Ever worry about debit card fraud emptying out your checking account? If so, you'll be happy to know that Visa announced today it will soon begin a push to bring fraud-fighting chip authentication to U.S. debit cards. From the press release:
Visa Inc. today announced plans to accelerate the migration to EMV contact and contactless chip technology in the United States. The adoption of dual-interface chip technology will help prepare the U.S. payment infrastructure for the arrival of NFC-based mobile payments by building the necessary infrastructure to accept and process chip transactions that support either a signature or PIN at the point of sale.
"By encouraging investments in EMV contact and contactless chip technology, we will speed up the adoption of mobile payments as well as improve international interoperability and security," said Jim McCarthy, global head of product, Visa Inc. "As NFC mobile payments and other chip-based emerging technologies are poised to take off in the coming years, we are taking steps today to create a commercial framework that will support growth opportunities and create value for all participants in the payment chain."
In case you've never seen one, the cards in question look just like a regular debit cards with the magnetic strip we're used to, but with a metallic chip on one side. Chips can help prevent fraud because they're harder to counterfeit than a conventional magnetic strip, which almost any enterprising thief can copy if they have your debit card information.
The biggest obstacle to adoption of chips in this country has been merchants not wanting to spring for chip-compatible payment machines. When you think about how much it would cost to replace all the payment machines in a typical big-box store, you start to get an idea why.
Visa plans to use a carrot-and-stick type approach to overcoming this obstacle. On the carrot side, merchants who reach a certain threshold of adoption can skip out on an annual security validation process that costs merchants a pretty penny in compliance costs. Visa will also invest in infrastructure on their side to process the chip payments.
The stick? There will be a "liability shift" for fraudulent transactions from banks to merchants if the fraud is committed via a conventional magnetic strip card. Right now card issuers are liable for such fraud.
The downside for consumers might be that the cards cost more for banks to issue, causing banks to up fees for replacing lost or expired debit cards.
What do you think? Would you be willing to pay more in fees to protect yourself from the inconvenience and possible losses caused by fraud?