EUGENE, Ore. - Oregon Community Credit Union leveraged the EMV liability shift date as a way to plant its flag as a technology leader among financial institutions in the Pacific Northwest.
That is the message from Jerry Liudahl, chief credit officer for the $1.3 billion CU, which had chip cards in the hands of the majority of its credit and debit card holders long before Oct. 1. Liudahl told Credit Union Journal there were several reasons behind OCCU's push, from reducing fraud to standing out in the crowd.
"When we decided to issue all EMV cards this year the primary consideration was not wanting other issuers to come out with cards and have people see their Oregon Community card without a chip as inferior somehow," he explained. "We did not look at it for differentiation at first. Our first thought was implementing over a two-year period vs. doing it all at one time."
To minimize its fraud losses - card present fraud represents 25% of Oregon Community CU's fraud losses - Liudahl said management knew it needed to be ready to issue chip cards this fall, anyway.
"We looked at it strategically as an opportunity to get chip cards in the hands of our members. We have a CUSO that has an affinity card program with University of Oregon and Oregon State University, which allows us to offer cards regardless of ability to join the credit union."
As the project took shape, the decision was made to prepare the entire card portfolio in 2015, rather than extending into 2016 and even 2017. Liudahl said replacing all of that plastic still took several months.
"We began in April with the idea of being done with the reissue by October. We identified those who would be more likely to use cards internationally and started with those cardholders.
"What makes our product somewhat unique in a very narrow window - everyone is going to have them at some point - is our debit card processor, Vantiv, was able to issue our debit EMV cards more quickly than others," he added.
Lots of Education Needed
With the switch to EMV cards, issuers are having to educate consumers on a few important differences in how chip cards are used vs. mag stripe cards (see related story on page TK). After years of swiping, people have to be taught to insert their card into a slot - and then leave it there for the entire transaction.
Being one of the first to issue chip cards meant Oregon Community CU had to offer instructions. Some examples include: creating a list of frequently asked questions, e-mails and newsletters, banner ads on its website, social media posts and educating the staff.
Bob Potter, OCCU's director of card services, said there was "a lot of education" integrated with the reissue.
"We took an approach of communicating in many different ways," Potter said.
Liudahl said management is aware many merchants will likely wait for the Oct. 1 shift date to start using EMV terminals because it is cheaper to use swipe terminals for as long as possible.
"So there still will be a need for education," he said. "We are trying to stay ahead of questions regarding using PINs or signing. There are things that will have to be explained and it will take a long time for the transaction to occur. We realize people are used to swiping and may end up leaving their card behind."
Liudahl said the main goal is to make the transition as smooth as possible for members.
"Our members are accepting and understand what is going on. There is some frustration that more merchants do not take their cards because now they understand the chip is more secure and protects them."
The Next Project
Both Liudahl and Potter said OCCU realized a "significant expenditure of resources" to convert all of its debit and credit cards to EMV in a relatively short time. However, they said the credit union has already benefitted from that investment - and not just from being one of the first to market with new technology.
"The great thing about doing this when we did is it has allowed us to focus on other projects," Liudahl said. "There is a real bottleneck right now of issuers trying to get ready just before [Oct. 1], which will delay a lot of efforts."
Added Potter: "We have a few more debit cards to go. We handle debit card servicing in-house so were cautious of the impact of changing too rapidly. We have 75,000 debit cards so we staggered the reissue. The remaining cards are those who are not very active."
Liudahl said the newest project is trying to master tokenization.
"That is the next security step. There is a very competitive landscape in credit cards, so it is nice we are projecting the message that we have the latest and greatest technology. And having this behind us allows us to focus on bringing additional value for holders of OCCU cards, whether marketing rewards points or creating a mobile wallet."
