.

The liability shift will go into effect on Oct. 1, 2015, with fuel-selling merchants granted an additional two years for transactions generated via automated fuel dispensers. Visa adds that the U.S. is the lone country yet to commit to either a domestic or cross-border liability shift tied to chip-enabled payments.

In May, Visa announced it will collaborate with U.S. and international bank partners including US Bancorp, PNC Financial Services, Regions Financial, BB&T Corp, Toronto Dominion's TD Bank and the U.S. arm of Barclays PLC to introduce a digital wallet enabling users to make real-world and online purchases via smartphone. The wallet solution will store customer credit and debit card account information. Visa acquired monetization platform provider PlaySpan in February, a move to accelerate its expansion into the digital and mobile commerce segments--two months later, Visa made an unspecified investment in Square, whose increasingly popular mobile payment solution enables users to accept credit and debit card purchases anywhere and anytime via iPhone, iPad or Android smartphone.

Last month, Visa (along with rivals MasterCard, Discover and American Express) confirmed it will join Isis, the nationwide mobile commerce joint venture spearheaded by Verizon Wireless (NYSE:VZ), AT&T (NYSE:T) and T-Mobile USA. According to Isis, the moves significantly expand the payment options available to mobile subscribers, at the same time extending the fledgling network's reach to encompass payment terminals already installed at U.S. merchant locations.

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