Visa expects that the adoption of dual-interface chip technology is set to help prepare the US 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.
The company believes that not only will chip technology accelerate mobile innovations, but it is also expected to secure payments through the use of dynamic authentication. In a statement, Visa reaffirmed its belief that chip technology greatly reduces a criminals 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 cards unique elements. By reducing static authentication, the value of stolen cardholder data is also diminished, benefiting all stakeholders.
Globally, Visa is set to 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, the company expects to see the use of static verification methods such as signature and PIN reduced or eliminated entirely as new and dynamic forms of cardholder verification are implemented.
Visas plan to encourage the US adoption of dynamic chip authentication technology is expected to include three initiatives. The first is the expansion of its Technology Innovation Program (TIP) to merchants in the US. TIP will eliminate 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 merchants Visa transactions originate from chip-enabled terminals.
The second initiative involved the building of processing infrastructure for chip acceptance. Visa will require US acquirer processors and sub-processor service providers to be able to support merchant acceptance of chip transactions no later than 1 April 2013. Chip acceptance will require service providers to be able to carry and process additional data that is included in chip transactions, including the cryptographic message that makes each transaction unique.
The third initiative involves the establishment of a counterfeit fraud liability shift. Visa intends to institute a US liability shift for domestic and cross-border counterfeit card-present point-of-sale (POS) transactions, effective 1 October 2015. Currently, POS counterfeit fraud is largely absorbed by card issuers. 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 merchants acquirer.
As the point-of-sale payment infrastructure evolves from the static magnetic stripe to intelligent devices such as EMV chip cards and NFC mobile phones, Visa also believes that it is critical to ensure that cardholders can continue to conduct secure payments for card-not-present transactions as well. Visa is designing its new digital wallet with click-to-buy functionality able to support dynamic authentication across multiple channels including the e-commerce environment.
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