Will Visa’s Support For EMV Mean Fewer QSAs?

Written by Walter Conway
August 10th, 2011

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.


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Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

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