RANCHO CUCAMONGA, Calif. — Good news for stragglers — It's not the end of the world if you're not ready for the EMV liability shift that takes place on Oct. 1.
"On the debit side, if you'd moved forward a year ago, you'd have to redo them, because there was no common AID yet," explained Michelle Thornton, director of product development for CO-OP Financial Services. "We've been pretty clear that on the debit side, don't worry [about missing the October 1 deadline]."
CO-OP, said Thornton, has suggested that its member credit unions examine the economics of converting to EMV debit cards before October and to make a decision as to whether or not they want to be seen as an early adopter and other factors that might be happening concurrently, such as mergers or core conversions.
"From a strictly liability shift perspective, the economics just don't bear out for most credit unions," she said. "Three percent of your fraud is probably card-present. And if you figure that big box merchants are going to be ready... what you're left with is the liability you could potentially shift. It's a pretty small number compared to what it costs to [implement] EMV."
Thornton wasn't saying credit unions should skip EMV all together, but emphasized that the economics and the risk factors both have to make sense for CUs moving forward with EMV conversions.
As reported elsewhere, the bulk of the October liability shift will be centered on credit EMV, with debit to follow later. With most of CO-OP's credit unions using the CUSO for debit servicing, Thornton said that about two-thirds of its member institutions are waiting "because from a budget and resource perspective it makes more sense for them to start at the end of 2015 or in 2016."
Thornton also shot down arguments that credit unions that aren't ready with EMV in October will face increased liability risks.
"Issuers have the liability today. By not being ready on October 1 and running into a merchant that's not ready, they have the potential to shift some liability. But with card-present fraud being relatively low in the U.S. when you look at the economics on EMV and the potential to shift liability on some of that fraud, you're not going to get a great return on your investment."
CO-OP believes that the bulk of the market — at least as far as debit is concerned — will move forward on EMV in 2015 and 2016.
"Certainly you need to do it, and we're not suggesting that people skip EMV," said Thornton. "Absolutely everyone should do it. But does that mean I have to do it Oct. 1, 2015? We don't think they have to."
