The (Payment) Times, They Are A-Changing

Last updated: 18 December 2019

You might recall my blog last month, “When in Rome, Have Your Card Declined,” when I lamented about the United States not following the rest of the world with EMV payment technology.  Well, it looks like that is about to change.  Last week, Visa announced plans to accelerate the migration to EMV chip technology and the adoption of mobile payments.

What is included in Visa’s acceleration plans?  There are actually three parts.

First, Visa will include the United States in the Technology Innovation Program (TIP).  TIP means that merchants will receive relief from certain PCI requirements as long as 75% of their Visa transactions come from chip-enabled terminals.  This is a big incentive for merchants, who shoulder the big costs of annual PCI DSS compliance assessments.

Second, Visa is requiring that all U.S. merchant acquirers and sub-processors must be able to support chip transactions no later than April 1, 2013.

Third, Visa is implementing a liability shift for domestic and cross-border counterfeit POS transactions effective Oct. 15, 2015.  This means that the liability for fraudulent transactions made in retail establishments that have not installed chip card terminals will fall to merchant acquirers and merchants.

These three items mean one thing: EMV is coming to the United States.  In the words of New York Times Bucks columnist Ann Carrns and team: “It’s about time!”

You may be asking, what does this have to do with mobile payment? EMV is both contact and contactless, and EMV contactless cards communicate with payment terminals in the same way as mobile payments. Therefore, payment terminals that accept EMV can also accept mobile payments by default. From Bloomberg: “It will speed up adoption of mobile payments by a year,” said Rick Oglesby, a senior analyst at Aite Group.

Along with this news, I saw more news last week that really validates that we’re entering a new era of payments.   ABI Research predicted that “85% of terminals shipped worldwide will be contactless-enabled in 2016, driven by increased proliferation of contactless cards and especially, rapid adoption of NFC-enabled cell phones.”  In other words, payment terminal technology is moving right along with plans from Visa and its issuers.

So whether EMV contact or contactless card, or our mobile phones, in the next few years we will most certainly be paying differently than we are today.  For me, and my colleagues at Gemalto, this has been a long time coming, and we fully support the United States’ transition to EMV chip technology to increase security and reduce fraud.