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Visa announced yesterday that it planned to accelerate the move to EMV chip technology and mobile payments in the U.S., a sign that the world's largest payment processor is looking to corner a share of the mobile wallet market.
Chip technology replaces the magnetic stripe on a credit card with an EMV chip, and Visa says it is a more secure way to make payments. Even if data is compromised, a counterfeit card would be unusable without the true card's unique elements. Chip technology has already been widely adopted in Europe, and can reduce a payment processor's fraud costs.
The adoption of chip technology would allow Visa to be a major player in the mobile wallet world. High-end smart phones are now shipping with near-field communication (NFC) technology, allowing phones to pass encrypted information at close range, without contact, with a simple wave. The technology has allowed consumers to make payments with their smart phones and essentially use phones as mobile wallets.
Visa is requiring firms that handle credit card transactions for retailers to adopt the new technology by April 2013. Companies that do comply may be eligible to skip Visa's annual security audit. Visa said merchants that haven't upgraded their terminals by October 2015 may be liable for damages related to counterfeit payment fraud.
Mobile wallet technology, though hyped, is not yet widely used by consumers. According to a recent poll by Consumer Reports National Research Center, only 5 percent of respondents used their phone to make a payment within the last month.
For more about mobile payments, check out Consumer Reports' story, "New ways to pay." And for tips on protecting your accounts from fraud, check out "House of cards."
Sources:
Visa announces plan to drive chip card and mobile payment adoption [Visa]
Visa to speed up migration to mobile wallet [Reuters]
Visa Announces Plans to Accelerate Chip Migration and Adoption of Mobile Payments [ZDnet]
Visa ramps up NFC chip plans for mobile wallets [WirelessWeek]
—Evan MacDonald
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