The ongoing difficulties Canadian merchants have encountered in their conversion to the EMV Integrated Circuit Card Specifications has prompted a new, six-month extension from the card brands.
Visa Inc. and MasterCard Inc. separately announced Friday that they have postponed, to March 31, 2011, their deadlines for shifting liability to merchants for fraudulent transactions made with magnetic-stripe cards that the EMV format could have prevented.
Visa previously had set its deadline for Oct. 1, and MasterCard's was Oct. 15. American Express Co.'s deadline is Oct. 31, 2012.
Card issuers will continue to absorb the liability for fraudulent transactions for six more months, the two networks said, stressing that the extension would not affect Canada's long-term overall migration to EMV by the end of 2015.
EMV is an international security standard for card transactions. It requires users to enter PINs to authenticate themselves.
"Visa and its clients recognize that this one-time extension allows merchants to temporarily delay the adoption of chip technology until after the busy holiday shopping period, should they choose to do so," said Tim Wilson, the head of Visa Canada, in a press release.
Many merchants have completed the transition to EMV, but others "need more time," Oliver Manahan, MasterCard Canada's vice president of advanced payments, said in a separate release.
Visa in 2003 announced plans to support Canada's shift to chip-and-PIN technology to reduce fraud; other Canadian payment-industry participants soon afterward joined the movement, which got under way in 2004.
The U.S. has not announced plans to adopt EMV, though some observers say card-skimming and other types of fraud are likely to rise as the U.S. remains the only large country still relying on magnetic-stripe card technology.
The networks' deadline extension should give merchants enough time to resolve issues preventing EMV adoption, said Catherine Johnston, the president and chief executive of the Advanced Card Technology Association of Canada, a nonprofit group.
"There have been a number of hardware complications" for merchants accepting EMV "that were not evident in other countries, nor were they evident during the pilot," Johnston said, though she declined to offer any details.
"There were some unique situations related to the Canadian environment that needed to be resolved, and we think the networks' decision to delay the liability shift is a prudent one," she said.
The association predicts more than half of Canada's 800,000 merchant-acceptance points will accept EMV cards by the end of 2010, when it also expects about 70% of the country's estimated 105 million credit and debit cards to be equipped with EMV chips.
Interac, Canada's PIN-debit payment network, previously announced that all Canadian automated teller machines must be EMV-compliant for domestic transactions by Dec. 31, 2012, and that merchants no longer will accept domestic magnetic-stripe transactions at the point of sale after Dec. 31, 2015.
The card technology trade group recently formed an "issues alert team" of issuers, acquirers and merchants to spot problems that are cropping up in the payments industry, Johnston said.
"Time and again, no matter what country it is, we always find that merchants need more time," converting to EMV technology, she said. "We are confident that both Visa and MasterCard have plans in place to make sure the problems they've identified will be resolved."