Canadian Test in 2007 Foreshadows a National Chip Rollout

Visa, MasterCard, and Canada's national debit network are preparing to launch a test in Ontario for a Canadian chip and PIN system that its backers hope will ultimately eliminate the magnetic stripe on all cards and replace signatures on all Visa and MasterCard credit cards. The test will start next fall in the adjacent cities of Waterloo and Kitchener, about 65 miles west of Toronto. Those cities and nearby municipalities comprise an urban area of about 500,000 people. The test will involve Visa Canada Association, MasterCard Canada Inc., the debit network Interac Association, many of those associations' major member financial institutions, and, on the acceptance side, leading acquirers, processors, and an undisclosed number of merchants. In a joint news release, Visa, MasterCard and Interac said they hope to have sufficient data for evaluation by March 2008. Visa reports that it is aiming for about 20% of its card transactions in the region to be chip-based, with 120,000 chip-embedded cards in issue and 1,800 chip-accepting terminals. MasterCard says its target is for 20% of its local cards to have a chip during the test. The cards will use the Europay/MasterCard/Visa (EMV) technology and security platform, and will require cardholders to enter PINs with each transaction. “Chip cards are already in use around the world, so the object of the market trial is not to test the technology,” Allen Wright, Visa Canada director of chip initiatives, tells Digital Transactions News in an e-mail. “While Visa will test the Canadian infrastructure and ensure interoperability, our biggest change is the use of PIN versus signature, and we will be making sure that this transition is as easy as possible for Visa cardholders and merchants. Simplifying the process for merchants, card issuers, and merchant-service providers is one of Visa's key objectives as well as ensuring the effectiveness of merchant and cardholder communications.” Canada is committed to full chip migration. Wright says Visa expects to reach “overwhelming critical mass” in chip deployments by 2010, though all cards will continue to contain a magnetic stripe. An Interac spokesperson says via e-mail that by Dec. 31, 2012, all Interac-connected ATMs and all debit cards must be converted to chip. By the end of 2015, all point-of-sale terminals that accept Interac must be converted. “After those dates, magnetic-stripe transactions will no longer be accepted in the Interac network,” the spokesperson says.