What Businesses Need to Know About Changes to Credit and Debit Cards

Chip Education Tour Virtual Stop with Business ForwardAugust 19, 2015

Visa Confidential

| EMV Chip Migration Update2

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U.S. EMV Chip Migration Update


83% of payment card fraud in the U.S. is counterfeit or card not present fraud

EMV chip, tokenization, and encryption are technologies designed to reduce risk from payment data being stolen and devalue the data if stolen83% of fraud in U.S.

!

Source: Visa Fraud Reporting System (FRS) and Enterprise Data Warehouse (EDW); CY 2013; U.S. domestic Visa debit and credit


Fraud Landscape Today

Source: VisaNet CY 2014, US Acquired/US Issued. Visa Fraud Reporting System (FRS) and Enterprise Data Warehouse (EDW); CY 2014; U.S. Issued / U.S. Acquired

Total fraud by type Card-present fraud

EMV chip will significantly reduce card-presentcounterfeit fraud

Other8%

Card not present

50%

Lost/Stolen

9%

Counterfeit

33%

Other17%

Lost/stolen17% Counterfeit

66%

Counterfeit fraud represents 66% of domestic card-present fraud and has grown 27% from 2013 to 2014


VCAS

• Dynamic, risk-based authentication

• Reduces friction at the POS

Fighting fraud from every angle

Lost and Stolen

Counterfeit

Card Not Present

EMV

• Creates a unique cryptogram for each transaction

• Not a silver bullet

Tokenization

• Replaces PAN with unique digital alias

• If payment token is used as the PAN, it will be identified as stolen and rejected

PIN

• Fraudster must know PIN for card to work

• Static data set

EN

CR

YP

TIO

N

REA

L-T

IME P

RED

ICT

IVE A

NA

LYT

ICS

Mobile proximity

eCommerce

****

Biometrics

• Enhances cardholder verification

• Reduces friction at the POS

3D SECURE

33%

50%

9%

Source: Visa Fraud Performance Benchmarking. Data refers to U.S. fraud CY 2014 US Issued/US Acquired. Remaining percentage fall under “Other” fraud types. U.S. Fraud by Type (% = share of total)


What is EMV chip card technology & Why does it matter to your business?

• EMV chip or “smart” cards are credit, debit or prepaid cards that have an embedded microchip

• Microchip generates a dynamic one-time use code (a cryptogram)

• Prevents the data being re-used to create counterfeit cards


How does EMV chip technology work?Because the cryptogram changes with every transaction, even if the card data is stolen, the information can’t be used to create counterfeit cards because the cryptogram would have already “expired”

Card number Name Expiry Service

code

CVV

(STATIC)

4 0 0 0 1 2 3 4 5 6 7^ J OHND O E^ 0 1 2 0 1 2^1 0 1^ 2 1 7^…


code

iCVV

4 0 0 0 1 2 3 4 5 6 7^ J OHND O E ^ 0 1 2 0 1 2^ 2 0 1^ 3 8 6 ^

Cryptogram

(DYNAMIC)

1 5 1 8 7 3 2 83 1 0 2 8 2 9 18 2 1 8 4 3 8 49 1 0 6 3 1 4 28 5 6 3 8 6 0 91 5 7 4 3 0 1 7 ^…2 4 8 0 1 8 0 31 5 1 8 7 3 2 83 1 0 2 8 2 9 18 2 1 8 4 3 8 49 1 0 6 3 1 4 28 5 6 3 8 6 0 91 5 7 4 3 0 1 72 4 8 0 1 8 0 34 3 1 2 3 6 8 93 6 7 9 4 5 1 03 4 9 1 5 2 3 85 8 3 6 8 1 2 7


code

iCVV

4 0 0 0 1 2 3 4 5 6 7 ^ J O H N D O E ^ 0 1 2 0 1 2^ 2 0 1 ^ 3 8 6 ^

Cryptogram

(DYNAMIC)

1 5 1 8 7 3 2 83 1 0 2 8 2 9 18 2 1 8 4 3 8 49 1 0 6 3 1 4 28 5 6 3 8 6 0 91 5 7 4 3 0 1 7 ^…2 4 8 0 1 8 0 31 5 1 8 7 3 2 83 1 0 2 8 2 9 18 2 1 8 4 3 8 49 1 0 6 3 1 4 28 5 6 3 8 6 0 91 5 7 4 3 0 1 72 4 8 0 1 8 0 34 3 1 2 3 6 8 93 6 7 9 4 5 1 03 4 9 1 5 2 3 87 3 2 5 6 0 0 3


The benefits of EMV chipSecurity, innovation and acceptance

Enhanced security – fraud

reduction

Enhanced international acceptance

Paves the way for secure mobile

payments –tokenization

Moves U.S. closer to

dynamic data authentication –devaluing data

Cardholders still protected with

zero liability

1 2 3 4 5


Visa U.S. EMV chip roadmap

• In August 2011, Visa led the industry by setting a plan to move the U.S. toEMV chip technology

• Successful globally, liability shifts have been the primary tool used to encourage both issuers and businesses to adopt EMV chip technology

Acquirer EMV Chip POS

ProcessingMandate

Acquirer EMV Chip ATM Processing

Mandate

POS Liability ShiftU.S. domestic and

cross-border

AFD Liability Shift

ATM Liability ShiftU.S. domestic and

cross-border

April 2013 April 2015 October 2015 October 2017

Note: AFD = automated fuel dispenser


EMV liability shift for counterfeit fraud

U.S. Card Terminal Liability

Today Mag stripe only Mag stripe only Issuer

After

October 1, 2015

for POS

After

October 1, 2017

for AFD & ATM

Mag stripe only Mag stripe only Issuer

Mag stripe only EMV chip Issuer

EMV chip Mag stripe only Acquirer

EMV chip EMV chip Issuer

There is no EMV liability shift on

contactless or lost/stolen fraud transactions

Note: Other non-counterfeit related dispute rights may still apply


U.S. EMV Migration − Client readiness report

Sources: Current cards based on MARS data through June 30, 2015; credit / debit card forecast per Aite Report – EMV: Lessons Learned and the U.S. Outlook (June 2014); activated terminal forecast per Payment Security Taskforce Acquirer projections press release (October 2014) ¹Forecast based on information currently available to Visa. Actual results may vary significantly.

• 117.1 million EMV chip cards issued, 78.1 million of which are credit

•Over a quarter of US credit cards have a chip on them today

Credit

• 39 million EMV debit cards issued; a 33% increase from May to June.

• Debit issuance continues to outpace credit issuance. 7 of the top 10 Visa debit issuers are now issuing EMV debit cards

Debit

• A number of standalone EMV terminals are now capable of routing PIN debit EMV transactions using the common debit AID

•Domestic EMV PV increased 42% from $1.3B in May to $1.9B in June

Acquirers / Terminals

• • 247 thousand EMV chip activated merchant locations, a 15% increase from May to June

• Visa has partnered with a number of merchants to deploy point-of-sale decals to help train customers on how to conduct chip transactions

Merchants

U.S. EMV Chip Migration Forecast1

By the End of 2015

Credit cards 70%

Debit cards 41%

Activated terminals 47%


EMV Chip Resources to Support You


Visit www.visachip.comOnline destination for businesses, consumers, issuers and acquirers

visachip.com/issuervisachip.com visachip.com/card visachip.com/merchant visachip.com/acquirer


Cardholder education

• Turnkey collateral and educational content for issuers

• Chip educational videos

• Search and Social campaigns

Card

activation

sticker

Search campaign

Issuer email


Implementation toolkitOnline implementation toolkit and resources to ensure a seamless migration to chip technology

• Chip technology overview

• 10-Step Implementation Guide

• Educational resources • Information graphics

• Videos

• FAQs

• Online staff training module

• Customer-facing POS decals

www.visachip.com/businesstoolkit


Online staff training module

Access the staff training module at



Customer-facing POS decals

3”x 2” Small Decal

5.5” x 4.5” Large Decal

Order the customer-facing POS decals at



Information graphic (Infographic) seriesCommunicate chip technology through visual learning tools

1. Get to know liability shift

2. EMV chip card overview

3. Ways to use a chip card

4. Understanding cardholder

verification methods

Find the Infographic series at



Ready to begin?Follow these steps to start your migration to chip technology

Visitwww.visachip.com/businesstoolkit

Meetwith your acquirer or card processor

Trainyour point-of-sale employees

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2

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Visa is here to support you

What Businesses Need to Know About Changes to Credit and Debit Cards

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