Independent sales organizations, which sell payment card acceptance to merchants, see a big opportunity in Visa Inc.’s decision to accelerate the switch to EMV chip-and-PIN cards in the United States.
By becoming knowledgeable about the transition and using that information to become merchants’ advisors, ISOs can achieve a competitive advantage, observers say.
And merchants appear likely to need help with the transition.
In trying to resolve the chicken-and-egg dilemma issuers and merchants have not been able to hatch themselves, Visa’s decision puts the onus–with incentives–on merchants to upgrade their terminal technology to accept EMV cards (
Visa will open its Technology Innovation Program to U.S. merchants in October 2012, waiving annual PCI Data Security Standard audits for merchants that conduct at least 75% of Visa transactions on terminals that support both contact and contactless chip payments, including Near Field Communications transactions.
The network will continue to support mag-stripe transactions. However, “we think over time, PIN and signature are going to be reduced or even eliminated completely,” says Eduardo Perez, Visa head of global payments systems risk.
Visa does not envision helping merchants with their hardware costs. The network anticipates merchants will use what they save on PCI validations to offset the cost of new terminals.
Plus, “terminal manufacturers already have [EMV-ready] terminals and are selling them to the marketplace,” says Perez. “As demand increases, prices will drop.”
Visa has received a positive response to its decision from large retailers, but Perez predicts the change will be easier for small and midsize merchants. “They can focus on the terminal purchase and rely on acquirers and processors to enable them to accept contact and contactless payments,” he says.
The important thing for ISOs to understand is that they ultimately play a role in messaging to merchants, Perez says, suggesting ISOs learn about the transition and guide merchants as they make the transition.
What do you think about this? Send us your feedback.
