The chip would also reduce credit card fraud because thieves can easily copy magnetic stripe cards, says Visa.
E.M.V. technology will also boost the mobile systems industry. The chip allows shoppers to pay for items by simply waving their mobile phones at a payment terminal.
To accelerate the process, Visa plans to offer financial incentives to merchants that install supporting E.M.V. technology, by eliminating a requirement that they complete annual security certifications. If that does not motivate merchants, starting 2015, Visa is pushing to hold merchants responsible for fraud costs that stem from any transaction where merchants refused to adopt contactless chip terminals.
Over the last year, for example, we’ve seen financial institutions issuing chip cards to international travelers, and some large merchants have already begun installing chip terminals.”
“With a commercial framework in place, our goal is to enhance security and support the next generation of payments,” Richey added.
In the near future, the chip card could be supplemented with “dynamic authentication,” which creates a unique card that cannot be duplicated. For instance, the dynamic authentication could be a time-sensitive token transmitted from a phone that is later matched against a consumer’s credit card number. Nonetheless, Visa says the end of the “mag-stripe” credit card is near.
“The way we buy things and pay for things is about to go through a fundamental transformation,” said Jeff Kagan, a technology analyst. “First it was cash to credit cards. Now it’s credit cards to the mobile wallet on your cell phone.”