In 2011, Visa announced a plan to introduce the Europay MasterCard Visa standard (EMV) to the US market, and to do so, they determined that they should incentivize large retailers to hop on board. With that in mind they created their TIP program, which basically allows large merchants to forgo PCI Validation if they have had a previous passing Report on Compliance (ROC) and have 75% of their transaction processed on an EMV device that supports Near Field Communication (NFC). Visa led the way, but Master Card is following suit.
This year, Master Card has announced on its website that they have a roadmap to lead merchants to using EMV technology. Not that it was any real surprise, but they targeted April 2013 as the date to have the US merchant infrastructure ready for the technology. This is the same deadline that Visa had set in their plan as well.
However, MasterCard’s plan does not mirror Visa’s precisely. MasterCard references a savings to merchants if they embrace the new technology, but that savings is not specified. There has been much speculation that they will follow Visa and allow for merchants to forgo PCI validation, but another group of industry experts believe that instead, MasterCard will lower fees or interchange rates for early adopters.
Both of these credit card giants are banking that financial incentives will be enough of an impetus to motivate large merchants to invest in new technology, EMV readers with NFC capability. Will it be enough? That will be hard to determine until the details about MasterCard’s program come to light. Right now, it is a promise with no specifics.
Here is the reality of the announcement. MasterCard is joining Visa in trying to push this new technology to American Merchants who are have been notoriously slow to embrace change. The card companies know that they will not be able to get consumers interested in the technology of NFC if there are no readers out in the market place. In some ways it is a chicken and egg problem. Merchants do not want to spend the money on infrastructure if no one will use it, and consumers will not embrace the technology if no one has it available. With all of the hype and marketing money being spent to push EMV with NFC, it is probably only a matter of a few years before we see a greater distribution of the technology. It will be interesting to see whether or not consumers follow suit and embrace it.