MADISON, Wis.-While now may not be the right time to convert card bases to EMV, CUs should be building a roadmap for how they will make the switch.
That's the advice Brian Scott, VP at The Members Group of Des Moines, gave attendees at CUNA Mutual Group's online Discovery conference last week to get focused on the October 2015 fraud liability shift deadline from Visa and MasterCard
Scott pointed out that date marks when the major payments networks will shift responsibility for card fraud. As previously reported in Credit Union Journal, instead of issuers shouldering much of the fraud loss, as they do today, it would be the least secure entity in the transaction. After October 2015, if a chip card is swiped on a non-EMV terminal and there is fraud, the merchant covers the cost. However, if a traditional mag-stripe card is swiped via an EMV-capable POS device, the issuer foots the bill.
Neither merchants nor issuers want to be the weak link in the chain, plus EMV is simply a much more secure technology. "You don't want to be left behind," cautioned Scott, who reminded the October 2015 liability shift is not a mandate. But he warned that if CUs don't convert by then, they face the possibility of having their mag stripe cards becoming a greater fraud target.
Scott urged CU executives to pay little attention to cards industry chatter about a large number merchants and financial institutions not being ready by the October deadline. "Both sides-merchants and financial institutions-will be prepared. Realize that merchants can flip the switch on EMV almost overnight, if they need to."
Scott recommended that credit unions dedicate one person on staff to focus a little time each day to stay on top of developments on the EMV front and to create the CU's roadmap to conversion. He is concerned that if CUs wait too long, and the October 2015 deadline gets too close, the credit union could be standing in a long line of FIs waiting to receive EMV certification with payments networks and get set up with their processor.
Education Will Be Vital
He also encouraged credit unions to do a great deal of member education around EMV and the use of the chip cards. He reminded there will be the tap-and-go EMV cards and those that the cardholder insert into the POS terminal and leave in place while entering their PIN.
"How members use their cards will be different than what they have become accustomed to," said Scott. "That can cause confusion and problems-even having cardholders think the card is not working correctly when the reason for a transaction problem is an error in how the person used their card. Spend time on education."
Much of the session focused on converting credit cards to EMV, due largely to the uncertainty of the future of debit interchange. The recent court decision that struck down the 21-cent debit interchange cap is prolonging the development of a final solution that addresses routing of both PIN and signature debit transactions, and impacting financial institutions' decisions around debit and EMV. Chip cards are not set up to accept multiple unaffiliated payments networks, and while Visa and MasterCard have made inroads on a solution, a need exists to create a streamlined approach to routing U.S. chip debit transactions.
Other points from Scott:
* Chip and signature will likely be the most common EMV form-25% of issuers are moving to chip and PIN, 60% to chip and signature, 20% are undecided.
* Chip card costs vary by how many are purchased, but on average the chip and PIN card costs $2 to $4, while tap-and-go runs between $3 and $7.
