Few options exist for consumers seeking a chip-and-PIN card from a U.S. issuer, but they are growing.
State Employees' Credit Union in Raleigh, N.C., is the latest issuer to offer a card that adheres to the EMV Integrated Circuit Card Specifications. This month it plans to begin migrating the 1.7 million debit cards in its portfolio to the EMV standard from magnetic stripe-only technology. It aims to complete the process late this year.
The credit union's smaller credit card portfolio, which has about 300,000 cards, is "next on the list" for conversion to EMV, although it has not yet set a timetable, said Leanne Phelps, the issuer's senior vice president for card services. Its goal is for all of the credit union's cards to eventually have both a magnetic stripe and an EMV chip.
The major reason for the shift is to enable cardholders to use their cards outside the U.S., where EMV technology is increasingly prevalent, Phelps said. Another factor is blocking potential fraud.
EMV adds a layer of fraud protection by requiring cardholders to enter a PIN to authenticate the transaction at the point of sale; the cardholder's PIN data is stored in the microchip.
"We have a lot of customers who travel internationally, and we keep hearing of travelers running into problems using their cards abroad," Phelps said.
State Employees' Credit Union customers are required to be North Carolina state employees, teachers, members of the state's National Guard, or retirees or family members of those groups.
Most of the credit union's cardholders travel abroad for personal reasons, such as vacations, but the National Guard members "are deployed all over the world, so an EMV card will be especially useful to them," Phelps said.
The opportunity to address criminal activity is another benefit the credit union considered in its decision to switch to EMV, Phelps said. "We know that the rest of the world is EMV-enabled, and now that Canada and Mexico are going EMV, we worry about what might happen down the road when criminals realize the U.S. is the only place they can conduct certain kinds of fraud using magnetic stripe cards. … We want to be ready for that," she said.
Oberthur Technologies is providing the cards and the migration platform. Embedding EMV chips in the cards will cost approximately 70 cents per card, on top of the basic cost of replacing debit cards, which is around $1, Phelps said.
United National Federal Credit Union last year became the first to offer EMV cards in the U.S. It says its 88,000 members travel abroad frequently.
And Travelex Currency Services Inc. last year began issuing chip-and-PIN prepaid cards at its 180 U.S. locations for use in Europe and the United Kingdom.
As pressure builds to block fraud and reduce foreign travelers' card hassles, and more large merchants announce their capability of accepting EMV transactions through chip-and-PIN-ready terminals, the U.S. market is on the "verge" of EMV adoption, some observers say.
But skeptics say fraud has not yet grown out of control in the U.S., and the potential price tag of a widespread EMV conversion — estimated at $5 billion to $13 billion — makes a broad movement to EMV unlikely.
Moreover, there is no mandate from the card networks, or any government or industry agency, for merchants and card issuers to invest in EMV, as has occurred in other countries that adopted chip-and-PIN technology.
And in February, Visa Inc. explicitly excluded U.S. companies from a new policy in which it waives its requirement that merchants annually validate compliance with the Payment Card Industry Data Security Standard if 75% of their transactions come from EMV cards.
"We're bullish on EMV in the U.S., particularly in the fraud-blocking potential it could bring," said Jeff Falk, product development director at The Members Group, a Des Moines payment processor with a heavy base of credit union customers. "But with economic and regulatory changes in motion that are likely to cut into financial institutions' bottom lines, it seems less likely that a lot of banks are going to be willing to fork out the extra funds to upgrade all their cards to EMV anytime soon," he said.
