"Our world is demanding greater flexibility and security when it comes to paying for goods and services," said Jim McCarthy, global head of products at Visa, in a statement. "Visa's expanded roadmap creates an environment in which new forms of electronic payment can flourish, offering security, convenience and flexibility to consumers, merchants and issuers. As part of our commitment, we are offering the industry a common US debit solution that will streamline implementation of secure EMV chip technology and advance the US marketplace towards next generation payments, including mobile payments."
EMV chip-based payment cards, also known as smart cards, contain an embedded microprocessor. That microprocessor chip contains the information needed to use the card for payment, and is protected by various security features, so they’re a more secure alternative to traditional magnetic stripe payment cards. As of the second quarter of 2012, there were 1.55 billion EMV-compliant chip-based payment cards in use worldwide, according to Visa.
Visa said that it will now support US regulations that require debit card issuers to enable at least two unaffiliated network routing options on their cards, by making EMV chip technology available free of charge in conjunction with a generic, unbranded Application Identifier (AID).
The EMV will thus allow merchants to continue routing debit transactions to their network of choice, just as they can with magnetic stripe transactions today, Visa said, while issuers will continue to have the flexibility to change debit networks without having to re-issue cards. In addition, this approach will enable debit networks that do not have their own EMV chip solutions to support debit chip card transactions. Visa said it will also make its technology and generic US debit AID available to support ATM transactions.
"Visa's proposal enables chip technology to support debit routing from the point of sale or the ATM, providing the same capabilities the industry relies on today in the magnetic stripe environment, with a streamlined approach that minimizes complexity and time-to-market," said Julie Conroy, research director at Aite Group.
Visa also established a timeline to encourage acquirers to upgrade ATMs in Asia Pacific and the US to accept EMV chip cards. By April 1, 2015, US third-party ATM acquirer processors and sub-processors must be able to support EMV chip data. Otherwise, Visa will assign liability for counterfeit fraud ATM transactions to the party – acquirer or issuer – that has not adopted EMV chip technology. If an EMV chip card is used at an ATM that cannot accept EMV chip-enabled cards, the ATM acquirer will bear the cost for counterfeit fraud, effective Oct. 1, 2017. Currently card issuers bear the liability for fraudulent ATM transactions.
"Visa's roadmap is designed to make the security and flexibility of EMV chip technology available to consumers and issuers in every environment, including ATMs," said Ellen Richey, chief enterprise risk officer at Visa. "This new timeline balances the interests of issuers and ATM operators and provides time to include chip integration into ATM hardware upgrade plans. As a result, the entire marketplace can more quickly realize the strong security benefits of EMV chip technology in this critical channel."