Visa Inc. celebrated the one-year anniversary of the official launch of chip payment technology in the United States. With steady progress and growth since October 1, 2015, there are now more than 1.46 million chip-enabled businesses and 363 million chip-enabled Visa cards, making the U.S. the largest Visa chip card market in the world. The number of Visa chip transactions surpassed half a billion in the month of August, representing a 1,000+ percent annual increase (1).
When Visa first introduced a roadmap to bring chip technology to U.S. payments, it set out three primary drivers: prevent counterfeit fraud, accelerate the adoption of mobile payments, and enhance convenience and payment security for international travelers. In the five years since that journey began, there has been demonstrable progress in each area.
Counterfeit Fraud Rates Declining at Chip-Ready Merchants
Businesses that have completed their transition to chip terminals benefited from a 47 percent reduction in counterfeit fraud in the month of May compared to the same period a year earlier (2).
“Migrating the U.S. to EMV chip is a massive undertaking, requiring coordination and collaboration between financial institutions, retailers, and the thousands of service and software providers that make our payments systems work,” said Stephanie Ericksen, vice president of Risk and Authentication Products, Visa Inc. “Thanks to efforts across the ecosystem, we’re seeing a positive impact on counterfeit fraud. We’re focused on continuing that momentum to bring counterfeit steadily down and simplifying the way businesses can adopt chip technology.”
One such effort reduces the time consumers spend at a chip-enabled checkout terminal. Visa developed Quick Chip, a solution that speeds transaction times to two seconds or less. Retailers that want to become Quick Chip-ready can implement the new technology in a matter of days. The technology has been successfully launched at New Leaf Community Markets, with more merchants expected to implement Quick Chip in time for the busy holiday shopping season.
Visa also took additional steps to help merchants and their service providers test and certify their terminal solutions more efficiently, and increased support, consulting, and training. Also, to mitigate the financial impact on merchants who are working to implement chip but have not yet completed the process, Visa modified its policies to temporarily cap the number of fraudulent transactions that issuers can charge back to non-chip merchants and their financial institutions. This has resulted in a 50 percent decrease in chargebacks since March of this year.
Digital Commerce Accelerating
The introduction of chip payment technology in the U.S. market has coincided with the introduction of secure mobile payment solutions such as Apple Pay, Android Pay, and Samsung Pay. Card and mobile-based payments use the same global security standards and encryption technologies, bringing greater flexibility to merchants who want to offer consumers the option to pay by either phone or card.
The growth in mobile adoption also enables solutions that empower consumers to take more control in securing their accounts and stopping fraud. Examples of consumer solutions include Mobile Location Confirmation, which lets account holders opt-in to allow the location of their mobile devices to be matched to the location of the transaction, as well as Consumer Transaction Controls, which allows consumers to determine the types of transactions that can be authorized and to turn on and off their accounts when cards are misplaced, lost, or stolen. Consumers can also use transaction alert services to receive real-time text or email notifications for charges in order to spot suspicious transactions as quickly as possible.
“The number of consumers worldwide who will own smart phones is expected to grow to 2.5 billion by 2019,” added Ericksen.(3) “That provides a great opportunity to accelerate the adoption of chip payment technology and introduce new ways to authenticate consumers through technologies such as biometrics and device ID.”
Easier Payments for International Travelers
Bringing chip technology to the U.S. has also meant more consistent payment experiences for U.S. consumers traveling abroad and foreign travelers visiting the U.S. When travelers use chip cards, issuing financial institutions can have greater confidence that those overseas transactions are not the result of counterfeit fraud. Visa also requires self-service checkouts to accept international chip cards without requiring a PIN, making transactions at train ticket vending machines, bike sharing stations, and parking meters both quick and secure. In August 2016, financial institutions approved nearly 97 percent of U.S. Visa chip transactions overseas, compared to about 87 percent for non-chip cards.
“Chip is an important investment in the payment system, not only in security but also in driving future innovation, and making payments easier for consumers,” said Ericksen. “The U.S. is clearly well on its way, and we’re looking forward to many more advancements ahead.”
1) U.S. Visa chip cards and chip-enabled merchants, as reported to Visa by client financial institutions for August 31, 2016. U.S. Visa chip transactions data as reported to Visa by client financial institutions for the month of August 2016.
2) Volume of counterfeit fraud at merchants with at least 80 percent of their total transaction volume made with chip cards at chip terminals, during the month of May 2016, compared to the month of May 2015. As reported to Visa by client financial institutions.
3) Statista, 2016
Source: Visa
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
