Visa offers merchant incentives for processing EMV cards

By Melissa Rudy

Consumers who haven't yet heard of the new, more secure "chip and PIN" credit cards are about to get an earful, as Visa prepares to push through readers for the improved chip credit card to merchants throughout the United States.

Although EMV microchip credit cards have become the norm in Europe and other parts of the world, American retailers have been slow to adopt the new payment processing systems, delaying the widespread use of these cards in the United States.

That's about to change with Visa's new initiative to encourage retailers to adopt the microchip card processing systems. According to their press release, Visa plans to offer incentives to retailers who implement the new payment systems and eliminate older ones that can only read magnetic stripe cards.

"Carrot and stick" approach

Visa is taking a "carrot and stick" approach to pushing EMV card readers on merchants. The carrot: From this point onward, merchants who accept three quarters of their transactions via chip instead of magnetic stripe will have their annual compliance fee waived. And the stick: Visa is imposing a deadline of April 2013 for all other retailers to accept chip card transactions.

How does this affect the consumer? Chip cards are much safer than the older magnetic stripe credit cards, as they create unique transaction details for every payment (older cards have "static" coding that is easier to use fraudulently). EMVs also require that the cardholder enter a PIN, like a debit card, for extra security.

These cards are already widely used in Europe and other parts of the world, so it's easier to get by in foreign countries if you carry an EMV card - all the current travel credit cards use EMV chip technology. With Visa pushing merchants to adopt the new card readers, consumers can expect to see chip cards popping up everywhere in the next few months.