DES MOINES, Iowa — More credit unions are taking the necessary steps to convert their magnetic stripe credit cards to EMV as the October 2015 deadline looms, according to a new survey by The Members Group.
Payments processor TMG queried 43 of its clients to determine their EMV conversion plans. The study found more than half (24) would like to start an EMV project within the next 12 months. Eleven of the FIs listed 2015 as their preferred start time, while eight said they were unsure when they would like to begin an EMV project.
Of the FIs surveyed, 27 said they have a reissuance plan in place. Of those, 22 said they will send out EMV cards on the natural reissue date. The remaining five issuers reported plans to reissue upon request on a per-cardholder basis.
The majority of both Visa and MasterCard issuers participating in the survey said they plan to issue contact-only, signature-based EMV cards that authorize only in an online environment. Only six issuers plan to issue dual-interface cards. With this capability, TMG noted, EMV cardholders would be able to take advantage of tap-and-go terminals, which are more prevalent overseas and in some major metropolitan areas of the U.S.
"A dual-interface configuration is considered the Cadillac among EMV cards and will demonstrate a credit union or bank is ahead of the market," said Brandon Kuehl, TMG product manager and EMV product leader. "However, it may require as much as double the budget to issue dual-interface EMV cards as compared to contact-only."
Signature Cards Are 'Best Practice'
As opposed to PIN-based EMV cards, Kuehl said signature cards are a "best practice" for community-FI credit card issuers, mainly due to credit cardholder familiarity with signature authentication.
"Consumers are not used to entering a PIN when swiping their credit cards," said Kuehl. "PIN also adds an additional layer of complexity for the issuer. When it comes to EMV issuance, TMG advises clients to start simple and add complexity in the future if necessary. The availability of PIN as an authenticator can always be added at a later date."
None of the survey respondents reported plans to issue EMV cards that authenticate in offline environments. Whereas European EMV cards typically allow for both online and offline transactions and authorizations, TMG said stateside cards will benefit from an abundance of connectivity and a healthy telecommunications infrastructure. This means fewer terminals in the U.S. are without the ability to communicate with the necessary authenticating parties.
"For issuers without a significant number of international travelers, online-only EMV cards will be sufficient," said Kuehl. "It is also important to understand that offline EMV cards require a significant amount of upkeep."
