Well that's certainly interesting. Wonder what that does for the future of "signature" debit. Interestingly, Visa also vetted online banking and established a 2012 "mandate" by announcing a requirement by banks to ensure cardholders have a Verified by Visa password for online banking. According to IT News/Australia, Visa today announced it would mandate a move to chip and PIN technology for all Australian Visa cardholders over the next four years, with signatures no longer accepted at the check-out by 2013. The overhaul would see more than 14 million Visa cards upgraded by April 1, 2013.
According to Visa about five million (37 percent) of Australian-issued cards are already embedded with the chips.
Visa will also require issuers (i.e. banks) to ensure cardholders are enrolled to have a Verified by Visa password for doing online banking transactions by April 1, 2012.
Chris Clark, general manager for Visa Australia and New Zealand said Visa would ensure all cardholders have a Verified by Visa password.
"We're saying all cardholders have to have a password," Clark said. "They must be enrolled. "If they don't get enrolled, the liability for a fraudulent transaction falls onto them," Clark said.
But the Verified by Visa password would not be mandatory for online merchants, such as eBay, to implement. Visa's policy would still allow for the three digit CVV2 "security code" to stay in place.
Clark said that current magnetic cards were "easy" to skim and that chip technology would prevent skimmers from duplicating cards. He said credit card data has usually been contained on the magnetic strip of the card. "And it's that stripe which is really, really easy - well... not easy - but that stripe can be compromised by card skimming".
Clark said chip technology would not be as easy to duplicate. (Editor's Note: HomeATM has a Chip and PIN flavor)
"To date, after I think over 20 years, the chips have not been able to be corrupted because they store what's called dynamic data," Clark said. "So every time you do a transaction, that chip interacts with a special terminal and it creates a dynamic authentication code whereas with a traditional or magnetic stripe transaction, where it's swiped, it's just the same old static authentication". Clark also said Visa was looking at more ways to secure credit cards. He said this included making dynamic online passwords, having an SMS every time you wanted to do an online transaction and having a type of token authentication or a card that plugged into your PC. Editor's Note: We have the obvious solution... the one V/MC has been using for decades in brick and mortar locations. You know the one. Instead of the merchant having the device, we bring the device to the consumer. But that creates some problems for Visa and MasterCard. One problem is that "card present" transactions have a significantly lower interchange rate because they are significantly more secure...and if not for that significantly lower interchange fee, you might have seen them pushing the only 2.x certified credit and debit card terminal designed for eCommerce use. It seems to me that it would also make complete sense to push our PIN Entry Device for online transactions...but alas, we run into the same problem there..."PIN Debit Interchange" is significantly lower (again, because it's more secure) than signature debit.
The dilemma facing Visa and MasterCard is a "money for nothin" one...money for higher interchange feed...nothing being the level of security when it comes to online transactions. Higher security = Lower interchange.
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