Evan Schuman's StorefrontBacktalk

A 403 Labs QSA, PCI Columnist Walt Conway has worked in payments and technology for more than 30 years, 10 of them with Visa.

Visa had its own version of “patch Tuesday” this week, when it released four bulletins announcing its plans to accelerate the adoption of EMV (named after its founders: Eurocard, MasterCard and Visa) chip technology in the U.S. market. A planned liability shift will have retailers looking at their technology budgets. But perhaps the most interesting point (from a PCI perspective) was its announcement that “Visa will waive PCI DSS compliance validation requirements” if merchants have the right POS devices. Did we just hear Visa announce the end of the QSA Full Employment Act, a.k.a. PCI compliance validation? And if Visa did make that announcement, are MasterCard, American Express and Discover likely to follow suit?

As usual, to qualify for any benefits, merchants and acquirers need to invest in their POS and back-office systems. But to make that investment pill easier to swallow, Visa is offering an incentive. And that incentive for merchants to make this investment appears to be quite substantial (it may also have me and some of my colleagues wondering if we’ll be looking for work next year). Specifically, effective October 2012, Visa is extending its Technology Innovation Program (TIP) to the U.S. market. That means Visa will “waive PCI DSS compliance validation requirements” for any year in which at least 75 percent of a merchant’s Visa transactions originate from a dual-interface, EMV chip-enabled terminals.

(See our news story companion to this column: Is Visa Using EMV To Rig The Mobile Game?)

Notice Visa is not saying that 75 percent of transactions have to be on EMV chip cards. TIP only requires that 75 percent of transactions—whatever cards are used—have to be on dual-interface terminals. Here is the fine print. If terminals process only Chip-and-PIN or contactless cards (i.e., not both), then the merchant cannot qualify for TIP. The terminals must be “dual-interface,” meaning they can process both EMV chip and NFC transactions. Also, the merchant’s and the acquirer’s back-office systems have to support dynamic authentication.

Visa is by no means saying merchants can ignore PCI. Merchants must maintain PCI compliance. For example, to participate in TIP, merchants need to have validated their compliance within the last 12 months and confirm they do not store sensitive authentication data (e.g., the security codes or PIN data). If a merchant suffers a data breach, they will need to revalidate their PCI compliance to get back in the program.