Changes to Visa's rules around merchant payment acceptance has led to the University of Iowa temporarily suspending its ability to accept student contactless payments made via mobile wallet in campus dining and retail locations. Visa's newly implemented rules require that all POS terminals have options for both contactless and chip reader payments in order to keep within compliance requirements.
According to The Daily Iowan, beginning February 1, students who previously used Apple Pay or Google Pay on their smartphone or mobile device have to now physically swipe their card to pay for meals.
In an email to The Daily Iowan, Scott Seagren, business officer at Division of Student Life, said the rule changes from Visa are normal and are not a cause for any card security concerns.
“The decision to temporarily disable contactless capabilities was to ensure that Housing & Dining remained in compliance with Visa Core Rules," said Seagren. “It is anticipated that new terminals will be installed yet this spring semester, which will enable acceptance of all contactless payments."
“Visa Core Rules require all merchants that support mobile wallet or app payments on a chip-enabled payment device to also support contactless chip tap payments,” said Seagren.
Seagren said the university was made aware a change was occurring in contactless payment in November 2021. Contactless payments include mobile wallets, like Apple Pay and Google Pay, and credit cards with tap functionality.
The university terminals do not accept contactless “tap” card functions. “The readers currently support payments made by swipe, by inserting a chip card, or by contactless mobile wallet payment e.g. Google Pay or Apple Pay,” said Seagren. “They cannot accept contactless chip payments made by tapping a physical card on the reader.”
The university could have faced fees if it did not update its POS terminals.
“If merchants have payment devices that are unable to meet that requirement, they must take action to disable all contactless payment capabilities or face Visa assessments starting at $5,000 per month and increasing to $10,000 or more per month,” Seagren said.
The university's credit card processing provider, Elavon Inc., has reportedly faced challenges updating the existing POS terminals, leading UI Housing and Dining to simply suspend contactless pay as a temporary fix.
“Housing and Dining chose to temporarily disable all contactless capabilities in the interim to avoid costly Visa assessments,” said Seagren.
Alternative payment methods are available to students in university dining locations, including Hawk Dollars, the Iowa One card, Dining Gift Cards, Meal Plan, and credit cards with magnetic stripe, and chip inserts. The only payment option that has been temporarily removed is contactless payment.