Visa USA has reported that U.S. financial institutions have issued more than one million credit and debit cards that use information on embedded computer chips to validate transactions instead of magnetic stripe technology.
"Migrating the U.S. market to chip [cards] will help build an infrastructure for accepting NFC mobile payments, enhance international acceptance and reduce fraud," said Stephanie Ericksen, head of authentication product integration at Visa Inc. "Since announcing our roadmap last year, we have seen strong interest among U.S. issuers large and small to invest in chip technology, as today's milestone shows. The progress is all the more significant considering that just 18 months ago there were no Visa-branded EMV contact chip cards issued in the U.S."
The roadmap to which Erickson referred is Visa's plan to use incentives to convince retailers and payment processors and acquirers to shift their technology to support the chip cards. Under Visa's approach, both methods, as well as no signature required, will continue to be available to issuers and merchants in the U.S. according to their preferences. Retailers that make the shift to terminals that supported both the chip cards and the contactless transactions could be excused from some of the card data security requirements that many have found burdensome and expensive.
Visa reported that cards with the embedded chip technology have been issued by Chase Card Services, State Employees' Credit Union, United Nations Federal Credit Union, U.S. Bank and Wells Fargo, among others. Industry analysts judged this development to be significant because Visa is on record as looking first to retailers to support chip card transactions before it looked to financial institutions to begin issuing them.
"In 2011, Wells Fargo led the way with an EMV smart card pilot to 15,000 customers who travel frequently to countries where chip-based payments is the standard," said Eric Schindewolf, vice president of product development for Wells Fargo Consumer Credit Card. "Based on the overwhelming success of the pilot, we are now considering making this program more widely available.”
But not all analysts were impressed by Visa's announcement. One who declined to go on the record, citing the fact that he was not allowed to talk to reporters, described 1 million cards as still filling the “boutique and travel” niche, meaning they were issued for cardholders who demanded the latest technology or travel overseas enough to make having a card with a magnetic stripe a real handicap.
According to its most recently available operational data, U.S. financial institutions had issued 651 million Visa-branded credit and debit cards as of June 30, 2011, meaning that two-tenths of one percent of the total Visa U.S. card base now carries an embedded chip.
The brand also revealed some of the ways it is prepared to help issuers with the new cards, including its Visa Chip Services that provides assistance in issuing and implementation. “Built on Visa's extensive chip expertise, Visa Chip Services will help issuers adopt the latest payment technologies efficiently and with minimal infrastructure investment,” Visa said.
"State Employees' Credit Union was able to build on Visa's expertise and solutions to engage quickly and launch an EMV chip card program in a matter of months, not years," said Leanne Phelps, senior vice president, card services at State Employees' Credit Union in Raleigh, N.C. "The jump-start helped us to be a leader."
The brand also said that it will provide chip data processing and authentication services in addition to consulting.