Merchant incentives, liability shifts but questions abound
Visa Inc. unveiled plans and incentives for U.S. merchants to deploy EMV with an eye toward near field communication, the company announced in August.
EMV via contact chip, contactless or NFC all use dynamic authentication to reduce a fraudsters ability to use stolen credit card data. The U.S. is one of the only industrialized countries in the world that hasn’t moved to EMV payments.
To encourage the transition Visa is doing three things. Effective Oct. 2012, Visa will expand its Technology Innovation Program to the U.S. and eliminate the PCI Data Security Standard requirement for eligible merchants in which at least 75% of the Visa transactions originate from chip-enabled terminals.
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Visa is actually not requiring banks to start issuing PIN-based cards, although it is very likely that they will, once the processors comply with the new requirement and lay out the infrastructure needed for accepting them. After all, U.S. issuers lost $3.9 billion in overall transaction volume and $447 million in revenues in 2008, because 9.7 million American cardholders were unable to use their cards abroad, according to data from Aite Group. Moreover, U.S. issuers have been receiving tons of complaints from inconvenienced American vacationers. Not to mention that chip-and-PIN reduced fraud in Europe quite substantially and will undoubtedly do the same here in the U.S. So issuers have every reason to embrace the new technology. http://blog.unibulmerchantservices.com/nfc-ascent-pushes-visa-to-speed-up-adoption-of-smart-credit-cards
The adoption of Chip and PIN in UK did not decreased fraud overall as fraudsters moved to other countries where counterfeiting was easier http://www.dailymail.co.uk/news/article-1065868/Fraud-WORSE-chip-pin-criminal-gangs-clone-British-credit-cards-abroad.html The adoption of EMV based chip cards (different than UK chip and pin where PIN is required to indirect authentication to the terminal) will make counterfeiting cards in US with stolen data from online malware etc more difficult to fraudsters because will increase the cost to fraudsters to fake cards with EMV . It will be interesting to see if will also reduce online fraud with stolen card data. If online purchases are still based on card no present data like we use it today in UK it won't. This would need PCs and phones to process NFC based chips to process EMV dynamic authentication (e.v. CVVs) send them through a secure channel outside the threat of fraudsters (e.g. Man In the Middle and key loggers)