Chip Cards Are Coming to ATMs, Too

ATM makers will have to start building chip-card acceptance into their machines soon, even though they are not one of the groups Visa Inc. targeted in its incentive plan for chip-card conversion in the U.S.

Visa's incentive plan rewards or penalizes merchants and acquirers based on their ability to handle chip-card payments by certain deadlines. But U.S. cardholders also will need to be able to use their cards at ATMs, sparking a need for banks and machine manufacturers to make updates, says Malon Updike, director of deployment in the Americas at NCR Corp. of Duluth, Ga.

“Depending on the size of the bank involved, financial executives will have to determine if they want to convert their ATM machines for use with only their signature bank cards … or set up a new set of certification codes to be able to accept all other cards at the ATM,” Updike says.

The EMV Integrated Circuit Card Specifications support stronger security than is used with magnetic-stripe cards. Chip cards are harder to counterfeit, and are used in other countries to fight fraud.

However, the U.S. has long resisted the switch to EMV cards despite the security benefits.

“This will be a stage-by-stage introduction, and I don’t think EMV acceptance in the U.S. will be so much about fraud detection but more about the rest of the world moving in that direction,” says Scott Strumello, an associate with Auriemma Consulting Group.

With Visa “sort of mandating it,” the banks and ATM manufacturers know they will have to comply eventually because consumers will want to use their Visa EMV cards at the ATM, Strumello says.

Each financial institution will switch to EMV at its own pace, says Chuck Somers, vice president of ATM Security at Diebold, Inc. of North Canton, Ohio.

Without a federal mandate to covert to EMV, it might take longer for U.S. banks than their European counterparts did because of the sheer number of ATM and point-of-sale networks, Somers says.