American Express announced it would be issuing the safer secure chip cards in the United States later this year. It’s preparing to release a time line for merchants to follow in anticipation of accepting these new technologically advanced credit cards. It follows both Visa and MasterCard in their respective announcements.
With the announcement made in late June, all four major credit card brands prepare to move forward as they require American merchants to accept the new credit cards. The timeline for most is October 2015, though many are already putting into place the technology to accept them sooner rather than later. Failure to do so will likely mean a shift in the liability for fraud. That shift, of course, will be made so that the merchants not in compliance will shoulder any repercussions.
The penalties are the same, even if by design they differ. Both American Express and MasterCard will focus on the party who has the least secure technology. For instance, if an issuer supports EMV chip-and-PIN but the merchant supports a less secure form of EMV – or who has nothing at all in place, it’s the merchant who will shoulder any fraudulent losses.
Not only that, but Visa’s liability shift will require merchants to “at least contact chip terminals” with not as much focus on what kind of EMV security (chip or signature) is used. Visa has placed less emphasis on PIN security in its plans for EMV card issuance in the United States. Generally speaking, credit card companies will usually allow a two year grace period in terms of falling into compliance.
When Visa and MasterCard, followed by Discover and American Express, announced their time lines and liability factors, many merchant groups have shows support of the chip-and-PIN, citing it as the most secure payment method.
AMEX, again, like the other card networks, will require payment processors to accommodate the EMV standard by April, 2013. It will also allow merchants what it refers to as “relief” from other parts of the Payment Card Industry data security standard if they agree to handle 75% of their American Express transactions through those terminals that can handle EMV payments.
In 2011, Visa launched what it referred to as “a multi-pronged initiative to expand the use and acceptance of EMV-enabled credit cards in the U.S.” It included certain incentives if retailers agreed to change out their old-school payment systems with ones that take these cards. EMV is an acronym for Europay, MasterCard and Visa, the developers of the technology.
It also agreed to waive the retailer’s fee to validate their compliance with an industry security standard each year if at least three-fourths of their transactions come from Visa EMV transactions. The initiative was good for those who transitioned by October 12.
Its biggest competitor, MasterCard set its own deadline for 2013 six month after Visa‘s declaration. All the major networks, including American Express, handle billions of secure EMV chip transactions each year. It’s just a matter of getting the U.S. in line. In a presser for American Express, senior vice president and general manager Suzan Kereere said,
As a global payments network, we understand the benefits associated with EMV-based technology, and we are committed to continue enhancing security at the point of sale for both merchants and American Express card members.
It’s believed the new technology will significantly reduce the massive instances of credit card fraud both in the U.S. and worldwide. With success in other countries, such as the UK, it’s long overdue.
- FTC Warns of Prepaid Card Scams – May 23, 2013