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Visa Inc. chief executive Charles Scharf on Thursday quelled rumors that the payment network might change its October 2015 liability-shift deadline for Europay-MasterCard-Visa chip card transactions. Scharf also decried what he called “misinformation” and “confusion” about card security following December’s news of Target Corp.’s huge payment card data breach and subsequent disclosures of breaches at retailers Neiman Marcus Group and Michaels Stores Inc.
The card networks next year plan to shift liability for counterfeit fraud arising from point-of-sale transactions to the party, merchant, acquirer or issuer, that doesn’t support EMV. Because of the cost and difficulty for many merchants to install new terminals and software, and the expense for issuers to replace magnetic-stripe cards with more costly EMV cards, rumors swept the payments industry over the past year that Visa might fudge the October 2015 deadline, the most important in a series of EMV time limits. Visa executives themselves obliquely suggested there might be some wiggle room. MasterCard Inc., however, consistently supported the existing deadlines, a stance on which Scharf apparently now concurs.
“In 2011, we had announced a plan to migrate the U.S. to EMV technology through a liability shift beginning in October 2015 and we have reaffirmed these dates,” he said in an early-morning conference call with analysts to review the company’s results for the first quarter of fiscal 2014, according to the SeekingAlpha transcript service.
Later, Scharf replied to an analyst’s question about the deadlines that “when you see the kinds of breaches that have occurred recently, it gets everyone focused on making sure that we’re doing all that we can to minimize any potential fraud in the future. So the dates that we had set out are the dates that we are going to stick with.”
Scharf acknowledged that “it requires people do a lot of work, which we understand, but we think it’s good for the payment system, for the ultimate end user, which means it will ultimately be good for all of us, in the process.” He also reiterated Visa’s support for transaction tokenization and, beyond that, other technologies as further defenses against fraud.
In the wake of countless press articles about card security after the Target’s breach, Scharf said Visa started a national advertising campaign to tell consumers about Visa’s zero-liability for fraud on compromised cards. Visa also stepped up its lobbying.
“I’m personally concerned about the amount of misinformation you read in the public domain, from confusion around who incurs the cost of fraud losses, to the misrepresented lack of payment-system security,” Scharf said. “This is misleading, inaccurate, and not helpful, and can have unintended public-policy consequences. We’re actively engaged with policymakers in Washington, D.C., along with our partners, to ensure that they actually hear the facts and understand the multiple layers of infrastructure that protect the payment system.”
Scharf also criticized issuer and merchant interests for sniping at each other over who’s responsible for data breaches and the resulting fraud. “Unfortunately, many merchants, issuers, and both of their lobbyists are attempting to assign blame in the press and not reacting in a particularly constructive manner, and it’s in all of our best interests that this change quickly,” he said.
On another hot topic, Scharf said in response to an analyst’s question about Bitcoin that Visa is “certainly paying attention” to the virtual currency. “There’s certainly some interesting things about Bitcoin and other things like it, but there’s also a great deal of complexity. People talk about things like frictionless and things like that, and when you actually dig through it, it’s really not the case. It’s far more complex than that. And we feel very comfortable with the business that we have here.”
Meanwhile, Scharf said that Visa has simplified integration issues with its V.me virtual wallet and that new V.me merchants include Jos. A. Bank, Ticketmaster, Petco, and Auto Zone. V.me now has 80 live clients and more than 300 signed, according to Visa.
Visa reported that combined U.S. credit and debit card payment volume totaled $590 billion in the first fiscal quarter ended Dec. 31, up 8.3% from $545 billion a year earlier. U.S. credit card payments jumped 9.5% to $287 billion, up 9.5%, while debit payments grew 7.2% to $303 billion. The VisaNet network processed 16 billion transactions worldwide, up 12.9% from 14.2 billion in the prior-year quarter.
Visa reported quarterly net income of $1.41 billion, up 8.8%, on operating revenues of $3.16 billion, up 10.9%.
