Visa EMV Deadline Remains the Same: CEO Addresses Rumors and Public Misinformation Regarding Card Security Breaches

Feb 11, 2014

Following the massive 2013 Holiday data-breach experienced by the Target Corporation, and additional breaches reported by the Neiman Marcus Group and Michaels Stores Incorporated, the public has rightfully expressed concern regarding Visa’s and MasterCard’s security. Both corporations have subsequently decided to shift card security liability for counterfeiting fraud due to point-of-sales transactions to the party, merchant, acquirer or issuer that does not use EMV.

EMV technology supports enhanced cardholder verification methods that provide stronger transaction security verses basic magnetic strip cards and card readers. EMV Co manages and maintains the specifications for the technology’s use and continues to enhance its security features. EMV Co is owned and maintained by Visa, MasterCard, American Express, Discover, Union Pay, and JVC, so it makes sense that these credit card companies would want merchants to use their service. The issue that merchants face is the cost of switching to the use of this service, coupled with the difficulty of preparing for the change. New EMV terminals must be installed, which includes additional software, in addition to replacing old magnetic strips with the new EMV chips that are required.

Visa’s announcement to switch the U.S. to liability due to the lack of the use of EMV card technology was made back in October 2011, with the reported switch beginning in October 2015. Although this change had already been announced, the recent December 2013 data-breach has caused many merchants to fear that Visa might go back on their original October deadline. On the other hand, MasterCard has firmly supported the original October deadline, and made no mention of any change to their intentions. Charles Scharf, the chief executive of Visa Incorporated, has attempted to quell these rumors, even though other Visa company executives had previously alluded that there might be a bit of wiggle room on the date. Scharf has gone on record to state that the existing deadline is solid. According to transcripts provided by Seeking Alpha transcript service, in a conference call that was conducted with analysts to review the company’s results for the fiscal 2014 first quarter, Scharf stated “In 2011, we had announced a plan to migrate the U.S. to EMV technology through a liability shift beginning in October 2015 and we have reaffirmed these dates.” In response to an analyst’s question specifically about the deadline, Scharf stated, “when you see the kinds of breaches that have occurred recently, it gets everyone focused on making sure that we’re doing all that we can to minimize any potential fraud in the future. So the dates that we had set out are the dates that we are going to stick with.”

Scharf admitted that Visa realizes that a great deal of work will be required by merchants to make the change, but he sites the recent breaches in card security as a worthwhile reason for companies to put in the effort. He also addressed the misinformation regarding who is to blame for the security breaches. He stated, “I’m personally concerned about the amount of misinformation you read in the public domain, from confusion around who incurs the cost of fraud losses, to the misrepresented lack of payment-system security. This is misleading, inaccurate, and not helpful, and can have unintended public-policy consequences. We’re actively engaged with policymakers in Washington, D.C., along with our partners, to ensure that they actually hear the facts and understand the multiple layers of infrastructure that protect the payment system. Unfortunately, many merchants, issuers, and both of their lobbyists are attempting to assign blame in the press and not reacting in a particularly constructive manner, and it’s in all of our best interests that this change quickly.”

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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