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U.S. EMV Migration Update and Best Practices Hap Huynh, Senior Director Risk Products April 2015 1 Notice of confidentiality This presentation is furnished to you solely in your capacity as a customer of Visa Inc. and/or a participant in the Visa payments system. By accepting this presentation, you acknowledge that the information contained herein (the “Information”) is confidential and subject to the confidentiality restrictions contained in Visa’s operating regulations and/or other confidentiality agreements, which limit your use of the Information. You agree to keep the Information confidential and not to use the Information for any purpose other than in your capacity as a customer of Visa Inc. or as a participant in the Visa payments system. The Information may only be disseminated within your organization on a need-to-know basis to enable your participation in the Visa payments system. Please be advised that the Information may constitute material non public information under U.S. federal securities laws and that purchasing or selling securities of Visa Inc. while being aware of material non public information would constitute a violation of applicable U.S. federal securities laws. 2 U.S. EMV chip migration update 3 Visa U.S. EMV chip roadmap • In August 2011, Visa led the industry by setting a plan to move the U.S. to EMV chip technology • Successful globally, liability shifts have been the primary incentive used to encourage both issuers and merchants to adopt EMV chip technology April 2013 Acquirer EMV Chip POS Processing Mandate April 2015 Acquirer EMV Chip ATM Processing Mandate October 2017 POS Liability Shift AFD Liability Shift U.S. domestic and cross-border ATM Liability Shift U.S. domestic and cross-border AFD = Automated Fuel Dispenser 4 October 2015 Visa Confidential EMV liability shift for counterfeit fraud U.S. Card Terminal Liability Today Mag stripe only Mag stripe only Issuer Mag stripe only Mag stripe only Issuer Mag stripe only EMV chip Issuer EMV chip Mag stripe only Acquirer EMV chip EMV chip Issuer After October 1, 2015 for POS After October 1, 2017 for AFD & ATM There is no EMV liability shift on contactless or lost/stolen fraud transactions Note: Other non-counterfeit related dispute rights may still apply 5 Visa Confidential Card personalization best practices Transaction authorization • Always online • No offline authorization by EMV chip Card authentication • Always online • No offline data authentication1 Issuer cardholder verification method (CVM) list Visa Credit 1. Online PIN (for ATM only) 2. Signature 3. No CVM Visa Debit 1. Online PIN (ATM) 2. Signature 3. Online PIN (POS) 4. No CVM Common AID 1. Online PIN (POS and ATM) 2. No CVM Best practices should reduce complexity, cost and time-to-market 1Exception 6 may exist for contactless cards for transit use only Visa Confidential EMV chip CVM considerations for the U.S. Minimize stakeholder and cardholder impact • Credit in the U.S. is not currently configured to work with PIN, and not all cardholders know or want to use a PIN at the point of sale • Adding PIN for credit would greatly increase the time and investment required to migrate to EMV chip Maximize fraud impact • EMV chip by itself greatly reduces counterfeit fraud; PIN doesn’t stop counterfeiters, only lost and stolen • PIN is “static data” – easily skimmed and phished, typically resulting in ATM fraud Optimize usability • PIN is not an appropriate solution for all environments (e.g., restaurants, small ticket, ecommerce) • PIN is not globally interoperable, signature is the only global standard for cardholder verification 7 Visa Confidential U.S. EMV Migration − client readiness report Credit Debit • 48 million EMV chip cards issued, majority credit • 1 in 3 of the top 50 credit issuers actively issuing chip credit cards • Cobrand portfolios have started migrating to chip Acquirers / Terminals • Several debit issuers actively issuing; multiple pilots underway U.S. EMV Chip Migration Forecast1 Credit cards 70% Debit cards 41% Activated terminals 47% • All major acquirer processors actively deploying EMV chip terminals By the End of 2015 • Debit EMV Payment Volume increased 30% from December 2014 to January 2015 Merchants • 100 thousand EMV chip activated merchant locations, a 26% increase from September 2014 to December 2014 • Terminal manufacturers continue testing common debit AID • Over half of domestic EMV Payment Volume generated by small merchants • Cross-industry efforts to define minimum terminal configuration requirements underway • Several major U.S. retailers have launched or are preparing for early chip pilots in Q1 2015 Sources: Current cards per Operating Certificates as of December 31, 2014; 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. 8 Visa Confidential