Visa (NYSE:V) today announced that U.S. financial institutions have reported issuing an estimated one million Visa-branded, EMV chip-enabled cards as of December 31, 2011, demonstrating the significant progress the industry is making toward implementing Visa's U.S. chip roadmap.(1),(2)
In August 2011, Visa announced plans to accelerate mobile innovation and the adoption of EMV contact and contactless chip technology in the U.S.
"Migrating the U.S. market to chip will help build an infrastructure for accepting NFC mobile payments, enhance international acceptance and reduce fraud," said Stephanie Ericksen, head of authentication product integration, Visa Inc. "Since announcing our roadmap last year, we have seen strong interest among U.S. issuers large and small to invest in chip technology, as today's milestone shows. The progress is all the more significant considering that just 18 months ago, there were no Visa-branded EMV contact chip cards issued in the U.S."
EMV chip technology refers to the microchip that is embedded in a credit or debit card, or even a mobile device. Sometimes misleadingly referred to as "chip and PIN," EMV chip is commonly deployed with a variety of cardholder verification methods including signature as well as PIN. Under Visa's approach, both methods, as well as "no signature required," will continue to be available to issuers and merchants in the U.S. according to their preferences.
The critical security advancement is the EMV chip, which protects the cardholder by generating a unique code every time it is used, effectively eliminating the problem of counterfeit cards. The same chip technology also enables mobile NFC payments.
Consumer EMV chip card programs are available from financial institutions such as Chase Card Services, State Employees' Credit Union, United Nations Federal Credit Union, U.S. Bank, and Wells Fargo. The growing adoption of chip technology in the U.S. has been facilitated by Visa's flexible approach to cardholder verification, which provides choices to issuers and merchants as they deploy chip cards and terminals that support signature or PIN or a combination of the two, based on the unique needs of their customers.
"In 2011, Wells Fargo led the way with ann EMV smart card pilot to 15,000 customers who travel frequently to countries where chip-based payments is the standard," said Eric Schindewolf, vice president of product development for Wells Fargo Consumer Credit Card. "Based on the overwhelming success of the pilot, we are now considering making this program more widely available."
Visa Chip Services
To support continued issuer adoption of chip payment technology, Visa is introducing Visa Chip Services, a suite of new and existing solutions to help issuers implement programs using EMV chip technology, including NFC-based mobile payments. Built on Visa's extensive chip expertise, Visa Chip Services will help issuers adopt the latest payment technologies efficiently and with minimal infrastructure investment. Several U.S. issuers have already taken advantage of Visa's services to introduce chip card programs, primarily targeted to international travelers, which represents a first step in a more broad-based migration. More than a dozen programs have been introduced since 2010. As issuers become more familiar with chip technology and leverage the groundwork they have already created, interest in more broad-based card programs as well as mobile NFC-based payments is growing as well.
"State Employees' Credit Union was able to build on Visa's expertise and solutions to engage quickly and launch an EMV chip card program in a matter of months, not years," said Leanne Phelps, senior vice president, Card Services, State Employees' Credit Union. "The jump-start helped us to be a leader and provide our members the products and services they want and need."
In addition to consulting services, best practices and testing tools, Visa is able to provide chip data processing and authentication services for issuers who have not made the back-end host system upgrades to be able to recognize and process more complicated chip transaction data.
The services suite has four key components:
- Visa Chip Authenticate is a service where Visa validates the EMV cryptogram on behalf of the issuer, minimizing the need for issuers to make authentication-related host system changes to verify chip transaction data. Issuers can choose to use this solution as a long term solution or on a interim basis while host system changes are in progress.
- Visa iCVV Convert is a chip data conversion and verification service that reduces chip data-related issuer and processor host system changes by converting the chip-based ICC Card Verification Value (iCVV) to the magnetic stripe-based Card Verification Value (CVV) and removing the chip data prior to sending the transaction to the issuer for review and response.
- Visa Streamlined Chip Setup accelerates issuers' time to market through a turnkey setup and testing service for issuers that require a streamlined online-only EMV compliant solution.
- Visa Custom Chip Setup provides issuers requiring online and offline PIN capability with customized guidance on key implementation decisions to develop an optimal chip issuance program.
Visa Chip Services is consistent with a set of implementation recommendations Visa introduced last month in order to help financial institutions and merchants make informed decisions as they evaluate competitive vendor offerings. The recommendations focus on using online processing rather than offline functions that can increase cost and complexity for chip card programs.
(1) The one million cards figure is based on Visa issuer estimates.
(2) EMV (Europay, MasterCard, Visa) is a global standard for payment cards, terminals and transactions based on chip technology.