MasterCard's recent commitment to its U.S. EMV-chip card migration timeline is only one piece of the puzzle. Now, all eyes are on Visa to see if it will support or counter its rival's move.
"MasterCard is not the lead on this, Visa still has twice the market share," says Brian Riley, senior research director and analyst with Boston-based CEB TowerGroup. "That doesn't mean MasterCard won't stand on its own on this."
MasterCard also stood firm on its timeline of April 19, 2013 as it related to EMV Maestro card transactions at the ATM, but merchant acceptance of the smart-card technology is a bigger issue, Riley says. EMV cards, which are more prevalent in other countries, use an embedded chip to improve security over magnetic stripe cards.
When contacted, Visa said it has no comment at this time about the possibility of adjusting the EMV timeline. Last year, Visa indicated it was receptive to merchants' concerns about the lingering questions around EMV card adoption.
Visa is "mindful of the stress this is creating," said Bob Whyte, Visa's head of consumer debit products in North America, at the PaymentsSource ATM, Debit and Prepaid Forum in October. Without going into specifics, Whyte suggested that Visa may soon issue additional guidance related to EMV adoption timelines.
As it stands, all major card networks expect most U.S. merchants to accept EMV cards by October 2015. Fuel merchants have until October 2017. After those dates, merchants who do not accept EMV payment cards face an increased liability for fraud.
Regulatory uncertainty may still trump any statement from the major card brands, says Julie Conroy, senior analyst and fraud expert with Boston-based Aite Group.
In July, federal judge Richard Leon instructed the Federal Reserve Board to review its implementation of debit routing rules under the Durbin amendment. This ruling was a setback for the payments industry, which was in deep discussions over how to apply this legislation to EMV debit cards.
"Many of the issuers Ive spoken with hit the pause button on their EMV process when Judge Leons ruling came through," Conroy says. "Even before Judge Leon threw the industry for a loop, it was going to be very difficult for acquirers to process the vast number of certifications needed on time, and at this point nobody knows what the debit certification is supposed to look like."
The ball is in Visa's court at least partly on that account as well, as major card brands have not yet officially responded to the independent debit networks' creation of the Debit Network Alliance, a company whose purpose is to resolve the debit routing issue.
Riley says the card brands have some other strategic hurdles to overcome, such as whether to require the use of a PIN to add security to EMV-chip cards. In the U.S., many issuers have opted for a signature-only approach to ease the transition.
"A strategy for chip-and-PIN or chip-and-signature has to be resolved," Riley says. "Some merchants feel that PIN may slow down the checkout process. Besides, if the merchants are able to accept EMV, they avoid the liability, so PIN or signature doesn't change that."
Recent major payment data breaches, such as the massive breach at Target Corp., have shown that the industry's move to EMV chip payment technology is more critical than ever for reducing counterfeit card fraud and taking the U.S. off the target list for criminals, says Randy Vanderhoof, director of the EMV Migration Forum.
"While uncertainty involving debit regulations may continue into the future, that is no reason to delay the progress we are already making," Vanderhoof adds.
Even if both major brands hold firm on the timelines, the U.S. is still likely to "limp across the finish line in a piece-meal fashion" as the October 2015 timeline approaches, Aite's Conroy says. "It will be nothing like the cohesive, coordinated moves weve seen in other markets like the U.K."