Visa’s mobile payments future just got real. The company announced today that it will deploy dual-mode chips in its infrastructure that will pave the way for NFC-based mobile payments, and it has also come up with an aggressive strategy to bring retailers on board.
Other credit card companies will have to face the same challenges. Despite the buzz that mobile payments has in tech circles, it will still require massive infrastructure changes, and retailers will need to be convinced the changes are necessary.
Visa says that it will speed up the migration to EMV (Europay, Mastercard and Visa) contact and contactless chips in the US — a standard for chip-enabled credit cards that has failed to find much ground in America, despite widespread popularity internationally. “By encouraging investments in EMV contact and contactless chip technology, we will speed up the adoption of mobile payments as well as improve international interoperability and security,” Jim McCarthy, Visa’s global head of product, said in a statement today.
Additionally, Visa says the use of chip technology in credit cards will allow for dynamic authentication, which adds an extra security layer by requesting additional information (not just a signature) during transactions. The company says it will continue to rely on signatures and PINs for “low-value, low-risk transactions” but that eventually they will be replaced entirely by dynamic authentication methods.
Visa listed the following three initiatives as part of its grand plan to bring retailers on board with dynamic chip authentication:
- Beginning October 1, 2012, Visa will will expand its Technology Innovation Program to the US, eliminating the requirement that merchants validate their PCI data security compliance if 75 percent of their payment terminals are chip-enabled. Visa says that terminals need to accept both contact and contactless chips, including NFC chips, to qualify. Retailers will likely jump on board with this plan since it will mean forgoing the annoyance of PCI compliance.
- Visa will require processors and sub-processors to support 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 wrote in a statement today.
- As of October 1, 2015, Visa will shift liability of fraud to merchants instead of card companies. Since dynamic card authentication offers better fraud protection, most merchants will opt to upgrade their terminals instead of having to deal with fraud charges. Fuel merchants will have an extra two years before liability will shift for terminals at self-service gas pumps.
In May, Visa unveiled its digital wallet for smartphones, which would allow consumers to use their phones for transactions like credit cards and would offer up several features not possible with a simple piece of plastic.