While U.S. merchants will only now in 2015 experience the liability shift of potential financial losses for not upgrading their terminals from magstripe –to EMV contact and contactless card enabled terminals, Visa has been incentivizing the move since 2011 through the innovative Visa TIP program.
Considering that EMV chip-enabled terminals greatly enhance payment security through dynamic authentication by eliminating static authentication (and in the process devaluing customer data), the shift to EMV should be seen as lucrative enough to be of great value to merchants in the U.S.
Even so, many merchants are not yet fully prepared for the liability shift occurring October 1st 2015, wherein merchants will bear the weight of all financial losses related to fraud. Added incentives such as Visa’s TIP program should make it clear that the shift will not only prevent financial losses in the event of fraud, but may create meaningful savings as well.
What is the Visa TIP program?
In October 2012, Visa introduced its Technology Innovation Program (TIP) to the U.S. The Visa TIP program effectively eliminates the requirement for certain merchants to validate their Payment Card Industry Data Security Standard (PCI DSS) each year (or may waive the fee of attaining PCI DSS). The program acknowledges those merchants that strive to prevent fraud by investing in the latest security technologies.
Who has to validate their PCI DSS annually?
All Level 1 and 2 merchants in the U.S. have been required to validate PCI DSS since 2007. These merchants continue to invest in PCI DSS validation each year at a cost – often hiring a Qualified Security Assessor (QSA) at their own expense.
How do I apply for the program?
There is no application process for the Visa TIP program – rather, U.S. merchants qualify automatically by meeting a certain number of criteria.
Eligible U.S. merchants must have:
- Validated their PCI DSS compliance within the last year (or have defined a plan for achieving compliance), including a confirmation that sensitive authentication data (such as PIN data or complete contents of a mag-stripe) is not stored.
- Upgraded to EMV chip-enabled terminals that support contact and contactless chip (including Near Field Communication or NFC technology) cards.
- Complied with current PCI DSS standards, and have renewed their compliance since the event of a breach of cardholder data (if they have been involved in such a breach, at any time).
Are there any additional requirements?
In a way, yes, there is. Eligible U.S. merchants must also make at least 75% of their total transaction count from dual-interface EMV terminals. This means that those merchants who do the bulk of sales online from e-commerce or via mail order must still validate their PCI DSS annually, but cannot benefit from the savings of the TIP program.
While the Visa TIP program was initially implemented to incentivize the migration of U.S. merchant technologies to the acceptance of EMV chip card terminals, it continues to play an important role in rewarding those merchants who invest today in the payment technologies of the future.