EMV in the United States

Mobile Content | Content is kingMost of the world has fully migrated or is in the process of migrating to EMV chip technology for debit and credit payments. According to EMVCo, approximately 1.2 billion EMV cards have been issued globally and 18.7 million POS devices accept EMV cards as of Q1 2011. This represents 40.1 percent of the total payment cards in circulation and 71 percent of the POS devices installed globally.

Given the prevalence of EMV chip technology in the rest of the world, many have questioned if and when the United States would move to EMV. U.S. financial institutions started issuing EMV chip cards to their frequently traveling customers; however the country seemed to be a long way off from acceptance. All of this changed on August 9, 2011 when Visa announced plans to speed up chip migration and adoption of mobile payments in the United States. Visa announced a three-part acceleration plan:

1. Expand the Technology Innovation Program to Merchants in the U.S

Effective October 1, 2012, Visa will expand its Technology Innovation Program (TIP) to the U.S. 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 merchant's Visa transactions originate from chip-enabled terminals. To qualify, terminals must be enabled to support both contact and contactless chip acceptance, including mobile contactless payments based on NFC technology. Contact chip-only or contactless-only terminals will not qualify for the U.S. program. Qualifying merchants must continue to protect sensitive data in their care by ensuring their systems do not store track data, security codes or PINs, and that they continue to adhere to the PCI DSS standards as applicable

2. Build Processing Infrastructure for Chip Acceptance

Visa will require U.S. acquirer processors and sub-processor service providers to be able to support merchant acceptance of chip transactions no later than April 1, 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. Visa will provide additional guidance as part of its bi-annual Business Enhancements Release for acquirer processors to certify that their systems can support EMV contact and contactless chip transactions

3. Establish a Counterfeit Fraud Liability Shift

Visa intends to institute a U.S. liability shift for domestic and cross-border counterfeit card-present point-of-sale (POS) transactions, effective October 1, 2015. Fuel-selling merchants will have an additional two years, until October 1, 2017 before a liability shift takes effect for transactions generated from automated fuel dispensers. 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 merchant's acquirer. The liability shift encourages chip adoption since any chip-on-chip transaction (chip card read by a chip terminal) provides the dynamic authentication data that helps to better protect all parties. The U.S. is the only country in the world that has not committed to either a domestic or cross-border liability shift associated with chip payments

With this announcement from Visa, the United States payments landscape is no longer a future of magnetic stripe technology, but one of EMV chip technology and contactless and mobile payments. This article will examine why the timing is good for EMV in the United States, and will discuss implementation and cost considerations for merchants and issuers.

Why EMV and Why Now? Why EMV and Why Now?
There are many reasons why EMV chip technology makes sense for the United States.

What is EMV?
Fraud and EMV  |  EMV SecurityWhen the Card is Not Present

Benefits of EMV to Issuers and Merchants Benefits of EMV to Issuers and Merchants
Issuers are generally liable for card fraud related to face-to-face transactions and therefore benefit from the reduction of direct fraud cost in this channel.

Benefits/ Considerations for EMV in the U.S. Benefits/ Considerations for EMV in the U.S.
U.S. and TravelersCosts | Moving at the Same Pace | Contactless and Mobile Payments

A Good Start A Good Start
Before Visa’s announcement, there was already a lot of support for EMV in the United States

Summary and Resources Summary and Resources
In August 2011, Visa announced plans to accelerate the United States’ migration to EMV payment technology and mobile payments