The silence is almost deafening.
But U.S. payments-industry players will face trouble from merchants unless they can reach a consensus soon on a plan to initiate a broad shift to chip-and-PIN technology, an industry insider contends.
More than four months after Visa Inc. announced a plan encouraging U.S. merchants to embrace EMV, the world’s dominant card-security standard, no other card brand has made a similar move, raising the question among some experts of whether Visa might have acted too soon.
“The fact that no other card brands have stepped up with a similar plan could be a problem,” Tim Buckingham, a partner specializing in banking and merchant-acquirer liability issues with global law firm DLA Piper LLP, tells PaymentsSource. “I guarantee that merchants will be confused and uncertain about what direction they should go if they don’t get a clear sense from other card brands about the future of EMV in the U.S. … Some consensus is needed.”
Visa on Aug. 9 announced a series of deadlines and incentives designed to encourage merchants to adopt the EMV chip standard for point-of-sale transactions to reduce counterfeit card fraud (
By October 2015, liability for fraudulent Visa EMV transactions in most cases will shift to acquirers from issuers if their merchants are not equipped to accept contact and contactless chip transactions. Gas stations have until October 2017 before the liability shift takes effect.
As part of its incentives, Visa said any merchant that by October 2012 accepts 75% of its annual Visa transactions through a terminal that can handle contact and contactless chip transactions will not have to validate their compliance with the Payment Card Industry Data Security Standard.
So far, none of the other major U.S. card brands, including MasterCard Worldwide, American Express Co. or Discover Financial Services, has outlined any plans to push EMV in the U.S. They also are not talking.
In other countries that adopted EMV in recent years, including Canada and the United Kingdom, competing card brands reached general agreement in pushing a liability shift to merchants that continued to accept only magnetic stripe cards, which are vulnerable to card-counterfeiting.
But the silence from MasterCard in particular raises questions, Buckingham says.
“We would certainly expect MasterCard to come up with its own EMV plan at some point, as they have in other countries, but perhaps they didn’t want to be seen as merely reacting to Visa this time,” he says.
Visa’s immediate EMV-adoption incentives are voluntary, which could present another potential obstacle to merchants embracing EMV, Buckingham suggests.
“The effort to switch over to EMV is a huge undertaking for merchants, and in other countries the shift was mandatory, which makes a big difference,” he says.
In the United Kingdom, when chip-and-PIN technology was phased in fraud losses from point-of-sale transactions declined 67% between 2004 and 2007, according to payments industry trade group Financial Fraud Action UK, formerly APACS. (
Despite those improvements, EMV did not eliminate all point-of-sale card crime in the UK, Buckingham notes.
Criminals armed with stolen card numbers and PINs often collaborate with crooked merchants or insiders to conduct fraudulent transactions over a period of a few days or a few weeks before systems detect the bogus transactions, Buckingham says.
“Lost and stolen card fraud also continues to be a problem that can be quite serious,” he says.
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