ST. PETERSBURG, Fla.-During the CSCU Solutions conference here, credit unions had a host of questions related to EMV cards and standards for a panel of experts. Here's a look at some of the questions asked.
Q: Will EMV be obsolete before it's widely accepted in the U.S. due to adoption of mobile?
Bastian Knoppers, FIS: I don't think so at all. As you see in any system change, it takes lots of time. A good payments system, which is what we're changing, is based on doing things securely, economically and efficiently, and we can't take that for granted. I think EMV and cards are going to be with us some time.
Docia Myer of CPI: I agree. Look how long it's taken credit cards to overcome cash. Cards have been around since the 1960s, but we still use cash. The great thing about going EMV is all these new technologies are based on EMV technology.
Q: What should be the approach on debit and credit product lines?
Knoppers: I think PIN is a key component in fraud reduction. I find what happened in Canada very interesting. Canada was very successful in deploying PIN with credit. And that is still the question here. It's possible the mix will change on PIN vs. signature debit. One thing that's missed here is what are the retailers and merchants going to do. The retailers are not excited about this or the liabilities. They have a huge cost and investment. If you listen to the Walmarts of the world they talk about EMV and PIN together. But does the retail community move people to PIN? That will determine this to a large part.
Myer: It's a personal opinion as someone with a background in customer experience, but when I look at the U.S. payment structure with 15,000 banks, if everyone implements something different, what is that customer experience going to be like? Whatever is chosen, a standard needs to be chosen that helps the customer experience.
Kim Lawrence of Visa: I think there is still a lot of blueprint writing to be done in the U.S. The one thing I hear from a lot of credit unions and issuers is that EMV allows you to do practically everything; there are endless options. We've got a set of products and a set of rules and constructs that provide a consistent experience. So a lot of that blueprint writing to be done is on our shoulders. Our message early on was 'Chip and Choice.' For debit it's likely that PIN is likely to be dominant, but signature will still be in play.
Q: What is the response from merchants?
Lawrence: EMV availability is being adopted in normal terminal reissuance and change-outs. There is not a specific, driven effort. They tend to be contact-based. There is not really an incentive or benefit right now for a merchant to take up contactless; there is more seamless add-on technology. I think everyone in the space is trying to figure out where the business case fits. There is a lot of testing going on in the U.S. among merchants. Others are taking a wait and see approach.
Q: What about a CU that hasn't started planning. What should be the first step in develping a plan?
Steven Fodor, CIBC: We were the first bank out in Canada. You have to bring in all your partners, and I mean all of them: external vendors, internal people, marketing. We brought in the national police force, all to work on our business case. We looked at a lot of different business cases. We got a lot of insight from the U.K. You need a multi-faceted group to do this. In our case, the chip case was a fraud business case. If you have already issued chip cards to your international members, data mine that information.
Myer: Your membership is based on something very unique and you need to take time to understand what is most beneficial to your members. What do they want? Are they international travelers? Are they experiencing fraud? Determine what will give you an advantage.
Lawrence: You should take advantage of the resources you have available. CSCU has a vast amount of information available, and Visa has a wealth of information. We have a lot of the lessons learned. It's at your fingertips and it can help you get up to speed.
Q: Will we need new ATM terminals?
Myer: If it's a newer ATM, most of it is just swiping out the reader itself. You need to also look at your CPU. There will also be screen changes.
Lawrence: ATMs are going to need to migrate to chip as well; but just the readers. We don't think chip and PIN makes sense for the U.S. and that is built around efficiencies. Visa has 16,000 card issuers, and millions of card terminals and ATMs. The cost of changing that out would be difficult. If you go to chip and PIN, when you skim the mag stripe, that fraud shows up at the ATM. PIN is prevalent on debit in the U.S. today. I would guess that nine-out-of 10 people don't even know they have a PIN on their credit card.
Q: What about the plastic costs in going from mag stripe to chip card?
Fodor: I think its about $6-$7 per card factoring in all costs. But the fraud savings offsets that.
Knoppers: Contact cards cost $2 to $3 per card; contactless probably adds about a $1 per card in incremental costs.
