Currently, only Visa and American Express are developing smart cards as an alternative to credit cards.
Unlike traditional credit cards, smart cards use an embedded chip that can be programmed to accept, store and send data. The technology also makes it easier to prevent card cloning and forgery.
Once the terminal software becomes available, several key US merchant payment processors will be able to offer smart-card acceptance applications on Hypercom and VeriFone terminal models. Processors who will be capable of handling smart cards include Arizona-based Vital Processing Services and Colorado-based First Data Merchant Services.
Visa is betting that around 40% of retailers will replace their POS devices during the next four years because of outdated technology, officials said.
Theodore Iacobuzio, a senior analyst at TowerGroup, said consumers would be quick to welcome smart cards once the technology is distributed among retailers. The sticking point until now has been that merchants will have to "foot the bill for any chip card rollout," said Iacobuzio.