A Guide to Visa’s EMV Merchant Incentives

Visa’s EMV (Europay, MasterCard and VISA) merchant incentives are expanding to other countries including the United States. The new technology was initially introduced in regions such as Europe, Asia and Canada. The new “chip-and-PIN” technology is popular because of its convenience and security when authenticating debit and credit card transactions. Not only is the technology useful in stores, but it also useful in other point of sale (POS) and automated teller machines (ATMs).

How Does Visa’s EMV Technology Work?
Both Japan Credit Bureau (JCB) and American Express have integrated this new technology. Consumers will know the technology by “IC Credit” and “Chip and PIN.” This new technology stores customer credit card information on the magnetic stripes. When a purchase is made, the customer must simply hold the card near the reader. When the technology recognizes the information, the user will be prompted to enter a PIN number on a keypad. The transaction will then be submitted.

Every merchant that desires to use this system will be required to upgrade their point-of-sale system. EMV technology can become quite expensive. Merchants consider the technology worth the investment, because it is more secure and less likely to result in a fraudulent charge. PINs are considered more secure than signatures. Fraud costs companies nearly $8.6 billion per year.

What are the New Incentives?
Visa is constantly offering businesses incentives to switch from traditional units to EMV terminals. Visa plans to promote this introduction of EMV and contactless cards and terminals worldwide so that businesses may start to save from fraudulent charges. Visa hopes the incentives will encourage companies to make the investment despite the huge cost increase. In the long term, the savings will be more than the cost of the terminal.

Some of the most popular incentives are listed below:

Eliminate Annual Technology Inspection Fees – Merchants who process over 75 percent of transactions with their EMV readers can waive their annual technology inspection fee after October 2012. This will represent some cost savings for companies that are migrating to the new technology.

No Fraudulent Credit Card Fees – Currently, merchants will not assume the liability risks for fraudulent credit card transactions. After 2015, merchants will be charged for fraudulent credit card transactions. This may lower interchange fees of acquiring banks.

Travelers abroad can also know that their transactions will be secure when they are traveling. No one can take their card and swipe it without knowing the PIN number. EMV technology gives card holders peace of mind. Because of the incentives, the United States is adopting a plan to migrate to this alternative payment option. Experts anticipate that the only people that will lose with the new technology are the fraudsters.

Since Europe is one of the leading users of this technology, they miss the technology and security when they travel to the United States. Since European countries comprise a large portion of tourism in the United States, the United States want to provide the same level of security they are afforded in their home states. UK holiday makers are one of the largest groups of Visa card spenders in the UAE.

Visa is doing whatever it can to encourage businesses to switch to this new technology. Experts estimate that merchants will eventually save between $30,000 and $55,000 on PCI audits and assessments annually. These savings are above and beyond the $30 per terminal upgrade, activation fees, installation fees and maintenance fees. The new upgrade fees are considerably more than the traditional terminal fees.

Merchants will eventually be required to migrate to the new technology. Companies should take advantage of the cost savings during the introductory period. When prices increase in the future, companies will be better prepared to handle the costs.

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