A new rule from Visa Inc. will let banks eliminate a long-standing but largely obsolete design element in their payment cards: embossed lettering.
The San Francisco company said Tuesday that it has changed its operating regulations to let banks issue unembossed debit and credit cards in the United States. Bankers said the change will make it easier to produce cards instantly at branches and could increase activation rates, especially for debit cards.
Many banks already use instant-issuing systems to produce embossed cards at branches instead of having the cards created off-site and mailed to customers.
Several companies have tested unembossed cards, which are made with a different type of machine. One of those companies, Commerce Bancshares Inc. of Kansas City, Mo., said it produces embossed cards at branches but is eager to move to unembossed ones.
"The flat-card equipment is easier to use. It's more efficient for us," Chuck Kim, an executive vice president with Commerce, said in an interview Tuesday. "It's just, in general, a better technology."
Commerce has been testing the system with 300 employees for the past 90 days, and it plans to roll the system out to branches next year.
Thomas Dyck, the executive vice president of retail deposit products for Toronto-Dominion Bank's TD Banknorth Inc., said it has been testing unembossed cards for a year and has issued 10,000 of them.
By eliminating the embossing, "you essentially take the account-opening process and dramatically simplify it, from a card perspective," Mr. Dyck said. Customers do not have to wait to receive their cards, and "for that reason alone you're going to see a lift early on" in their transaction volume.
TD Banknorth's hypothesis is that getting the cards quicker can influence customers' behavior for the life of the account, driving up overall debit card use, he said.
The machines that banks use to make embossed cards in their branches essentially stamp customers' names and account numbers on to pre-printed cards; the machines that make unembossed cards are more like printers and enable banks to offer a broader range of designs — a fact that could appeal to customers.
Stacey Pinkerd, Visa's head of global consumer debit products, said the rule change reflects the fact that the vast majority of card transactions are authorized now through the data stored on a magnetic stripe or a computer chip; raised characters on a card's face, which are necessary for card swipers, are no longer needed.
The activation rates for debit cards that are mailed to customers is about 65%, he said; giving the cards to customers when they open an account will increase that figure, though he would not say by how much.
Visa began letting retailers offer unembossed gift cards in 2005.
"Prepaid was really just a distribution network issue, specifically around gift cards" sold at retailers that would not be willing to install embossing equipment in their stores, Mr. Pinkerd said. "It was an area where we felt comfortable starting this process."
As a result of the popularity of gift cards, "merchants have sort of been conditioned on and educated on unembossed cards being acceptable," he said.
Mr. Kim said merchant acceptance was a key concern for Commerce when it considered issuing flat cards. "We promise our customers we'll make their transactions easy, and a transaction isn't easy if it doesn't work."
Carl Bradbury, Commerce's director of consumer card products, said that few merchants need the embossed characters to authorize payments, and that merchant acceptance has not proven to be a problem.
"I haven't seen one of those old imprinting machines since the early '90s," he said.
In an earlier test by Visa, taxi cabs were one of the few problem areas, Mr. Bradbury said. "They had a taxi driver who wouldn't take the card," but in Commerce's tests, "taxi drivers everywhere have come into the 21st century and are able to accept transactions electronically."
Mr. Pinkerd agreed that even holdouts against electronic authorization have found ways to accept unembossed cards.
"I was in a taxicab about four months ago and utilizing the flat plastic, and I showed it to the taxicab driver; he didn't even have an imprinter in his cab," he said. "All he did was he called in, he got approval through his dispatch location … and he processed the payment."
